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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 30, 2009

Or



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

Commission file numbers: 333-144492 and 0-26190





US Oncology Holdings, Inc.

US Oncology, Inc.

(Exact name of registrants as specified in their charters)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 90-0222104                          
|Delaware                                                       |  | 84-1213501                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

10101 Woodloch Forest

The Woodlands, Texas

77380

(Address of principal executive offices)

(Zip Code)

(281) 863-1000

(Registrants telephone number, including area code)





Indicate by check mark whether the Registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90
days.    Yes   ̈    No  x

Indicate by check mark whether the Registrants have submitted electronically and posted on its corporate Website, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the Registrants are large accelerated filers, accelerated filers, non-accelerated filers or a
smaller reporting company. See definition of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                            |  |                                               |  |                             
|--------------------------- |  | --------------------------------------------- |  | ----------------------------
|Large accelerated filers   ̈ |  |                                               |  | Accelerated filers   ̈       
|                            |  |                                              
|Non-accelerated filers  x   |  | (Do not check if a smaller reporting company) |  | Smaller reporting company   ̈

Indicate by check mark whether the Registrants are shell companies
(as defined in Rule 12(b)-2 of the Securities Exchange Act of 1934.)    Yes   ̈    No  x

As of November 4, 2009, 422,644,764 and 100 shares of US
Oncology Holdings, Inc. and US Oncology, Inc. common stock were outstanding, respectively.

This Form 10-Q is
a combined quarterly report being filed separately by two registrants: US Oncology Holdings, Inc. and US Oncology, Inc. Unless the context indicates otherwise, any reference in this report to Holdings refers to US Oncology Holdings, Inc.
and any reference to US Oncology refers to US Oncology, Inc., the wholly-owned operating subsidiary of Holdings. References to the Company, we, us, and our refer collectively to US Oncology
Holdings, Inc. and US Oncology, Inc.









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US ONCOLOGY HOLDINGS, INC.

US ONCOLOGY, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009



|                              |  |                                                                                       |  |   
|----------------------------- |  | ------------------------------------------------------------------------------------- |  | --
|TABLE OF CONTENTS             |  | PAGE NO.                                                                             
|PART I. FINANCIAL INFORMATION |  |                                                                                      
|                              |  |                                                                                      
|Item 1.                       |  | Condensed Consolidated Financial Statements (unaudited):                              |  |   
|                              |  | Condensed Consolidated Balance Sheets                                                 |  | 3 
|                              |  | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)       |  | 4 
|                              |  | Condensed Consolidated Statements of Equity (Deficit)                                 |  | 6 
|                              |  | Condensed Consolidated Statements of Cash Flows                                       |  | 7 
|                              |  | Notes to Condensed Consolidated Financial Statements                                  |  | 9 
|                              |  |                                                                                      
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations |  | 40
|                              |  |                                                                                      
|Item 4.                       |  | Controls and Procedures                                                               |  | 71
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                      
|                              |  |                                                                                      
|Item 1.                       |  | Legal Proceedings                                                                     |  | 72
|                              |  |                                                                                      
|Item 1A.                      |  | Risk Factors                                                                          |  | 74
|                              |  |                                                                                      
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                   |  | 90
|                              |  |                                                                                      
|Item 6.                       |  | Exhibits                                                                              |  | 91
|                              | 
|SIGNATURES                    |  | 93                                                                                   

This Form 10-Q is being filed by each of the registrants, US Oncology Holdings, Inc.
and US Oncology, Inc. Each Registrant hereto is filing on its own behalf the information as required by Form 10-Q which is contained in this quarterly report.



-2-



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|------- | -------------------------------------------

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share information)



|                                                                                                                                                                                                           |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | --------- | - | ----------------- | - | --------- | ----------------- |  | - | ---------------- | - |  | - | --------- | -
|                                                                                                                                                                                                           |  | US Oncology Holdings, Inc. |           |   | US Oncology, Inc. |  
|                                                                                                                                                                                                           |  | September 30,2009          |           |   | December 31,2008  |   |           | September 30,2009 |  |   | December 31,2008 |  
|ASSETS                                                                                                                                                                                                     |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Current assets:                                                                                                                                                                                            |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Cash and equivalents                                                                                                                                                                                       |  | $                          | 132,910   |   |                   | $ | 104,477   |                   |  | $ | 132,535          |   |  | $ | 104,476   |  
|Accounts receivable                                                                                                                                                                                        |  |                            | 369,943   |   |                   |   | 364,336   |                   |  |   | 369,943          |   |  |   | 364,336   |  
|Other receivables                                                                                                                                                                                          |  |                            | 28,772    |   |                   |   | 25,707    |                   |  |   | 28,772           |   |  |   | 25,707    |  
|Prepaid expenses and other current assets                                                                                                                                                                  |  |                            | 24,385    |   |                   |   | 26,182    |                   |  |   | 24,385           |   |  |   | 20,682    |  
|Inventories                                                                                                                                                                                                |  |                            | 120,576   |   |                   |   | 130,967   |                   |  |   | 120,576          |   |  |   | 130,967   |  
|Deferred income taxes                                                                                                                                                                                      |  |                            | 11,541    |   |                   |   | 9,749     |                   |  |   | 5,424            |   |  |   | 4,373     |  
|Due from affiliates                                                                                                                                                                                        |  |                            | 46,316    |   |                   |   | 75,884    |                   |  |   | 29,014           |   |  |   | 66,428    |  
|                                                                                                                                                                                                           |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Total current assets                                                                                                                                                                                       |  |                            | 734,443   |   |                   |   | 737,302   |                   |  |   | 710,649          |   |  |   | 716,969   |  
|Property and equipment, net                                                                                                                                                                                |  |                            | 413,376   |   |                   |   | 410,248   |                   |  |   | 413,376          |   |  |   | 410,248   |  
|Service agreements, net                                                                                                                                                                                    |  |                            | 261,781   |   |                   |   | 273,646   |                   |  |   | 261,781          |   |  |   | 273,646   |  
|Goodwill                                                                                                                                                                                                   |  |                            | 377,270   |   |                   |   | 377,270   |                   |  |   | 377,270          |   |  |   | 377,270   |  
|Other assets                                                                                                                                                                                               |  |                            | 79,068    |   |                   |   | 72,434    |                   |  |   | 73,144           |   |  |   | 64,720    |  
|                                                                                                                                                                                                           |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Total assets                                                                                                                                                                                               |  | $                          | 1,865,938 |   |                   | $ | 1,870,900 |                   |  | $ | 1,836,220        |   |  | $ | 1,842,853 |  
|                                                                                                                                                                                                           |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|LIABILITIES AND EQUITY (DEFICIT)                                                                                                                                                                           |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Current liabilities:                                                                                                                                                                                       |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Current maturities of long-term indebtedness                                                                                                                                                               |  | $                          | 11,310    |   |                   | $ | 10,677    |                   |  | $ | 11,310           |   |  | $ | 10,677    |  
|Accounts payable                                                                                                                                                                                           |  |                            | 291,416   |   |                   |   | 266,443   |                   |  |   | 291,174          |   |  |   | 266,190   |  
|Due to affiliates                                                                                                                                                                                          |  |                            | 112,674   |   |                   |   | 136,913   |                   |  |   | 112,674          |   |  |   | 136,913   |  
|Accrued compensation cost                                                                                                                                                                                  |  |                            | 43,936    |   |                   |   | 40,776    |                   |  |   | 43,936           |   |  |   | 40,776    |  
|Accrued interest payable                                                                                                                                                                                   |  |                            | 14,547    |   |                   |   | 26,266    |                   |  |   | 14,547           |   |  |   | 26,266    |  
|Income taxes payable                                                                                                                                                                                       |  |                            | 4,049     |   |                   |   |          |                   |  |   | 2,047            |   |  |   | 2,727     |  
|Other accrued liabilities                                                                                                                                                                                  |  |                            | 52,907    |   |                   |   | 45,341    |                   |  |   | 36,592           |   |  |   | 34,804    |  
|                                                                                                                                                                                                           |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Total current liabilities                                                                                                                                                                                  |  |                            | 530,839   |   |                   |   | 526,416   |                   |  |   | 512,280          |   |  |   | 518,353   |  
|Deferred revenue                                                                                                                                                                                           |  |                            | 7,509     |   |                   |   | 6,894     |                   |  |   | 7,509            |   |  |   | 6,894     |  
|Deferred income taxes                                                                                                                                                                                      |  |                            | 11,541    |   |                   |   | 15,783    |                   |  |   | 36,529           |   |  |   | 35,139    |  
|Long-term indebtedness                                                                                                                                                                                     |  |                            | 1,569,598 |   |                   |   | 1,517,884 |                   |  |   | 1,075,644        |   |  |   | 1,061,133 |  
|Other long-term liabilities                                                                                                                                                                                |  |                            | 30,585    |   |                   |   | 47,472    |                   |  |   | 11,220           |   |  |   | 12,347    |  
|                                                                                                                                                                                                           |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Total liabilities                                                                                                                                                                                          |  |                            | 2,150,072 |   |                   |   | 2,114,449 |                   |  |   | 1,643,182        |   |  |   | 1,633,866 |  
|Commitments and contingencies (Note 10)                                                                                                                                                                    |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Preferred stock Series A, 15,000,000 shares authorized, 13,938,657 shares issued and outstanding, liquidation preference of
$332,180,261 as of September 30, 2009 and $315,383,422 as of December 31, 2008 |  |                            | 346,119   |   |                   |   | 329,322   |                   |  |   |                 |   |  |   |          |  
|Preferred stock Series A-1, 2,000,000 shares authorized, 1,948,251 shares issued and outstanding, liquidation preference of
$50,228,424 as of September 30, 2009 and $47,688,602 as of December 31, 2008   |  |                            | 59,168    |   |                   |   | 56,629    |                   |  |   |                 |   |  |   |          |  
|(Deficit) equity:                                                                                                                                                                                          |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Common stock, $0.001 par value, 300,000,000 shares authorized, 148,433,820 and 148,281,420 shares issued and outstanding in 2009
and 2008, respectively                                                    |  |                            | 148       |   |                   |   | 148       |                   |  |   |                 |   |  |   |          |  
|Common stock, $0.01 par value, 100 shares authorized, issued and outstanding                                                                                                                               |  |                            |          |   |                   |   |          |                   |  |   | 1                |   |  |   | 1         |  
|Additional paid-in capital                                                                                                                                                                                 |  |                            |          |   |                   |   |          |                   |  |   | 551,275          |   |  |   | 560,768   |  
|Retained deficit                                                                                                                                                                                           |  |                            | (704,129  | ) |                   |   | (643,220  | )                 |  |   | (372,798         | ) |  |   | (365,354  | )
|                                                                                                                                                                                                           |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Total Company stockholders (deficit) equity                                                                                                                                                               |  |                            | (703,981  | ) |                   |   | (643,072  | )                 |  |   | 178,478          |   |  |   | 195,415   |  
|Noncontrolling interests                                                                                                                                                                                   |  |                            | 14,560    |   |                   |   | 13,572    |                   |  |   | 14,560           |   |  |   | 13,572    |  
|                                                                                                                                                                                                           |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Total (deficit) equity                                                                                                                                                                                     |  |                            | (689,421  | ) |                   |   | (629,500  | )                 |  |   | 193,038          |   |  |   | 208,987   |  
|                                                                                                                                                                                                           |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  
|Total liabilities and (deficit) equity                                                                                                                                                                     |  | $                          | 1,865,938 |   |                   | $ | 1,870,900 |                   |  | $ | 1,836,220        |   |  | $ | 1,842,853 |  
|                                                                                                                                                                                                           |  |                            |           |   |                   |   |           |                   |  |   |                  |   |  |   |           |  

The accompanying notes are an integral part of these statements.



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##### Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)

(unaudited, in thousands)



|                                                                |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|--------------------------------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                |  | US Oncology Holdings, Inc.       |         |   | US Oncology, Inc.                |  
|                                                                |  | Three Months Ended September 30, |         |   | Three Months Ended September 30, |  
|                                                                |  | 2009                             |         |   | 2008                             |   |         | 2009 |  |   | 2008    |  
|Product revenue                                                 |  | $                                | 608,035 |   |                                  | $ | 556,359 |      |  | $ | 608,035 |   |  | $ | 556,359 |  
|Service revenue                                                 |  |                                  | 293,419 |   |                                  |   | 265,377 |      |  |   | 293,419 |   |  |   | 265,377 |  
|                                                                |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Total revenue                                                   |  |                                  | 901,454 |   |                                  |   | 821,736 |      |  |   | 901,454 |   |  |   | 821,736 |  
|                                                                |  |                                  |         |  
|Cost of products                                                |  |                                  | 596,208 |   |                                  |   | 537,029 |      |  |   | 596,208 |   |  |   | 537,029 |  
|                                                                |  |                                  |         |  
|Cost of services:                                               |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Operating compensation and benefits                             |  |                                  | 140,321 |   |                                  |   | 131,158 |      |  |   | 140,321 |   |  |   | 131,158 |  
|Other operating costs                                           |  |                                  | 84,824  |   |                                  |   | 81,310  |      |  |   | 84,824  |   |  |   | 81,310  |  
|Depreciation and amortization                                   |  |                                  | 19,090  |   |                                  |   | 17,898  |      |  |   | 19,090  |   |  |   | 17,898  |  
|                                                                |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Total cost of services                                          |  |                                  | 244,235 |   |                                  |   | 230,366 |      |  |   | 244,235 |   |  |   | 230,366 |  
|                                                                |  |                                  |         |  
|Total cost of products and services                             |  |                                  | 840,443 |   |                                  |   | 767,395 |      |  |   | 840,443 |   |  |   | 767,395 |  
|General and administrative expense                              |  |                                  | 18,913  |   |                                  |   | 18,216  |      |  |   | 18,792  |   |  |   | 18,078  |  
|Impairment and restructuring charges                            |  |                                  | 4,117   |   |                                  |   | 271     |      |  |   | 4,117   |   |  |   | 271     |  
|Depreciation and amortization                                   |  |                                  | 7,700   |   |                                  |   | 7,684   |      |  |   | 7,700   |   |  |   | 7,684   |  
|                                                                |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|                                                                |  |                                  | 871,173 |   |                                  |   | 793,566 |      |  |   | 871,052 |   |  |   | 793,428 |  
|                                                                |  |                                  |         |  
|Income from operations                                          |  |                                  | 30,281  |   |                                  |   | 28,170  |      |  |   | 30,402  |   |  |   | 28,308  |  
|                                                                |  |                                  |         |  
|Other expense:                                                  |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Interest expense, net                                           |  |                                  | (37,627 | ) |                                  |   | (33,132 | )    |  |   | (28,016 | ) |  |   | (22,679 | )
|Loss on early extinguishment of debt                            |  |                                  | (3,672  | ) |                                  |   |        |      |  |   | (3,672  | ) |  |   |        |  
|Other income (expense), net                                     |  |                                  | (7,596  | ) |                                  |   | (4,186  | )    |  |   |        |   |  |   |        |  
|                                                                |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) before income taxes                               |  |                                  | (18,614 | ) |                                  |   | (9,148  | )    |  |   | (1,286  | ) |  |   | 5,629   |  
|Income tax benefit (provision)                                  |  |                                  | (764    | ) |                                  |   | 4,110   |      |  |   | 1,332   |   |  |   | (1,039  | )
|                                                                |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss)                                               |  |                                  | (19,378 | ) |                                  |   | (5,038  | )    |  |   | 46      |   |  |   | 4,590   |  
|Less: Net income attributable to noncontrolling interests       |  |                                  | (912    | ) |                                  |   | (715    | )    |  |   | (912    | ) |  |   | (715    | )
|                                                                |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss) attributable to the Company                   |  | $                                | (20,290 | ) |                                  | $ | (5,753  | )    |  | $ | (866    | ) |  | $ | 3,875   |  
|                                                                |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Other comprehensive income (loss):                              |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss)                                               |  | $                                | (19,378 | ) |                                  | $ | (5,038  | )    |  | $ | 46      |   |  | $ | 4,590   |  
|Change in unrealized gain (loss) on cash flow hedge, net of tax |  |                                  |        |   |                                  |   | 229     |      |  |   |        |   |  |   |        |  
|                                                                |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Comprehensive income (loss)                                     |  |                                  | (19,378 | ) |                                  |   | (4,809  | )    |  |   | 46      |   |  |   | 4,590   |  
|Comprehensive income attributable to noncontrolling interests   |  |                                  | (912    | ) |                                  |   | (715    | )    |  |   | (912    | ) |  |   | (715    | )
|                                                                |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Other comprehensive income (loss) attributable to the Company   |  | $                                | (20,290 | ) |                                  | $ | (5,524  | )    |  | $ | (866    | ) |  | $ | 3,875   |  
|                                                                |  |                                  |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  

The accompanying notes are an integral part of these statements.



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##### Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)



|                                                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|--------------------------------------------------------------- |  | ------------------------------- | --------- | - | ------------------------------- | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                                |  | US Oncology Holdings, Inc.      |           |   | US Oncology, Inc.               |  
|                                                                |  | Nine Months Ended September 30, |           |   | Nine Months Ended September 30, |  
|                                                                |  | 2009                            |           |   | 2008                            |   |           | 2009 |  |   | 2008      |  
|Product revenue                                                 |  | $                               | 1,765,687 |   |                                 | $ | 1,656,670 |      |  | $ | 1,765,687 |   |  | $ | 1,656,670 |  
|Service revenue                                                 |  |                                 | 859,975   |   |                                 |   | 804,848   |      |  |   | 859,975   |   |  |   | 804,848   |  
|                                                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Total revenue                                                   |  |                                 | 2,625,662 |   |                                 |   | 2,461,518 |      |  |   | 2,625,662 |   |  |   | 2,461,518 |  
|                                                                |  |                                 |           |  
|Cost of products                                                |  |                                 | 1,730,012 |   |                                 |   | 1,610,641 |      |  |   | 1,730,012 |   |  |   | 1,610,641 |  
|                                                                |  |                                 |           |  
|Cost of services:                                               |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Operating compensation and benefits                             |  |                                 | 416,107   |   |                                 |   | 391,432   |      |  |   | 416,107   |   |  |   | 391,432   |  
|Other operating costs                                           |  |                                 | 248,168   |   |                                 |   | 237,544   |      |  |   | 248,168   |   |  |   | 237,544   |  
|Depreciation and amortization                                   |  |                                 | 54,590    |   |                                 |   | 55,252    |      |  |   | 54,590    |   |  |   | 55,252    |  
|                                                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Total cost of services                                          |  |                                 | 718,865   |   |                                 |   | 684,228   |      |  |   | 718,865   |   |  |   | 684,228   |  
|                                                                |  |                                 |           |  
|Total cost of products and services                             |  |                                 | 2,448,877 |   |                                 |   | 2,294,869 |      |  |   | 2,448,877 |   |  |   | 2,294,869 |  
|General and administrative expense                              |  |                                 | 53,374    |   |                                 |   | 59,543    |      |  |   | 53,179    |   |  |   | 59,306    |  
|Impairment and restructuring charges                            |  |                                 | 5,907     |   |                                 |   | 382,041   |      |  |   | 5,907     |   |  |   | 382,041   |  
|Depreciation and amortization                                   |  |                                 | 22,470    |   |                                 |   | 21,967    |      |  |   | 22,470    |   |  |   | 21,967    |  
|                                                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|                                                                |  |                                 | 2,530,628 |   |                                 |   | 2,758,420 |      |  |   | 2,530,433 |   |  |   | 2,758,183 |  
|                                                                |  |                                 |           |  
|Income (loss) from operations                                   |  |                                 | 95,034    |   |                                 |   | (296,902  | )    |  |   | 95,229    |   |  |   | (296,665  | )
|                                                                |  |                                 |           |  
|Other expense:                                                  |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Interest expense, net                                           |  |                                 | (102,820  | ) |                                 |   | (101,810  | )    |  |   | (73,122   | ) |  |   | (69,313   | )
|Loss on early extinguishment of debt                            |  |                                 | (26,025   | ) |                                 |   |          |      |  |   | (26,025   | ) |  |   |          |  
|Other income (expense), net                                     |  |                                 | (9,975    | ) |                                 |   | (4,528    | )    |  |   | 37        |   |  |   | 1,370     |  
|                                                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Loss before income taxes                                        |  |                                 | (43,786   | ) |                                 |   | (403,240  | )    |  |   | (3,881    | ) |  |   | (364,608  | )
|Income tax benefit (provision)                                  |  |                                 | 3,260     |   |                                 |   | 9,688     |      |  |   | (948      | ) |  |   | (3,905    | )
|                                                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Net loss                                                        |  |                                 | (40,526   | ) |                                 |   | (393,552  | )    |  |   | (4,829    | ) |  |   | (368,513  | )
|Less: Net income attributable to noncontrolling interests       |  |                                 | (2,615    | ) |                                 |   | (2,447    | )    |  |   | (2,615    | ) |  |   | (2,447    | )
|                                                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Net loss attributable to the Company                            |  | $                               | (43,141   | ) |                                 | $ | (395,999  | )    |  | $ | (7,444    | ) |  | $ | (370,960  | )
|                                                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Other comprehensive loss:                                       |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Net loss                                                        |  | $                               | (40,526   | ) |                                 | $ | (393,552  | )    |  | $ | (4,829    | ) |  | $ | (368,513  | )
|Change in unrealized gain (loss) on cash flow hedge, net of tax |  |                                 |          |   |                                 |   | 457       |      |  |   |          |   |  |   |          |  
|                                                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Comprehensive loss                                              |  |                                 | (40,526   | ) |                                 |   | (393,095  | )    |  |   | (4,829    | ) |  |   | (368,513  | )
|Comprehensive income attributable to noncontrolling interests   |  |                                 | (2,615    | ) |                                 |   | (2,447    | )    |  |   | (2,615    | ) |  |   | (2,447    | )
|                                                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  
|Other comprehensive loss attributable to the Company            |  | $                               | (43,141   | ) |                                 | $ | (395,542  | )    |  | $ | (7,444    | ) |  | $ | (370,960  | )
|                                                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |           |  

The accompanying notes are an integral part of these statements.



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US ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY (DEFICIT)

(unaudited, in thousands)



|                                                                                                                 |  |                                         |   |  |          |     |   |                          |   |         |                           |  |   |                         |   |  |       |        |   |  |   |          |  
|---------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | - |  | -------- | --- | - | ------------------------ | - | ------- | ------------------------- |  | - | ----------------------- | - |  | ----- | ------ | - |  | - | -------- | -
|                                                                                                                 |  | US Oncology Holdings, Inc. Shareholders |   |  |          |     |   |                          |  
|                                                                                                                 |  | SharesIssued                            |   |  | ParValue |     |   | AdditionalPaid-InCapital |   |         | RetainedDeficit           |  |   | NoncontrollingInterests |   |  | Total |       
|Balance at December 31, 2008                                                                                     |  | 148,281                                 |   |  | $        | 148 |   |                          | $ |        |                           |  | $ | (643,220                | ) |  | $     | 13,572 |   |  | $ | (629,500 | )
|                                                                                                                 |  |                                         |   |  |          |    
|Share-based compensation                                                                                         |  |                                        |   |  |          |    |   |                          |   | 1,571   |                           |  |   |                        |   |  |       |       |   |  |   | 1,571    |  
|Restricted stock award issuances                                                                                 |  | 750                                     |   |  |          | 1   |   |                          |   |        |                           |  |   |                        |   |  |       |       |   |  |   | 1        |  
|Forfeiture of restricted stock awards                                                                            |  | (597                                    | ) |  |          | (1  | ) |                          |   |        |                           |  |   |                        |   |  |       |       |   |  |   | (1       | )
|Accretion of preferred stock dividends                                                                           |  |                                        |   |  |          |    |   |                          |   | (1,571  | )                         |  |   | (17,768                 | ) |  |       |       |   |  |   | (19,339  | )
|Distributions to noncontrolling interests                                                                        |  |                                        |   |  |          |    |   |                          |   |        |                           |  |   |                        |   |  |       | (1,627 | ) |  |   | (1,627   | )
|Net income (loss)                                                                                                |  |                                        |   |  |          |    |   |                          |   |        |                           |  |   | (43,141                 | ) |  |       | 2,615  |   |  |   | (40,526  | )
|                                                                                                                 |  |                                         |   |  |          |     |   |                          |   |         |                           |  |   |                         |   |  |       |        |   |  |   |          |  
|Balance at September 30, 2009                                                                                    |  | 148,434                                 |   |  | $        | 148 |   |                          | $ |        |                           |  | $ | (704,129                | ) |  | $     | 14,560 |   |  | $ | (689,421 | )
|                                                                                                                 |  |                                         |   |  |          |     |   |                          |   |         |                           |  |   |                         |   |  |       |        |   |  |   |          |  
|                                                                                                                
|US ONCOLOGY, INC. CONDENSED CONSOLIDATED STATEMENT OF EQUITY (unaudited, in thousands,
except share information) | 
|                                                                                                                 |  | US Oncology, Inc. Shareholder           |   |  |          |     |   |                          |  
|                                                                                                                 |  | SharesIssued                            |   |  | ParValue |     |   | AdditionalPaid-InCapital |   |         | RetainedEarnings(Deficit) |  |   | NoncontrollingInterests |   |  | Total |       
|Balance at December 31, 2008                                                                                     |  | 100                                     |   |  | $        | 1   |   |                          | $ | 560,768 |                           |  | $ | (365,354                | ) |  | $     | 13,572 |   |  | $ | 208,987  |  
|                                                                                                                 |  |                                         |   |  |          |    
|Share-based compensation                                                                                         |  |                                        |   |  |          |    |   |                          |   | 1,571   |                           |  |   |                        |   |  |       |       |   |  |   | 1,571    |  
|Dividend paid                                                                                                    |  |                                        |   |  |          |    |   |                          |   | (11,064 | )                         |  |   |                        |   |  |       |       |   |  |   | (11,064  | )
|Distributions to noncontrolling interests                                                                        |  |                                        |   |  |          |    |   |                          |   |        |                           |  |   |                        |   |  |       | (1,627 | ) |  |   | (1,627   | )
|Net income (loss)                                                                                                |  |                                        |   |  |          |    |   |                          |   |        |                           |  |   | (7,444                  | ) |  |       | 2,615  |   |  |   | (4,829   | )
|                                                                                                                 |  |                                         |   |  |          |     |   |                          |   |         |                           |  |   |                         |   |  |       |        |   |  |   |          |  
|Balance at September 30, 2009                                                                                    |  | 100                                     |   |  | $        | 1   |   |                          | $ | 551,275 |                           |  | $ | (372,798                | ) |  | $     | 14,560 |   |  | $ | 193,038  |  
|                                                                                                                 |  |                                         |   |  |          |     |   |                          |   |         |                           |  |   |                         |   |  |       |        |   |  |   |          |  

The accompanying notes are an integral part of these statements.



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##### Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)



|                                                                                  |  |                                 |         |   |                                 |   |          |      |  |   |         |   |  |   |          |  
|--------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------- | - | -------- | ---- |  | - | ------- | - |  | - | -------- | -
|                                                                                  |  | US Oncology Holdings, Inc.      |         |   | US Oncology, Inc.               |  
|                                                                                  |  | Nine Months Ended September 30, |         |   | Nine Months Ended September 30, |  
|                                                                                  |  | 2009                            |         |   | 2008                            |   |          | 2009 |  |   | 2008    |  
|Cash flows from operating activities:                                             |  |                                 |         |   |                                 |   |          |      |  |   |         |   |  |   |          |  
|Net loss                                                                          |  | $                               | (40,526 | ) |                                 | $ | (393,552 | )    |  | $ | (4,829  | ) |  | $ | (368,513 | )
|Adjustments to reconcile net loss to net cash provided by operating activities:   |  |                                 |         |   |                                 |   |          |      |  |   |         |   |  |   |          |  
|Depreciation and amortization, including amortization of deferred financing costs |  |                                 | 83,891  |   |                                 |   | 84,323   |      |  |   | 82,101  |   |  |   | 82,532   |  
|Impairment and restructuring charges                                              |  |                                 | 5,907   |   |                                 |   | 382,041  |      |  |   | 5,907   |   |  |   | 382,041  |  
|Deferred income taxes                                                             |  |                                 | (6,034  | ) |                                 |   | (10,756  | )    |  |   | 339     |   |  |   | (4,447   | )
|Non-cash compensation expense                                                     |  |                                 | 1,571   |   |                                 |   | 1,769    |      |  |   | 1,571   |   |  |   | 1,769    |  
|Gain on sale of assets                                                            |  |                                 |        |   |                                 |   | (1,370   | )    |  |   |        |   |  |   | (1,370   | )
|Equity in earnings of joint ventures                                              |  |                                 | (2,429  | ) |                                 |   | (858     | )    |  |   | (2,429  | ) |  |   | (858     | )
|Loss on interest rate swap                                                        |  |                                 | 10,012  |   |                                 |   | 6,610    |      |  |   |        |   |  |   |         |  
|Non-cash interest under PIK election                                              |  |                                 | 27,373  |   |                                 |   | 20,173   |      |  |   |        |   |  |   |         |  
|Loss on early extinguishment of debt                                              |  |                                 | 26,025  |   |                                 |   |         |      |  |   | 26,025  |   |  |   |         |  
|(Increase) Decrease in:                                                           |  |                                 |         |   |                                 |   |          |      |  |   |         |   |  |   |          |  
|Accounts and other receivables                                                    |  |                                 | (8,528  | ) |                                 |   | 4,811    |      |  |   | (8,528  | ) |  |   | 4,811    |  
|Prepaid expenses and other current assets                                         |  |                                 | (3,703  | ) |                                 |   | 2,901    |      |  |   | (3,703  | ) |  |   | 2,900    |  
|Inventories                                                                       |  |                                 | 10,391  |   |                                 |   | (30,386  | )    |  |   | 10,391  |   |  |   | (30,386  | )
|Other assets                                                                      |  |                                 | 26      |   |                                 |   | 50       |      |  |   | 26      |   |  |   | 50       |  
|Increase (Decrease) in:                                                           |  |                                 |         |   |                                 |   |          |      |  |   |         |   |  |   |          |  
|Accounts payable                                                                  |  |                                 | 29,816  |   |                                 |   | 20,890   |      |  |   | 29,830  |   |  |   | 21,746   |  
|Due from/to affiliates                                                            |  |                                 | 5,338   |   |                                 |   | (19,658  | )    |  |   | 13,330  |   |  |   | (18,787  | )
|Income taxes receivable/payable                                                   |  |                                 | 9,549   |   |                                 |   | (305     | )    |  |   | (826    | ) |  |   | 6,980    |  
|Other accrued liabilities                                                         |  |                                 | (23,338 | ) |                                 |   | (2,357   | )    |  |   | (13,174 | ) |  |   | (1,153   | )
|                                                                                  |  |                                 |         |   |                                 |   |          |      |  |   |         |   |  |   |          |  
|Net cash provided by operating activities                                         |  |                                 | 125,341 |   |                                 |   | 64,326   |      |  |   | 136,031 |   |  |   | 77,315   |  
|                                                                                  |  |                                 |         |   |                                 |   |          |      |  |   |         |   |  |   |          |  

Continued on following page

The accompanying notes are an integral part of these statements.



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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - continued

(unaudited, in thousands)



|                                                        |  |                                 |          |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|------------------------------------------------------- |  | ------------------------------- | -------- | - | ------------------------------- | - | ------- | ---- |  | - | -------- | - |  | - | ------- | -
|                                                        |  | US Oncology Holdings, Inc.      |          |   | US Oncology, Inc.               |  
|                                                        |  | Nine Months Ended September 30, |          |   | Nine Months Ended September 30, |  
|                                                        |  | 2009                            |          |   | 2008                            |   |         | 2009 |  |   | 2008     |  
|Cash flows from investing activities:                   |  |                                 |          |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|Acquisition of property and equipment                   |  |                                 | (66,696  | ) |                                 |   | (60,037 | )    |  |   | (66,696  | ) |  |   | (60,037 | )
|Net payments in affiliation transactions                |  |                                 | (4,393   | ) |                                 |   | (41,216 | )    |  |   | (4,393   | ) |  |   | (41,216 | )
|Net proceeds from sale of assets                        |  |                                 |         |   |                                 |   | 3,747   |      |  |   |         |   |  |   | 3,747   |  
|Distributions from noncontrolling interests             |  |                                 | 3,509    |   |                                 |   | 1,493   |      |  |   | 3,509    |   |  |   | 1,493   |  
|Investment in unconsolidated subsidiaries               |  |                                 | (7,790   | ) |                                 |   | (3,486  | )    |  |   | (7,790   | ) |  |   | (3,486  | )
|                                                        |  |                                 |          |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|Net cash used in investing activities                   |  |                                 | (75,370  | ) |                                 |   | (99,499 | )    |  |   | (75,370  | ) |  |   | (99,499 | )
|                                                        |  |                                 |          |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|Cash flows from financing activities:                   |  |                                 |          |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|Proceeds from Senior Secured Notes                      |  |                                 | 758,926  |   |                                 |   |        |      |  |   | 758,926  |   |  |   |        |  
|Proceeds from other indebtedness                        |  |                                 |         |   |                                 |   | 4,000   |      |  |   |         |   |  |   | 4,000   |  
|Net borrowings under revolving facility                 |  |                                 |         |   |                                 |   | 20,000  |      |  |   |         |   |  |   | 20,000  |  
|Repayment of term loan                                  |  |                                 | (436,666 | ) |                                 |   | (34,937 | )    |  |   | (436,666 | ) |  |   | (34,937 | )
|Repayment of Senior Notes                               |  |                                 | (311,578 | ) |                                 |   |        |      |  |   | (311,578 | ) |  |   |        |  
|Repayment of other indebtedness                         |  |                                 | (9,405   | ) |                                 |   | (1,293  | )    |  |   | (9,405   | ) |  |   | (1,293  | )
|Debt financing costs                                    |  |                                 | (21,188  | ) |                                 |   | (119    | )    |  |   | (21,188  | ) |  |   | (103    | )
|Net distributions to parent                             |  |                                 |         |   |                                 |   |        |      |  |   | (11,064  | ) |  |   | (13,004 | )
|Repayment of advance to parent                          |  |                                 |         |   |                                 |   |        |      |  |   |         |   |  |   |        |  
|Distributions to noncontrolling interests               |  |                                 | (1,627   | ) |                                 |   | (2,626  | )    |  |   | (1,627   | ) |  |   | (2,626  | )
|Contributions from noncontrolling interests             |  |                                 |         |   |                                 |   | 466     |      |  |   |         |   |  |   | 466     |  
|Proceeds from exercise of stock options                 |  |                                 |         |   |                                 |   | 25      |      |  |   |         |   |  |   |        |  
|Contribution of proceeds from exercise of stock options |  |                                 |         |   |                                 |   |        |      |  |   |         |   |  |   | 25      |  
|                                                        |  |                                 |          |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|Net cash used in financing activities                   |  |                                 | (21,538  | ) |                                 |   | (14,484 | )    |  |   | (32,602  | ) |  |   | (27,472 | )
|                                                        |  |                                 |          |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|Increase (decrease) in cash and cash equivalents        |  |                                 | 28,433   |   |                                 |   | (49,657 | )    |  |   | 28,059   |   |  |   | (49,656 | )
|Cash and cash equivalents:                              |  |                                 |          |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|Beginning of period                                     |  |                                 | 104,477  |   |                                 |   | 149,257 |      |  |   | 104,476  |   |  |   | 149,256 |  
|                                                        |  |                                 |          |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|End of period                                           |  | $                               | 132,910  |   |                                 | $ | 99,600  |      |  | $ | 132,535  |   |  | $ | 99,600  |  
|                                                        |  |                                 |          |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|Interest paid                                           |  | $                               | 79,792   |   |                                 | $ | 87,029  |      |  | $ | 79,767   |   |  | $ | 78,881  |  
|Income taxes and related interest paid (refunded)       |  |                                 | (6,739   | ) |                                 |   | 1,396   |      |  |   | 1,476    |   |  |   | 1,396   |  
|Non-cash investing and financing transactions:          |  |                                 |          |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|Notes issued in affiliation transactions                |  |                                 |         |   |                                 |   | 32,836  |      |  |   |         |   |  |   | 32,836  |  
|Notes issued for interest paid-in-kind                  |  |                                 | 37,203   |   |                                 |   | 31,751  |      |  |   |         |   |  |   |        |  
|Accretion of dividends on preferred stock               |  |                                 | 19,339   |   |                                 |   |        |      |  |   |         |   |  |   |        |  

The accompanying notes are an integral part of these statements.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1  Basis of Presentation

US Oncology Holdings, Inc. (Holdings) was formed in March, 2004 when a wholly owned subsidiary of Holdings agreed to merge with
and into US Oncology, Inc. (US Oncology), with US Oncology continuing as the surviving corporation (the Merger). The Merger was consummated on August 20, 2004. Currently, Holdings principal asset is 100% of the
shares of common stock of US Oncology. Holdings and US Oncology and their subsidiaries are collectively referred to as the Company.

The unaudited condensed consolidated financial statements of Holdings include the accounts of its wholly-owned subsidiary, US Oncology. Holdings conducts substantially all of its business through US
Oncology and its subsidiaries which provide extensive services and support to its affiliated cancer care sites nationwide to help them expand their offering of the most advanced treatments, build integrated community-based cancer care centers,
improve their therapeutic drug management programs, and participate in cancer-related clinical research studies. US Oncology is affiliated with 1,310 physicians operating in 493 locations, including 98 radiation oncology facilities in 39 states. US
Oncology also provides a broad range of services to pharmaceutical manufacturers, including product distribution and informational services such as data reporting and analysis.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States
(GAAP) for interim financial reporting and in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements contained in this report reflect all adjustments that are normal and recurring in nature, except for the adoption
of the accounting standards discussed in Note 11  Recent Accounting Standards, and considered necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The year-end condensed
balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for the interim period are not necessarily indicative of the results expected for the full year. The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as disclosures of contingent assets and
liabilities. Because of inherent uncertainties in this process, actual future results could differ from those expected at the reporting date. These unaudited condensed consolidated financial statements, footnote disclosures and other information
should be read in conjunction with the financial statements and the notes thereto included in the Companys Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on March 12, 2009, and subsequent
filings.

The Company has evaluated subsequent events that occurred between September 30, 2009 and November 5, 2009,
the date our financial statements were available to be issued.

NOTE 2  Revenues

The Company derives revenues primarily from (i) comprehensive service agreements with physician practices; (ii) pharmaceutical
services agreements with physician practices under the oncology pharmaceutical services (OPS) model; (iii) fees paid by pharmaceutical companies for services as a group purchasing organization, data services and other manufacturer
services and (iv) research agreements with pharmaceutical manufacturers and other trial sponsors.

Governmental programs,
such as Medicare and Medicaid, are collectively the affiliated practices largest payers. For the three months ended September 30, 2009 and 2008, the affiliated practices under comprehensive service agreements derived 39.6% and 38.5%,
respectively, of their net patient revenue from services provided under the Medicare program (of which 7.2% and 6.1%, respectively, relate to Medicare managed care) and 3.8% and 3.4%, respectively, from services provided under state Medicaid
programs. For the nine months ended September 30, 2009 and 2008, the affiliated practices under comprehensive service agreements derived 39.6% and 38.0%, respectively, of their net patient revenue from services provided under the Medicare
program (of which 6.8% and 5.3%, respectively, relate to Medicare managed care) and 3.7% and 3.3%, respectively, from services provided under state Medicaid programs. Capitation revenues were less than 1% of total net patient revenue in all periods.
During the three months ended September 30, 2009 and 2008, an additional payer represented 9.4% and 10.5%, respectively, of such affiliated practices aggregate net revenues. During the nine months ended September 30, 2009 and 2008,
that payer represented 9.8% of such affiliated practices aggregate net revenues. Changes in the payer reimbursement rates, or in affiliated practices payer mix, could materially and adversely affect the Companys revenues.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



Erythropoiesis-stimulating agents (ESAs) are drugs used for the treatment of
anemia, which is a condition that occurs when the level of healthy red blood cells in the body becomes too low, thus inhibiting the bloods ability to carry oxygen. Many cancer patients suffer from anemia either as a result of their disease or
as a result of the treatments they receive for their cancer. ESAs have historically been used by oncologists to treat anemia. ESAs are administered to increase levels of healthy red blood cells as an alternative to blood transfusions.

On July 30, 2007, Centers for Medicare & Medicaid Services (CMS) issued a national coverage decision
(NCD) establishing criteria for reimbursement by Medicare for ESA usage which led to a significant decline in utilization of these drugs by oncologists, including those affiliated with US Oncology. In addition, the Oncology Drug Advisory
Committee (ODAC) of the U.S. Food and Drug Administration (FDA) met on March 13, 2008, to further consider the use of ESAs in oncology. Based upon the ODAC findings, on July 30, 2008, the FDA published a final
new label for the ESA drugs Aranesp and Procrit. Unlike the NCD from CMS, which governs reimbursement (rather than prescribing) for Medicare beneficiaries only, the label indication directs appropriate physician prescribing and applies to all
patients and payers.

The FDA also mandated implementation of a Risk Evaluation and Mitigation Strategy (REMS) for
ESAs. A proposed REMS for ESAs was filed by ESA manufacturers with the FDA in August 2008 but is not yet final or publicly available. The REMS is expected to focus on future ESA prescribing guidelines and may require additional patient consent,
education requirements, medication guides and physician registration procedures. The length of time required for the FDA to approve the REMS and for manufacturers to implement the new program is uncertain and it presently remains under discussion
between the manufacturers and the FDA. Once implemented, the REMS will outline additional, if any, procedural steps that will be required for qualified physicians to prescribe ESAs for their patients. The REMS is expected to become effective in
late 2009 or early 2010. We believe a possible impact of the REMS could be further reductions in ESA utilization, which could be significant. Because the use of ESAs relates to specific clinical determinations and the Company does not make clinical
decisions for affiliated physicians, analysis of the financial impact of these restrictions is a complex process. As a result, there is inherent uncertainty in making an estimate or range of estimates as to the ultimate financial impact on the
Company. Factors that could significantly affect the financial impact on the Company include ongoing clinical interpretations of the REMS, coverage restrictions and risks related to ESA use.

The decline in ESA usage has had a significant adverse affect on the Companys results of operations, and, particularly, its Medical
Oncology Services and Pharmaceutical Services segments. Operating income attributable to ESAs administered by our network of affiliated physicians decreased $0.8 million and $9.0 million during the three and nine months ended September 30,
2009, respectively, from the comparable periods ended September 30, 2008. The operating income reflects results from the Companys Medical Oncology Services segment which relate primarily to the administration of ESAs by practices
receiving comprehensive management services and from the Pharmaceutical Services segment which includes purchases by physicians affiliated under the OPS model, as well as distribution and group purchasing fees received from manufacturers for
pharmaceuticals purchased by physicians affiliated under either of these arrangements.

Decreasing financial performance of
affiliated practices as a result of declining ESA usage also affects their relationship with the Company and, in some instances, has led to increased pressure to amend the terms of their management services agreements. In addition, reduced
utilization of ESAs may adversely impact the Companys ability to continue to receive favorable pricing from ESA manufacturers. Decreased financial performance may also adversely impact the Companys ability to obtain acceptable
credit terms from pharmaceutical manufacturers, including manufacturers of products other than ESAs.

The Company expects
continued payer scrutiny of the side effects of supportive care products and other drugs that represent significant costs to payers. Such scrutiny by payers or additional scientific data could lead to future restrictions on usage or reimbursement
for other pharmaceuticals as a result of payer or FDA action or reductions in usage as a result of the independent determination of oncologists practicing in the Companys network. Any such reduction could have an adverse effect on the
Companys business. In the Companys evidence-based medicine initiative, affiliated physicians continually review emerging scientific information to develop clinical pathways for use in oncology and remain engaged with payers in
determining optimal usage for all pharmaceuticals.

Medicare reimbursement for physician services is based on a fee
schedule, which establishes payment for a given service, in relation to actual resources used in providing the service, through the application of relative value units (RVUs). The resources used are converted into a dollar amount of
reimbursement through a conversion factor, which is updated annually by CMS, based on a formula.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



On October 30, 2009, CMS announced final changes to policies and payment rates for
services to be furnished during 2010 by physicians and nonphysician practitioners who are paid under the Medicare physician fee schedule. Under the statutory formula, the conversion factor for 2010 is estimated to decrease by 21.2% unless Congress
again enacts superseding legislation. Congress and the Administration are considering possible actions to prevent that decrease. In addition, CMS projects that changes to policies and payment rates for 2010 would result in a 1% decrease (6% decrease
in 2013 under 4-year phase-in) in overall payments to the specialty of hematology/oncology and a 1% decrease (5% decrease in 2013) in overall payments to the specialty of radiation oncology.

On April 6, 2009, CMS issued a final NCD to expand coverage for initial testing with positron emission tomography (PET) as a cancer diagnostic tool for Medicare
beneficiaries who are diagnosed with and treated for most solid tumor cancers. This NCD also extends coverage to patients to allow PET usage beyond initial diagnosis, to include subsequent treatment strategies and expanded usage of PET scans,
including at US Oncology affiliated practices, beginning in the second quarter of 2009. In April, 2009, many US Oncology affiliated practices began accepting patients under the expanded coverage. However, a large number of claims have not been paid
because CMS had not issued the official change request informing Medicare contractors to alter their claims processing. Due to this claim payment environment, it is premature to estimate the full impact the expanded coverage will have on PET
utilization and reimbursement. The change request notification from CMS is expected to take place in the fourth quarter of 2009 and claim reimbursement will be retroactive to April 6, 2009.

On October 30, 2008, CMS issued a final rule for the Medicare Physician Fee Schedule for calendar year 2009. The final rule
establishes Medicare policy changes and payment rates that went into effect for services furnished by physicians and nonphysician practitioners as of January 1, 2009. The 2009 Medicare Physician Fee Schedule included a 5% decrease in the
conversion factor from the 2008 rates reflecting the discontinuation of a budget neutrality adjustor that had been applied to a portion of the fee schedule calculation for the past two years. This change negatively impacted technical services and
increased reimbursement for services with greater physician work components such as Evaluation and Management services. Under this fee schedule, pretax income for the nine months ended September 30, 2009, decreased by approximately $0.5 million
compared to the nine months ended September 30, 2008.

In November, 2006, CMS released its Final Rule of the Five-Year
Review of Work Relative Value Units (RVUs or Work RVUs) under the Physician Fee Schedule and Proposed Changes to the Practice Expense (PE) Methodology (the Final Rule). The Work RVUs changes were
implemented in full beginning January 1, 2007, while the PE methodology changes are being phased in over a four-year period (2007-2010). For the nine months ended September 30, 2009, the Final Rule resulted in an increase in pretax income
of $2.1 million over the comparable prior year period for Medicare non-drug reimbursement excluding the 2009 conversion factor change.

The Companys most significant, and only service agreement to provide more than 10% of total revenues, is with Texas Oncology, P.A. which accounted for approximately 25% of revenue for the nine month periods ended September 30,
2009, and 2008.



|                                     |  |                                  |         |                                 |   |         |  |      |         |  |   |        
|------------------------------------ |  | -------------------------------- | ------- | ------------------------------- | - | ------- |  | ---- | ------- |  | - | -------
|                                     |  | Three Months Ended September 30, |         | Nine Months Ended September 30,
|                                     |  | 2009                             |         | 2008                            |   | 2009    |  | 2008
|Revenue from Texas Oncology, P.A.    |  | $                                | 223,876 |                                 | $ | 198,152 |  | $    | 655,792 |  | $ | 592,439
|Less: Reimbursement of expenses      |  |                                  | 210,436 |                                 |   | 186,754 |  |      | 618,564 |  |   | 557,631
|                                     |  |                                  |         |                                 |   |         |  |      |         |  |   |        
|Earnings component of management fee |  | $                                | 13,440  |                                 | $ | 11,398  |  | $    | 37,228  |  | $ | 34,808 
|                                     |  |                                  |         |                                 |   |         |  |      |         |  |   |        

NOTE 3  Fair Value Measurements

The accounting standard which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements became effective
January 1, 2009, at which time the Company adopted the standard with respect to non-financial assets and liabilities measured on a non-recurring basis. The application of the fair value framework established by the standard to these fair value
measurements on a non-recurring basis, which would include goodwill (generally as a result of an impairment assessment), did not have a material impact on the Companys unaudited condensed consolidated financial statements as there was no fair
value measurement recorded for goodwill during the nine months ended September 30, 2009. Effective January 1, 2008, the Company applied the provisions of the standard to its disclosures related to assets and liabilities which are measured
at fair value on a recurring basis (at least annually). As a result, the standard was applied to the Companys interest rate swap liability.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



Disclosures are required that categorize assets and liabilities measured at fair value
into one of three different levels depending on the observability of the inputs employed in the measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than
quoted prices included within Level 1 for the asset or liability, either directly or indirectly through market-corroborated inputs. Level 3 inputs are unobservable inputs for the asset or liability reflecting our assumptions about pricing by market
participants. The Company classifies assets and liabilities in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company's methodology for categorizing assets and liabilities that are measured
at fair value pursuant to this hierarchy gives the highest priority to unadjusted quoted prices in active markets and the lowest level to unobservable inputs.

Liabilities consist of the Companys interest rate swap, only, which is valued using models based on readily observable market parameters for all substantial terms of the derivative contract and,
therefore, is classified as Level 2. Under the interest rate swap the Company pays a fixed rate of 4.97% and receives a floating rate based on the six-month LIBOR on a notional amount of $425.0 million. The floating rate is set at the start of each
semi-annual interest period with the final interest settlement date on March 15, 2012. The fair value of the interest rate swap is estimated based upon the expected future cash settlements, as reported by the counterparty, using observable
market information. The most significant factors in estimating the value of the interest rate swap is the assumption made regarding the future interest rates that will be used to establish the variable rate payments to be received by the Company and
the discount rate used to determine the present value of those estimated future payments. The Company considers both counterparty credit risk and its own credit risk when estimating the fair market value of the interest rate swap. Because of
negative differential between the current (and projected) LIBOR rate and the fixed interest rate paid by the Company, which results in a net liability position, as well as the counterpartys credit rating, counterparty credit risk is assessed
to be minimal and did not impact the fair value of the interest rate swap. The Company also assesses its own credit risk in the valuation of its obligation under the interest rate swap using Company-specific market information. The most significant
market information considered was the credit spread between the Holdings Floating Rate PIK Toggle Notes (Holdings Notes), an instrument with a similar credit profile and term as the interest rate swap, and the like term treasury spread
(as an estimate of a risk free rate). An increase in future LIBOR rates of 1.00 percent would increase (in the Companys favor) the fair value of the interest rate swap by $6.9 million and a decrease in future interest rates of 1.00 percent
would negatively impact its fair value by the same amount. As of September 30, 2009, $69.0 million of the Companys indebtedness remains exposed to changes in variable interest rates.

The following table summarizes the assets and liabilities measured at fair value on a recurring basis as of September 30, 2009 (in
thousands):



|                            |  |                                    |        |                                                             |   |                                             |  |                                         |        |  |   |  
|--------------------------- |  | ---------------------------------- | ------ | ----------------------------------------------------------- | - | ------------------------------------------- |  | --------------------------------------- | ------ |  | - | -
|                            |  | Fair Value as ofSeptember 30, 2009 |        | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservable Inputs(Level 2) |  | SignificantUnobservable Inputs(Level 3)
|Assets                      |  | $                                  |       |                                                             | $ |                                            |  | $                                       |       |  | $ | 
|Liabilities                 |  |                                    |        |                                                             |   |                                             |  |                                         |        |  |   |  
|Other accrued liabilities   |  |                                    | 16,313 |                                                             |   |                                            |  |                                         | 16,313 |  |   | 
|Other long-term liabilities |  |                                    | 13,560 |                                                             |   |                                            |  |                                         | 13,560 |  |   | 
|                            |  |                                    |        |                                                             |   |                                             |  |                                         |        |  |   |  
|Total                       |  | $                                  | 29,873 |                                                             | $ |                                            |  | $                                       | 29,873 |  | $ | 
|                            |  |                                    |        |                                                             |   |                                             |  |                                         |        |  |   |  

Non-designated Derivative Instrument

The Companys interest rate swap agreement described above was initially designated as a cash flow hedge against the variability of cash future interest payments on the Holdings
Notes (see Note 6  Indebtedness). The Company no longer believes that payment of cash interest on the entire principal of the outstanding Notes remains probable and has discontinued cash flow hedge accounting for the interest rate swap.
Subsequent to discontinuation of hedge accounting, the Company has recognized all unrealized gains and losses in earnings, rather than deferring such amounts in accumulated other comprehensive income. As a result of discontinuing cash flow hedge
accounting for this instrument, Holdings recognized unrealized losses during the three months and nine months ended September 30, 2009 and 2008 as follows (in thousands):



|                            |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |        |  
|--------------------------- |  | -------------------------------- | ------ | - | ------------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                            |  | Three Months Ended September 30, |        |   | Nine Months Ended September 30, |  
|                            |  | 2009                             |        |   | 2008                            |   |        | 2009 |  |   | 2008    |  
|Other income (expense), net |  | $                                | (7,596 | ) |                                 | $ | (4,186 | )    |  | $ | (10,012 | ) |  | $ | (5,898 | )



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



Although cash flow hedge accounting is no longer applied to the interest rate swap, the
Company believes the swap, economically, remains a hedge against the variability in a portion of interest accruing on the Holdings Notes.

At September 30, 2008, accumulated other comprehensive income included $1.1 million, net of tax, related to the interest rate swap which represented activity while the instrument was designated as a
cash flow hedge that was associated with future interest payments which could not be considered probable of not occurring at that time. During the three months and nine months ended September 30, 2008, loss in accumulated other comprehensive
income of $0.4 million and $0.7 million, respectively, had been reclassified into earnings, as follows (in thousands):



|                      |  |                                                    |   |      |                                 |      |      |  |      |   |  |   |      |  
|--------------------- |  | -------------------------------------------------- | - | ---- | ------------------------------- | ---- | ---- |  | ---- | - |  | - | ---- | -
|                      |  | Amount of Loss Reclassified from OCI into Earnings |  
|                      |  | Three Months Ended September 30,                   |   |      | Nine Months Ended September 30, |     
|                      |  | 2009                                               |   | 2008 |                                 |      | 2009 |  | 2008 |  
|Interest expense, net |  | $                                                  |  |      | $                               | (366 | )    |  | $    |  |  | $ | (712 | )

At December 31, 2008, due to the current and projected low interest rate
environment, and the expectation that payments due on the interest rate swap would increase, the Company believed that cash payments for interest rate swap obligations would reduce the availability under the restricted payments provisions in US
Oncologys indebtedness to a level that additional payments for cash interest for the Holdings Notes no longer remained probable. As a result, at December 31, 2008 all amounts previously recorded in accumulated other comprehensive income
related to interest rate swap activity while that instrument was designated as a cash flow hedge (amounting to $0.8 million, net of tax) were reclassified to Other Income (Expense), Net in the Consolidated Statement of Operations and Comprehensive
Income (Loss) for US Oncology Holdings, Inc.

NOTE 4  Intangible Assets and Goodwill

Changes in intangible assets relating to service agreements, customer relationships and goodwill during the nine months ended
September 30, 2009 consisted of the following (in thousands):



|                                                                                               |  |                        |         |   |                            |   |       |          |  |   |        
|---------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | -------------------------- | - | ----- | -------- |  | - | -------
|                                                                                               |  | ServiceAgreements, net |         |   | CustomerRelationships, net |   |       | Goodwill
|Balance at December 31, 2008                                                                   |  | $                      | 273,646 |   |                            | $ | 3,743 |          |  | $ | 377,270
|Additions                                                                                      |  |                        | 4,525   |   |                            |   |      |          |  |   |       
|Impairment charge                                                                              |  |                        | (150    | ) |                            |   |      |          |  |   |       
|Amortization expense and other                                                                 |  |                        | (16,240 | ) |                            |   | (375  | )        |  |   |       
|                                                                                               |  |                        |         |   |                            |   |       |          |  |   |        
|Balance at September 30, 2009                                                                  |  | $                      | 261,781 |   |                            | $ | 3,368 |          |  | $ | 377,270
|                                                                                               |  |                        |         |   |                            |   |       |          |  |   |        
|Average of straight-line based amortization period remaining in years as of September 30, 2009 |  |                        | 13      |   |                            |   | 7     |          |  |   | n/a    

Customer relationships, net, are classified as Other Assets in the accompanying
unaudited Condensed Consolidated Balance Sheet. Accumulated amortization relating to service agreements was $67.9 million and $52.6 million at September 30, 2009 and December 31, 2008, respectively. The amortization expense of amortizable
intangible assets for the nine months ended September 30, 2009 was $16.2 million, and the estimated amortization expense for the five succeeding years is approximately $20 million, per year.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



NOTE 5  Impairment and Restructuring Charges

Impairment and restructuring charges recognized during the three months and nine months ended September 30, 2009 and 2008 consisted of
the following (in thousands):



|                        |  |                                  |       |                                 |   |      |  |      |       |  |   |        
|----------------------- |  | -------------------------------- | ----- | ------------------------------- | - | ---- |  | ---- | ----- |  | - | -------
|                        |  | Three Months Ended September 30, |       | Nine Months Ended September 30,
|                        |  | 2009                             |       | 2008                            |   | 2009 |  | 2008
|Goodwill                |  | $                                |      |                                 | $ |     |  | $    |      |  | $ | 380,000
|Severance costs         |  |                                  | 4,117 |                                 |   | 271  |  |      | 5,731 |  |   | 1,933  
|Service agreements, net |  |                                  |      |                                 |   |     |  |      | 150   |  |   |       
|Other, net              |  |                                  |      |                                 |   |     |  |      | 26    |  |   | 108    
|                        |  |                                  |       |                                 |   |      |  |      |       |  |   |        
|Total                   |  | $                                | 4,117 |                                 | $ | 271  |  | $    | 5,907 |  | $ | 382,041
|                        |  |                                  |       |                                 |   |      |  |      |       |  |   |        

During the three months and nine months ended September 30, 2009, the Company
recorded $4.1 million and $5.7 million, respectively, of severance charges related to certain corporate personnel. These charges will be paid through the fourth quarter of 2011. During the three months ended September 30, 2009, the charge of
$4.1 million primarily related to benefits payable as a result of the retirement of its Executive Chairman in the third quarter of 2009. In addition, during the nine months ended September 30, 2009, an unamortized service agreement intangible
was impaired for $0.2 million in the first quarter of 2009 related to a practice that converted from a comprehensive services model to a targeted physician services relationship.

During the three months ended March 31, 2008, the Company recorded an impairment of its goodwill related to the Medical Oncology services segment of $380.0 million. Also, during
the three months and nine months ended September 30, 2008, charges of $0.3 million and $1.9 million, respectively, were recognized primarily related to employee severance for which payment was made by the end of the third quarter of 2008.

The carrying value of goodwill and the carrying value of service agreements are subject to impairment tests. In connection
with the preparation of the financial statements for the three months ended March 31, 2008, and as a result of the decline in the financial performance of the Medical Oncology services segment, the Company assessed the recoverability of
goodwill related to that segment and determined an impairment had occurred. The resulting impairment charge in the amount of $380.0 million did not result in future cash expenditures or impact the financial covenants of US Oncologys senior
secured credit facility. There were no impairments of goodwill identified during the three months and nine months ended September 30, 2009. However, future adverse changes in actual or anticipated operating results, as well as unfavorable
changes in economic factors and market multiples used to estimate the fair value of the Company, could result in future non-cash impairment charges.

NOTE 6  Indebtedness

As of September 30, 2009 and December 31, 2008, long-term indebtedness consisted of the
following (in thousands):



|                                                |  |                   |           |   |                  |   |           |  
|----------------------------------------------- |  | ----------------- | --------- | - | ---------------- | - | --------- | -
|                                                |  | September 30,2009 |           |   | December 31,2008 |  
|US Oncology, Inc.                               |  |                   |           |   |                  |   |           |  
|9.125% Senior Secured Notes, due 2017           |  | $                 | 759,331   |   |                  | $ |          |  
|Senior Secured Credit Facility                  |  |                   |          |   |                  |   | 436,666   |  
|9.0% Senior Notes, due 2012                     |  |                   |          |   |                  |   | 300,000   |  
|10.75% Senior Subordinated Notes, due 2014      |  |                   | 275,000   |   |                  |   | 275,000   |  
|9.625% Senior Subordinated Notes, due 2012      |  |                   | 3,000     |   |                  |   | 3,000     |  
|Subordinated notes                              |  |                   | 27,891    |   |                  |   | 34,956    |  
|Mortgage, capital lease obligations and other   |  |                   | 21,732    |   |                  |   | 22,188    |  
|                                                |  |                   |           |   |                  |   |           |  
|                                                |  |                   | 1,086,954 |   |                  |   | 1,071,810 |  
|Less current maturities                         |  |                   | (11,310   | ) |                  |   | (10,677   | )
|                                                |  |                   |           |   |                  |   |           |  
|                                                |  |                   | 1,075,644 |   |                  |   | 1,061,133 |  
|                                                |  |                   |           |   |                  |   |           |  
|US Oncology Holdings, Inc.                      |  |                   |           |   |                  |   |           |  
|Senior Floating Rate PIK Toggle Notes, due 2012 |  |                   | 493,954   |   |                  |   | 456,751   |  
|                                                |  |                   |           |   |                  |   |           |  
|                                                |  | $                 | 1,569,598 |   |                  | $ | 1,517,884 |  
|                                                |  |                   |           |   |                  |   |           |  



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



Future principal obligations under US Oncologys and Holdings long-term
indebtedness as of September 30, 2009, are as follows (in thousands):



|                         |  |                                    |        |      |   |       |  |      |         |      |   |            |  |   |       |  |   |          
|------------------------ |  | ---------------------------------- | ------ | ---- | - | ----- |  | ---- | ------- | ---- | - | ---------- |  | - | ----- |  | - | ---------
|                         |  | Twelve months ending September 30,
|                         |  | 2010                               |        | 2011 |   | 2012  |  | 2013 |         | 2014 |   | Thereafter
|US Oncology payments due |  | $                                  | 11,310 |      | $ | 8,965 |  | $    | 8,364   |      | $ | 8,212      |  | $ | 1,917 |  | $ | 1,063,855
|Holdings payments due    |  |                                    |       |      |   |      |  |      | 493,954 |      |   |           |  |   |      |  |   |         
|                         |  |                                    |        |      |   |       |  |      |         |      |   |            |  |   |       |  |   |          
|                         |  | $                                  | 11,310 |      | $ | 8,965 |  | $    | 502,318 |      | $ | 8,212      |  | $ | 1,917 |  | $ | 1,063,855
|                         |  |                                    |        |      |   |       |  |      |         |      |   |            |  |   |       |  |   |          

As of September 30, 2009, US Oncology is in compliance with the covenants of its indebtedness.

Senior Secured Credit Facility

At December 31, 2008, the senior secured credit facility consisted of a $160.0 million revolving credit facility and $436.7 million outstanding under a term loan facility. In June 2009, the term
loan portion of the facility, in the amount of $436.7 million, was repaid with proceeds from the 9.125% Senior Secured Notes described below. In August 2009, the revolving credit portion of the facility was replaced with the new Senior Secured
Revolving Credit Facility described below.

Senior Notes

As of December 31, 2008, the Company had $300.0 million in 9.0% senior notes outstanding. These notes, which were scheduled to mature on August 15, 2012, were redeemed with proceeds from the
9.125% Senior Secured Notes described below. A portion of the proceeds from the Senior Secured Notes were deposited with a trustee to redeem the 9.0% Senior Notes on August 17, 2009 for a redemption price of 102.250% plus accrued and unpaid
interest.

Loss on Early Extinguishment of Debt

During the three months ended September 30, 2009 and in connection with replacing the revolving credit portion of the senior secured credit facility, the Company incurred a loss on early
extinguishment of debt of $3.7 million related to the write-off of unamortized debt issuance costs and transaction costs associated with terminating the facility.

During the nine months ended September 30, 2009 and primarily in connection with issuing the Senior Secured Notes and refinancing the Term Loan facility and 9.0% Senior Notes, the Company recognized
a $26.0 million loss on early extinguishment of debt which, in addition to the $3.7 million loss during the three months ended September 30, 2009, is primarily related to payment of a 2.25 percent call premium and call period interest on the
Senior Notes and the write-off of unamortized issuance costs related to the retired Senior Notes and the senior secured credit facility.

Senior Secured Revolving Credit Facility

On August 26, 2009, US Oncology terminated its previous senior
secured credit facility and entered into a $120.0 million Senior Secured Revolving Credit Facility, including a letter of credit sub-facility and a swingline loan sub-facility, which matures on August 31, 2012. At September 30, 2009,
availability had been reduced by outstanding letters of credit amounting to $30.4 million and $89.6 million was available for borrowing. At September 30, 2009, no amounts had been borrowed under the Senior Secured Revolving Credit Facility.

The Company incurred $4.0 million in transaction expenses related to the Senior Secured Revolving Credit Facility which are
included as Other Assets in the Companys unaudited Condensed Consolidated Balance Sheet and will be amortized into interest expense on a straight-line basis over the three year term of the facility.

Borrowings under the Senior Secured Revolving Credit Facility bear interest at a rate per annum equal to, at the
Companys option, either (a) a base rate determined by reference to the higher of (1) the prime rate of Deutsche Bank, (b) the one month LIBO rate plus 1% and (3) the federal funds effective rate plus 1/2of 1% or (b) a LIBO rate determined by reference to the costs
of funds for U.S. dollar deposits for the interest period relevant to such borrowing, in each case plus an applicable margin. The applicable margin is 3.50% with respect to base rate borrowings and 4.50% with respect to LIBO rate borrowings. The
Senior Secured Revolving Credit Facility is guaranteed on a senior secured basis by the Companys wholly-owned domestic subsidiaries and is secured on a first lien priority basis (subject to certain exceptions and permitted liens) by
substantially all the tangible and intangible assets and properties of the Company and such guarantors.



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##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



On the last business day of each calendar quarter, the Company is required to pay each
lender a commitment fee in respect of any unused commitment under the Senior Secured Revolving Credit Facility. The commitment fee is 1.00% annually.

The Senior Secured Revolving Credit Facility requires the Company to comply, on a quarterly basis, with certain financial covenants, including a maximum leverage ratio test, which become more restrictive
over time. At September 30, 2009, the Company was required to maintain a maximum leverage ratio of no more than 7.00:1. As of September 30, 2009, US Oncologys actual leverage ratio was 4.98:1.

In addition, the Senior Secured Revolving Credit Facility includes various negative covenants, including with respect to indebtedness,
liens, investments, permitted businesses and transactions and other matters, as well as certain customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and
warranties, covenant defaults, cross defaults to certain indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments, actual or asserted failure of any guaranty or security document supporting the Senior Secured
Revolving Credit Facility to be in full force and effect and change of control. If such an event of default occurs, the lenders under the Senior Secured Revolving Credit Facility will be entitled to take various actions, including the acceleration
of amounts due under the Senior Secured Revolving Credit Facility and all actions permitted to be taken by a secured creditor.

9.125%
Senior Secured Notes

On June 18, 2009, US Oncology issued $775.0 million aggregate principal amount of senior secured
notes due August 15, 2017 (the Senior Secured Notes) in a private offering to institutional investors. Interest on the notes accrues at a fixed rate of 9.125% per annum and are payable semi-annually in arrears on
February 15 and August 15, commencing on August 15, 2009. As of September 30, 2009, US Oncologys unaudited condensed consolidated balance sheet included $759.3 million of debt outstanding which reflects the $775.0 million
principal amount of the Senior Secured Notes net of an unamortized original issue discount in the amount of $15.7 million. During the three months and nine months ended September 30, 2009, interest expense on the Senior Secured Notes was $17.9
million and $20.2 million, respectively.

These notes are senior secured obligations of US Oncology and rank equally in right
of payment with all of the Companys and the guarantors existing and future senior indebtedness. Indebtedness under the Senior Secured Notes is guaranteed by all of US Oncologys current restricted subsidiaries (see Note 12 
Financial Information for Subsidiary Guarantors and Non-Subsidiary Guarantors) and all of US Oncologys future restricted subsidiaries, and is secured by a second-priority security interest, subject to permitted liens, in substantially all of
US Oncologys existing and future real and personal property, including accounts receivable, inventory, equipment, general intangibles, intellectual property, investment property, cash and a first priority pledge of US Oncologys capital
stock and the capital stock of the guarantor subsidiaries, subject to certain limitations.

US Oncology has the right to
redeem some or all of the Senior Secured Notes prior to August 15, 2013 at a price equal to 100.0% of the principal amount plus accrued and unpaid interest and a make whole premium. Thereafter, the Company may redeem some or all of
the notes at the redemption prices set forth below:



|                                                         |  |         |  
|-------------------------------------------------------- |  | ------- | -
|Redemption period                                        |  | Price   |  
|On or after August 15, 2013 and prior to August 15, 2014 |  | 104.560 | %
|On or after August 15, 2014 and prior to August 15, 2015 |  | 102.280 | %
|On or after August 15, 2015                              |  | 100.000 | %

In addition, prior to August 15, 2012, US Oncology may redeem up to a maximum of
35% of the original aggregate principal amount of the senior secured notes, including any additional notes subsequently issued, with the net proceeds of certain equity offerings at a redemption price of 109.125% of the principal amount thereof, plus
accrued and unpaid interest thereon, provided that, if the equity offering is an offering by Holdings, a portion of the net cash proceeds thereof equal to the amount required to redeem any such notes is contributed to the equity capital of US
Oncology or used to acquire capital stock of US Oncology, subject to certain limitations.

US Oncology issued the Senior
Secured Notes pursuant to an indenture dated June 18, 2009 between US Oncology and a Trustee. Among other provisions, the indenture contains certain covenants that limit the ability of US Oncology and certain of its restricted subsidiaries to
incur additional debt, pay dividends on, redeem or repurchase capital stock, make certain investments, enter into certain types of transactions with affiliates, engage in unrelated businesses, incur certain liens and sell certain assets or merge
with or into other companies.



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##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



US Oncology may be obligated (based on certain thresholds) to make prepayment offers on
the Senior Secured Notes of up to 100% of allocable excess proceeds, as defined by the notes indenture, from certain asset sales. In addition, the Senior Secured Notes include various negative covenants, including with respect to
indebtedness, liens, investments, permitted businesses and transactions and other matters, as well as certain customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of
representations and warranties, covenant defaults, cross defaults to certain indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments, actual or asserted failure of any guaranty or security document supporting the
Senior Secured Notes to be in full force and effect and change of control. If such an event of default occurs, the lenders under the Senior Secured Notes are entitled to take various actions, including the acceleration of amounts due under the
Senior Secured Notes and all actions permitted to be taken by a secured creditor.

In connection with the issuance of the
Senior Secured Notes, the Company entered into a Purchase Agreement providing for the initial sale of the Senior Secured Notes and a Registration Rights Agreement with respect to registration rights for the benefit of the holders of the Senior
Secured Notes. The Registration Rights Agreement requires that US Oncology and the guarantors file an exchange offer registration statement with the SEC not later than 120 days and use their reasonable best efforts to cause the registration
statement to become effective within 210 days from the Senior Secured Notes closing date of June 18, 2009. If US Oncology and the guarantors do not comply with its obligations under the Registration Rights Agreement, the interest rate on the
notes will increase by 0.25% for each 90 day period US Oncology does not comply with these obligations, not to exceed 1.0%. Pursuant to the Registration Rights Agreement, the exchange offer registration statement was filed with the SEC on
October 15, 2009, subsequently amended and declared effective on November 3, 2009. The Company expects to complete the exchange offer during the fourth quarter of 2009 and accordingly does not expect to incur any increased interest under
the Registration Rights Agreement.

The Company incurred $17.2 million in transaction expenses related to the Senior Secured
Notes offering which are included as Other Assets in the Companys unaudited Condensed Consolidated Balance Sheet and will be amortized into interest expense on a straight-line basis over the eight year term of the notes. Proceeds from the
offering of approximately $744.4 million, along with cash on hand, were used to repay the $436.7 million senior secured credit facility maturing in 2010 and 2011 and the $300 million 9.0% Senior Notes due 2012.

Senior Floating Rate PIK Toggle Notes

During the three months ended March 31, 2007, Holdings, whose principal asset is its investment in US Oncology, issued $425.0 million of senior floating rate PIK toggle notes (Notes
or Holdings Notes), due March 15, 2012. These notes are senior unsecured obligations of Holdings. Holdings may elect to pay interest on the Notes entirely in cash, by increasing the principal amount of the Notes (PIK
interest), or by paying 50% in cash and 50% by increasing the principal amount of the Notes. Cash interest accrues on the Notes at a rate per annum equal to 6-month LIBOR plus the applicable spread. PIK interest accrues on the Notes at a rate
per annum equal to the cash interest rate plus 0.75%. The Company must make an election regarding whether subsequent interest payments will be made in cash or through PIK interest prior to the start of the applicable interest period. The applicable
spread is 4.50% and increased by 0.50% on March 15, 2009 and will increase by another 0.50% on March 15, 2010. During the three months ended September 30, 2009 and 2008, interest on the Holdings Notes was $9.6 million and $10.4
million, respectively. During the nine months ended September 30, 2009 and 2008, interest on the Holdings Notes was $29.7 million and $32.5 million, respectively. In the three months ended September 30, 2009 and 2008, $9.0 million and $5.4
million, respectively, accrued under the election to pay interest in kind and the remaining $0.6 million and $5.0 million, respectively, accrued as cash interest or interest related to future spread increases and the amortization of debt issuance
costs. In the nine months ended September 30, 2009 and 2008, $27.4 million and $20.2 million, respectively, accrued under the election to pay interest in kind and the remaining $2.3 million and $12.3 million, respectively, accrued as cash
interest or interest related to future spread increases and the amortization of debt issuance costs.



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##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



Holdings may redeem all or any of the Notes at the redemption prices set forth below,
plus accrued and unpaid interest, if any, to the redemption date:



|                                                               |  |       |  
|-------------------------------------------------------------- |  | ----- | -
|Redemption period                                              |  | Price |  
|On or after September 15, 2009 and prior to September 15, 2010 |  | 101.0 | %
|On or after September 15, 2010                                 |  | 100.0 | %

Because Holdings principal asset is its investment in US Oncology, US Oncology
provides funds to service Holdings indebtedness through payment of dividends to Holdings. US Oncologys senior notes and senior subordinated notes limit its ability to make restricted payments from US Oncology, including dividends paid by
US Oncology to Holdings. As of September 30, 2009, US Oncology has the ability to make approximately $23.7 million in restricted payments, which amount increases based on capital contributions to US Oncology, Inc. and by 50 percent of US
Oncologys net income and is reduced by i) the amount of any restricted payments made and ii) 50 percent of the net losses of US Oncology, excluding certain non-cash charges such as the $380.0 million goodwill impairment during the
three months ended March 31, 2008 and the $26.0 million loss on early extinguishment of debt during the nine months ended September 30, 2009. Delaware law also requires that US Oncology be solvent both at the time, and immediately
following, a dividend payment to Holdings. Because Holdings relies on dividends from US Oncology to fund cash interest payments on the Holdings Notes, in the event that such restrictions prevent US Oncology from paying such a dividend, Holdings
would be unable to pay interest on the notes in cash and would instead be required to pay PIK interest. In connection with issuing the Notes, Holdings entered into an interest rate swap agreement, with a notional amount of $425.0 million, fixing the
LIBOR base rate at 4.97% through maturity in 2012 (see Note 3  Fair Value Measurements). Unlike interest on the Holdings Notes, which may be settled in cash or through the issuance of additional notes, payments due to the swap counterparty
must be made in cash. As a result of the current and projected low interest rate environment, and the related expectation that Holdings will continue to be a net payer on the interest rate swap, the Company believes that cash payments for the
interest rate swap obligations will reduce the availability under the restricted payments provisions in US Oncologys indebtedness to a level that additional payments for cash interest for the Holdings Notes may not be prudent and therefore, no
longer remain probable. Based on projected LIBOR interest rates as of September 30, 2009, there will be available funds under the restricted payments provision in order to service, at a minimum, the estimated interest rate swap obligations
through September 30, 2010. The Companys semiannual payment obligations on the interest rate swap increase by $2.1 million for each 1.00% that the fixed interest rate of 4.97% paid to the counterparty exceeds the variable interest rate
received from the counterparty. Similarly, the Companys semiannual payment obligations on the interest rate swap decrease by $2.1 million when the difference between the fixed interest rate paid to the counterparty and the variable interest
rate received from the counterparty is reduced by 1.00%. In the event amounts available under the restricted payments provision are insufficient for the Company to service interest on the Holdings Notes, including any obligation related to the
interest rate swap, the Company may be required to arrange additional financing or a capital infusion and use such proceeds to satisfy these obligations. There can be no assurance that additional financing or a capital infusion, if available, will
be made on terms that are acceptable to the Company. The Company issued $18.3 million in notes to settle the interest due in September, 2009 and expects to issue $15.7 million in notes to settle the interest due in March, 2010. In addition, the
Company paid $6.6 million to settle the obligation under the interest rate swap agreement for the interest period ended September 15, 2009. During the nine months ended September 30, 2009, US Oncology paid dividends in the amount of $11.1
million to Holdings to finance obligations due in March and September related to the Holdings Notes and interest rate swap.

Holdings issued the Notes pursuant to an Indenture dated March 13, 2007 between Holdings and a Trustee. Among other provisions, the Indenture contains certain covenants that limit the ability of Holdings and certain restricted
subsidiaries, including US Oncology, to incur additional debt, pay dividends on, redeem or repurchase capital stock, issue capital stock of restricted subsidiaries, make certain investments, enter into certain types of transactions with affiliates,
engage in unrelated businesses, create liens securing the debt of Holdings and sell certain assets or merge with or into other companies.



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##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



Fair value of Notes

The fair value of the Companys long term indebtedness is estimated based on quoted market prices or prices quoted from third party financial institutions. The carrying amount and fair value of the
indebtedness, including the current portion, are as follows:



|                                                         |  |                          |         |                         |   |                |  |            |         |  |   |        
|-------------------------------------------------------- |  | ------------------------ | ------- | ----------------------- | - | -------------- |  | ---------- | ------- |  | - | -------
|                                                         |  | As of September 30, 2009 |         | As of December 31, 2008
|                                                         |  | CarryingAmount           |         | Fair Value              |   | CarryingAmount |  | Fair Value
|                                                         |  | (in thousands)          
|9.125% Senior Secured Notes, due 2017                    |  | $                        | 759,331 |                         | $ | 804,891        |  | $          |        |  | $ |       
|9.0% Senior Notes, due 2012                              |  |                          |        |                         |   |               |  |            | 300,000 |  |   | 273,000
|10.75% Senior Subordinated Notes, due 2014               |  |                          | 275,000 |                         |   | 288,750        |  |            | 275,000 |  |   | 224,125
|Holdings Senior Floating Rate PIK Toggle Notes, due 2012 |  |                          | 493,954 |                         |   | 429,740        |  |            | 456,751 |  |   | 262,632

NOTE 7  Stock-Based Compensation

The following disclosures relate to stock incentive plans involving shares of Holdings common stock or options to purchase Holdings common stock. Activity related to Holdings
stock-based compensation is also included in the financial statements of US Oncology, as the participants in such plans are employees of US Oncology.

Compensation expense is recognized in the Companys financial statements over the requisite service period, net of estimated forfeitures, and based on the fair value as of the grant date.

US Oncology Holdings, Inc. 2004 Equity Incentive Plan

The Holdings Board of Directors adopted the US Oncology Holdings, Inc. 2004 Equity Incentive Plan (the Equity Incentive Plan) effective in August, 2004, as amended October 1,
2009 (see Note 13  Subsequent Events). The purpose of the plan is to attract and retain the best available personnel and to provide additional incentives to employees and consultants to promote the success of the business. Effective
January 1, 2008, the Company amended the Equity Incentive Plan to (i) eliminate the distinction between shares available for grant under restricted common shares and those available for grant under stock options and (ii) increase the
number of shares available for awards from 27,223,966 to 32,000,000. Also on January 1, 2008, the Company awarded 7,882,000 shares of restricted stock to employees, a portion of which related to the cancellation of 2,606,250 employee stock
options. The cancellation of options in exchange for restricted shares was accounted for as a modification of the original award. As a result, the unrecognized compensation expense associated with the original award continues to be recognized
over the service period related to the original award. In addition, incremental compensation cost equal to the excess of the fair value of the new award over the fair value of the original award as of the date the new award was granted, is
being recognized over the service period related to the new award. Depending on the individual grants, awards vest either at the grant date or over defined service periods. Based on the individual vesting criteria for each award, the Company
recorded compensation expense of approximately $0.7 million and $0.7 million during the three months ended September 30, 2009 and 2008, respectively, and $1.6 million and $1.8 million during the nine months ended September 30, 2009 and
2008, respectively, related to restricted stock and stock option awards made under the Equity Incentive Plan. At September 30, 2009, 2,581,850 shares of restricted stock or stock options were available for future awards.

The Company granted awards of 500,000 and 750,000 restricted shares with an aggregate fair value at the time of grant of approximately $0.2
million and $0.3 million, respectively, during the three months and nine months ended September 30, 2009 and 1,450,000 and 9,694,500 restricted shares (which includes the January 1, 2008 awards discussed above) with an aggregate fair value
at the time of grant of approximately $0.3 million and $13.1 million during the three months and nine months ended September 30, 2008. Restricted shares vest over a three to five year period from the date of grant. During the nine months ended
September 30, 2009, 597,600 restricted shares were forfeited by holders. No restricted shares were forfeited by holders during the three months ended September 30, 2009. During the three months and nine months ended September 30,
2008, 150,000 and 1,695,000 restricted shares were forfeited by holders, respectively.



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##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



The following summarizes activity for restricted shares awarded under the Equity
Incentive Plan for the nine months ended September 30, 2009:



|                                                  |  |                   |  
|------------------------------------------------- |  | ----------------- | -
|                                                  |  | Restricted Shares |  
|Restricted shares outstanding, December 31, 2008  |  | 9,514,500         |  
|Granted                                           |  | 750,000           |  
|Vested                                            |  | (2,415,349        | )
|Forfeited                                         |  | (597,600          | )
|                                                  |  |                   |  
|Restricted shares outstanding, September 30, 2009 |  | 7,251,551         |  
|                                                  |  |                   |  

Compensation expense related to outstanding restricted stock awards is estimated to
be $1.8 million, $1.7 million, $1.7 million and $0.5 million for each of the twelve months ending September 30, 2010 through 2013. Deferred compensation related to these awards is less than $0.1 million during the twelve month periods ending
after September 30, 2013.

The following summarizes activity for options awarded under the Equity Incentive Plan for the
nine months ended September 30, 2009:



|                                        |  |                             |   |  |                               |      |                                           |    
|--------------------------------------- |  | --------------------------- | - |  | ----------------------------- | ---- | ----------------------------------------- | ---
|                                        |  | Stock Options              
|                                        |  | SharesRepresented byOptions |   |  | WeightedAverage ExercisePrice |      | Weighted AverageRemainingContractual Term
|Options outstanding, December 31, 2008  |  | 588,750                     |   |  | $                             | 1.44 |                                           |    
|Granted                                 |  |                            |   |  |                               |      |                                           |    
|Exercised                               |  |                            |   |  |                               |      |                                           |    
|Cancelled                               |  |                            |   |  |                               |      |                                           |    
|Forfeited                               |  | (37,500                     | ) |  |                               | 1.65 |                                           |    
|                                        |  |                             |   |  |                               |      |                                           |    
|Options outstanding, September 30, 2009 |  | 551,250                     |   |  |                               | 1.43 |                                           | 6.6
|                                        |  |                             |   |  |                               |      |                                           |    
|Options exercisable, September 30, 2009 |  | 302,700                     |   |  |                               | 1.39 |                                           | 6.0

At September 30, 2009, 551,250 options to purchase Holdings common stock were
outstanding. During the nine months ended September 30, 2009, there were no options granted to purchase common shares and there were 80,000 options granted to purchase common shares during the nine months ended September 30, 2008.
Compensation expense related to options granted has been recorded based on the fair value as of the grant date and vesting provisions.

Holdings 2004 Director Stock Option Plan

The Holdings Board of Directors also adopted the US Oncology
Holdings 2004 Director Stock Option Plan (the Director Stock Option Plan), which was effective in October, 2004, as amended October 1, 2009 (see Note 13  Subsequent Events). The total number of shares of common stock for
which options may be granted under the Director Stock Option Plan is 500,000 shares. At September 30, 2009, 131,000 options to purchase Holdings common stock were outstanding and 286,000 options were available for future awards. Under this
plan, each eligible director in office and each eligible director who joined the board after adoption is automatically granted an option, annually, to purchase 5,000 shares of common stock. In addition, each such director is automatically granted an
option, annually, to purchase 1,000 shares of common stock for each board committee on which such director served. As of September 30, 2009, options to purchase 214,000 shares of common stock, net of forfeitures, have been granted to directors
under the Director Stock Option Plan. The options vest six months after the date of grant. During the nine months ended September 30, 2009, there were no exercises of options issued under the Director Stock Option Plan.



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##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



NOTE 8  Income Taxes

The effective tax rate for the three months and nine months ended September 30, 2009 and 2008 was as follows (dollars in thousands):



|                                                                          |  |                                 |         |    |                                 |   |          |      |  |   |        |    |  |   |          |   
|------------------------------------------------------------------------- |  | ------------------------------- | ------- | -- | ------------------------------- | - | -------- | ---- |  | - | ------ | -- |  | - | -------- | --
|                                                                          |  | US Oncology Holdings, Inc.      |         |    | US Oncology, Inc.               |  
|                                                                          |  | Three Months Ended September 30 |         |    | Three Months Ended September 30 |  
|                                                                          |  | 2009                            |         |    | 2008                            |   |          | 2009 |  |   | 2008   |   
|Income (loss) before income taxes                                         |  | $                               | (18,614 | )  |                                 | $ | (9,148   | )    |  | $ | (1,286 | )  |  | $ | 5,629    |   
|Less: Income before income taxes attributable to noncontrolling interests |  |                                 | (912    | )  |                                 |   | (715     | )    |  |   | (912   | )  |  |   | (715     | ) 
|                                                                          |  |                                 |         |    |                                 |   |          |      |  |   |        |    |  |   |          |   
|Income (loss) before income taxes attributable to the Company             |  | $                               | (19,526 | )  |                                 | $ | (9,863   | )    |  | $ | (2,198 | )  |  | $ | 4,914    |   
|                                                                          |  |                                 |         |    |                                 |   |          |      |  |   |        |    |  |   |          |   
|Income tax benefit (provision) attributable to the Company                |  | $                               | (764    | )  |                                 | $ | 4,110    |      |  | $ | 1,332  |    |  | $ | (1,039   | ) 
|                                                                          |  |                                 |         |    |                                 |   |          |      |  |   |        |    |  |   |          |   
|Effective tax rate attributable to the Company                            |  |                                 | (3.9    | )% |                                 |   | 41.7     | %    |  |   | 60.6   | %  |  |   | 21.1     | % 
|                                                                          |  |                                 |         |    |                                 |   |          |      |  |   |        |    |  |   |          |   
|                                                                          |  |                                
|                                                                          |  | US Oncology Holdings, Inc.      |         |    | US Oncology, Inc.               |  
|                                                                          |  | Nine Months Ended September 30, |         |    | Nine Months Ended September 30, |  
|                                                                          |  | 2009                            |         |    | 2008                            |   |          | 2009 |  |   | 2008   |   
|Loss before income taxes                                                  |  | $                               | (43,786 | )  |                                 | $ | (403,240 | )    |  | $ | (3,881 | )  |  | $ | (364,608 | ) 
|Less: Income before income taxes attributable to noncontrolling interests |  |                                 | (2,615  | )  |                                 |   | (2,447   | )    |  |   | (2,615 | )  |  |   | (2,447   | ) 
|                                                                          |  |                                 |         |    |                                 |   |          |      |  |   |        |    |  |   |          |   
|Loss before income taxes attributable to the Company                      |  | $                               | (46,401 | )  |                                 | $ | (405,687 | )    |  | $ | (6,496 | )  |  | $ | (367,055 | ) 
|                                                                          |  |                                 |         |    |                                 |   |          |      |  |   |        |    |  |   |          |   
|Income tax benefit (provision) attributable to the Company                |  | $                               | 3,260   |    |                                 | $ | 9,688    |      |  | $ | (948   | )  |  | $ | (3,905   | ) 
|                                                                          |  |                                 |         |    |                                 |   |          |      |  |   |        |    |  |   |          |   
|Effective tax rate attributable to the Company                            |  |                                 | 7.0     | %  |                                 |   | 2.4      | %    |  |   | (14.6  | )% |  |   | (1.1     | )%
|                                                                          |  |                                 |         |    |                                 |   |          |      |  |   |        |    |  |   |          |   

The difference between the effective tax rate for Holdings and US Oncology relates to
the incremental interest expense, changes in the fair value of Holdings interest rate swap and general and administrative expenses incurred by Holdings which increase its taxable loss and, consequently, alter the impact that non-deductible
costs have on its effective tax rate as well as a valuation allowance provided on the deferred tax asset of Holdings.

The
difference between our effective income tax rate and the amount that would be determined by applying the statutory U.S. income tax rate before income taxes is as follows (in thousands):



|                                              |  |                                 |         |   |                                 |   |          |      |  |   |        |   |  |   |          |  
|--------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------- | - | -------- | ---- |  | - | ------ | - |  | - | -------- | -
|                                              |  | US Oncology Holdings, Inc.      |         |   | US Oncology, Inc.               |  
|                                              |  | Nine Months Ended September 30, |         |   | Nine Months Ended September 30, |  
|                                              |  | 2009                            |         |   | 2008                            |   |          | 2009 |  |   | 2008   |  
|U.S. statutory income tax benefit             |  | $                               | (16,240 | ) |                                 | $ | (141,990 | )    |  | $ | (2,273 | ) |  | $ | (128,469 | )
|Non-deductible expenses(1)                    |  |                                 | 837     |   |                                 |   | 132,463  |      |  |   | 837    |   |  |   | 132,463  |  
|State income taxes, net of federal benefit(2) |  |                                 | 626     |   |                                 |   | (428     | )    |  |   | 1,372  |   |  |   | (356     | )
|Reserve for uncertain tax positions           |  |                                 | 619     |   |                                 |   |         |      |  |   | 619    |   |  |   |         |  
|Valuation allowance                           |  |                                 | 9,834   |   |                                 |   |         |      |  |   |       |   |  |   |         |  
|Other                                         |  |                                 | 1,064   |   |                                 |   | 267      |      |  |   | 393    |   |  |   | 267      |  
|                                              |  |                                 |         |   |                                 |   |          |      |  |   |        |   |  |   |          |  
|Effective tax (benefit) provision(3)          |  | $                               | (3,260  | ) |                                 | $ | (9,688   | )    |  | $ | 948    |   |  | $ | 3,905    |  
|                                              |  |                                 |         |   |                                 |   |          |      |  |   |        |   |  |   |          |  



|(1) | The nine months ended September 30, 2008 includes the impact of a $380.0 million goodwill impairment charge of which $376.0 million was not
deductible for tax purposes.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



|(2) | The Texas state margin tax became effective January 1, 2007. Under the Texas margin tax, a companys tax obligation is computed based on
its receipts less, in the case of the Company, the cost of pharmaceuticals. As such, significant costs incurred that would be deducted to compute an income tax of an entity may not be considered in assessing an obligation for margin tax.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | For the nine months ended September 30, 2009, the annual effective tax rate for US Oncology, Inc. for the year ended December 31, 2009
could not be reasonably estimated because the Company expects its pretax income for this period to be near breakeven. As a result, in the interim financial statements, taxes have been provided for based on the actual results for the nine months
ended September 30, 2009 rather than an estimated effective tax rate for the fiscal year. In addition, the percentage impact of items included in US Oncology, Inc.s reconciliation above are higher due to the $26.0 million debt
extinguishment loss changing income before income taxes attributable to the Company to a loss of $6.5 million.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

At September 30, 2009, Holdings had a gross federal net operating loss carryforward benefit of approximately $95.4 million that will begin to expire in 2027 and a $1.5 million alternative minimum tax credit, which has no expiration
date. In assessing the realizability of deferred tax assets, management evaluates a variety of factors in considering whether it is more likely than not that some portion or all of the deferred tax assets will ultimately be realized. Management
considers earnings expectations, the existence of taxable temporary differences, tax planning strategies, and the periods in which estimated losses can be utilized. The debt extinguishment loss and incremental interest associated with the June 2009
refinancing (see Note 6  Indebtedness) as well as the recent history of operating losses, provides evidence that Holdings net deferred tax asset may not be recoverable. Accordingly, a valuation allowance on Holdings net deferred
tax assets in the amount of $9.8 million has been established.

With respect to US Oncology, Inc., whose financial statements
are prepared as if it filed a separate return, management concluded that it is more likely than not that the Company will realize its deferred tax assets and no valuation allowance was provided. At September 30, 2009, US Oncology, Inc. had a
net deferred tax liability balance of $31.1 million.

As of September 30, 2009, the Company had an accrual for uncertain
tax positions of $2.7 million which is generally expected to settle within the next twelve months. During the nine months ended September 30, 2009, the accrual was increased by $0.5 million related to a potential state tax liability for the
disallowance of prior period state net operating losses.

NOTE 9  Segment Financial Information

The Companys reportable segments are based on internal management reporting that disaggregates the business by service line. The
Companys reportable segments are Medical Oncology Services, Cancer Center Services, Pharmaceutical Services, and Research/Other services (primarily consisting of research services). The Company provides comprehensive practice management
services for the non-clinical aspects of practice management to affiliated practices in its Medical Oncology and Cancer Center Services segments. In addition to managing non-clinical operations, the Medical Oncology services segment provides
oncology pharmaceutical services to practices affiliated under comprehensive service agreements. The Cancer Center Services segment develops and manages comprehensive, community-based cancer centers, which integrate various aspects of outpatient
cancer care, including radiology diagnostic capabilities to radiation therapy for practices affiliated under comprehensive service agreements. The Pharmaceutical Services segment distributes oncology pharmaceuticals to the Companys affiliated
practices, including practices affiliated under the OPS model, provides pharmaceuticals and counseling services to patients through its oral oncology specialty pharmacy and mail order business and offers informational and other services to
pharmaceutical manufacturers. The Research/Other services segment contracts with pharmaceutical and biotechnology firms to provide a comprehensive range of services relating to clinical trials.

Balance sheet information by reportable segment is not reported, since the Company does not prepare such information internally.



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##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



The tables below present segment results for the three months and nine months ended
September 30, 2009 and 2008 (in thousands). Income (loss) from operations of Holdings is identical to those of US Oncology with the exception of nominal administrative expenses:



|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|------------------------------------ |  | ------------------------------------- | -------- | - | -------------------- | - | ------- | ---------------------- |  | - | -------------- | - |  | -------------- | ------- | - | ---------------- | - | ------- | ----- |  | - | -------- | - |  | - | -------- | -
|                                     |  | Three Months Ended September 30, 2009 |         
|                                     |  | MedicalOncologyServices               |          |   | CancerCenterServices |   |         | PharmaceuticalServices |  |   | Research/Other |   |  | CorporateCosts |         |   | Eliminations (1) |   |         | Total | 
|US Oncology, Inc.                    |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Product revenue                      |  | $                                     | 450,202  |   |                      | $ |        |                        |  | $ | 628,737        |   |  | $              |        |   |                  | $ |        |       |  | $ | (470,904 | ) |  | $ | 608,035  |  
|Service revenue                      |  |                                       | 160,147  |   |                      |   | 99,457  |                        |  |   | 16,728         |   |  |                | 17,087  |   |                  |   |        |       |  |   |         |   |  |   | 293,419  |  
|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Total revenue                        |  |                                       | 610,349  |   |                      |   | 99,457  |                        |  |   | 645,465        |   |  |                | 17,087  |   |                  |   |        |       |  |   | (470,904 | ) |  |   | 901,454  |  
|Operating expenses                   |  |                                       | (591,204 | ) |                      |   | (64,044 | )                      |  |   | (620,111       | ) |  |                | (16,996 | ) |                  |   | (18,694 | )     |  |   | 470,904  |   |  |   | (840,145 | )
|Impairment and restructuring charges |  |                                       | 1        |   |                      |   |        |                        |  |   |               |   |  |                |        |   |                  |   | (4,118  | )     |  |   |         |   |  |   | (4,117   | )
|Depreciation and amortization        |  |                                       |         |   |                      |   | (10,695 | )                      |  |   | (392           | ) |  |                | (64     | ) |                  |   | (15,639 | )     |  |   |         |   |  |   | (26,790  | )
|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Income (loss) from operations        |  | $                                     | 19,146   |   |                      | $ | 24,718  |                        |  | $ | 24,962         |   |  | $              | 27      |   |                  | $ | (38,451 | )     |  | $ |         |   |  | $ | 30,402   |  
|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|US Oncology Holdings, Inc.           |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Operating expenses                   |  | $                                     |         |   |                      | $ |        |                        |  | $ |               |   |  | $              |        |   |                  | $ | (121    | )     |  | $ |         |   |  | $ | (121     | )
|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Income (loss) from operations        |  | $                                     | 19,146   |   |                      | $ | 24,718  |                        |  | $ | 24,962         |   |  | $              | 27      |   |                  | $ | (38,572 | )     |  | $ |         |   |  | $ | 30,281   |  
|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Goodwill                             |  | $                                     | 28,913   |   |                      | $ | 191,424 |                        |  | $ | 156,933        |   |  | $              |        |   |                  | $ |        |       |  | $ |         |   |  | $ | 377,270  |  
|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|                                     | 
|                                     |  | Three Months Ended September 30, 2008 |         
|                                     |  | MedicalOncologyServices               |          |   | CancerCenterServices |   |         | PharmaceuticalServices |  |   | Research/Other |   |  | CorporateCosts |         |   | Eliminations (1) |   |         | Total | 
|US Oncology, Inc.                    |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Product revenue                      |  | $                                     | 413,596  |   |                      | $ |        |                        |  | $ | 618,929        |   |  | $              |        |   |                  | $ |        |       |  | $ | (476,166 | ) |  | $ | 556,359  |  
|Service revenue                      |  |                                       | 143,806  |   |                      |   | 91,996  |                        |  |   | 15,031         |   |  |                | 14,544  |   |                  |   |        |       |  |   |         |   |  |   | 265,377  |  
|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Total revenue                        |  |                                       | 557,402  |   |                      |   | 91,996  |                        |  |   | 633,960        |   |  |                | 14,544  |   |                  |   |        |       |  |   | (476,166 | ) |  |   | 821,736  |  
|Operating expenses                   |  |                                       | (540,452 | ) |                      |   | (60,903 | )                      |  |   | (608,505       | ) |  |                | (15,803 | ) |                  |   | (18,079 | )     |  |   | 476,166  |   |  |   | (767,576 | )
|Impairment and restructuring charges |  |                                       |         |   |                      |   |        |                        |  |   |               |   |  |                |        |   |                  |   | (271    | )     |  |   |         |   |  |   | (271     | )
|Depreciation and amortization        |  |                                       |         |   |                      |   | (9,496  | )                      |  |   | (971           | ) |  |                | (84     | ) |                  |   | (15,030 | )     |  |   |         |   |  |   | (25,581  | )
|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Income (loss) from operations        |  | $                                     | 16,950   |   |                      | $ | 21,597  |                        |  | $ | 24,484         |   |  | $              | (1,343  | ) |                  | $ | (33,380 | )     |  | $ |         |   |  | $ | 28,308   |  
|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|US Oncology Holdings, Inc.           |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Operating expenses                   |  | $                                     |         |   |                      | $ |        |                        |  | $ |               |   |  | $              |        |   |                  | $ | (138    | )     |  | $ |         |   |  | $ | (138     | )
|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Income (loss) from operations        |  | $                                     | 16,950   |   |                      | $ | 21,597  |                        |  | $ | 24,484         |   |  | $              | (1,343  | ) |                  | $ | (33,518 | )     |  | $ |         |   |  | $ | 28,170   |  
|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Goodwill                             |  | $                                     | 28,913   |   |                      | $ | 191,424 |                        |  | $ | 156,933        |   |  | $              |        |   |                  | $ |        |       |  | $ |         |   |  | $ | 377,270  |  
|                                     |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  



|(1) | Eliminations represent the sale of pharmaceuticals from the distribution center (pharmaceutical services segment) to the practices affiliated under
comprehensive service agreements (medical oncology segment).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|------------------------------------ |  | ------------------------------------ | ---------- | - | -------------------- | - | -------- | ---------------------- |  | - | -------------- | - |  | -------------- | ------- | - | ---------------- | - | -------- | ----- |  | - | ---------- | - |  | - | ---------- | -
|                                     |  | Nine Months Ended September 30, 2009 |           
|                                     |  | MedicalOncologyServices              |            |   | CancerCenterServices |   |          | PharmaceuticalServices |  |   | Research/Other |   |  | CorporateCosts |         |   | Eliminations (1) |   |          | Total | 
|US Oncology, Inc.                    |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Product revenue                      |  | $                                    | 1,329,256  |   |                      | $ |         |                        |  | $ | 1,799,532      |   |  | $              |        |   |                  | $ |         |       |  | $ | (1,363,101 | ) |  | $ | 1,765,687  |  
|Service revenue                      |  |                                      | 468,581    |   |                      |   | 288,917  |                        |  |   | 47,697         |   |  |                | 54,780  |   |                  |   |         |       |  |   |           |   |  |   | 859,975    |  
|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Total revenue                        |  |                                      | 1,797,837  |   |                      |   | 288,917  |                        |  |   | 1,847,229      |   |  |                | 54,780  |   |                  |   |         |       |  |   | (1,363,101 | ) |  |   | 2,625,662  |  
|Operating expenses                   |  |                                      | (1,744,915 | ) |                      |   | (187,648 | )                      |  |   | (1,774,123     | ) |  |                | (50,865 | ) |                  |   | (53,016  | )     |  |   | 1,363,101  |   |  |   | (2,447,466 | )
|Impairment and restructuring charges |  |                                      | (176       | ) |                      |   |         |                        |  |   |               |   |  |                |        |   |                  |   | (5,731   | )     |  |   |           |   |  |   | (5,907     | )
|Depreciation and amortization        |  |                                      |           |   |                      |   | (29,711  | )                      |  |   | (1,566         | ) |  |                | (210    | ) |                  |   | (45,573  | )     |  |   |           |   |  |   | (77,060    | )
|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Income (loss) from operations        |  | $                                    | 52,746     |   |                      | $ | 71,558   |                        |  | $ | 71,540         |   |  | $              | 3,705   |   |                  | $ | (104,320 | )     |  | $ |           |   |  | $ | 95,229     |  
|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|US Oncology Holdings, Inc.           |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Operating expenses                   |  | $                                    |           |   |                      | $ |         |                        |  | $ |               |   |  | $              |        |   |                  | $ | (195     | )     |  | $ |           |   |  | $ | (195       | )
|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Income (loss) from operations        |  | $                                    | 52,746     |   |                      | $ | 71,558   |                        |  | $ | 71,540         |   |  | $              | 3,705   |   |                  | $ | (104,515 | )     |  | $ |           |   |  | $ | 95,034     |  
|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Goodwill                             |  | $                                    | 28,913     |   |                      | $ | 191,424  |                        |  | $ | 156,933        |   |  | $              |        |   |                  | $ |         |       |  | $ |           |   |  | $ | 377,270    |  
|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|                                     | 
|                                     |  | Nine Months Ended September 30, 2008 |           
|                                     |  | MedicalOncologyServices              |            |   | CancerCenterServices |   |          | PharmaceuticalServices |  |   | Research/Other |   |  | CorporateCosts |         |   | Eliminations (1) |   |          | Total | 
|US Oncology, Inc.                    |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Product revenue                      |  | $                                    | 1,226,411  |   |                      | $ |         |                        |  | $ | 1,836,578      |   |  | $              |        |   |                  | $ |         |       |  | $ | (1,406,319 | ) |  | $ | 1,656,670  |  
|Service revenue                      |  |                                      | 443,090    |   |                      |   | 274,321  |                        |  |   | 45,255         |   |  |                | 42,182  |   |                  |   |         |       |  |   |           |   |  |   | 804,848    |  
|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Total revenue                        |  |                                      | 1,669,501  |   |                      |   | 274,321  |                        |  |   | 1,881,833      |   |  |                | 42,182  |   |                  |   |         |       |  |   | (1,406,319 | ) |  |   | 2,461,518  |  
|Operating expenses                   |  |                                      | (1,613,198 | ) |                      |   | (180,302 | )                      |  |   | (1,807,296     | ) |  |                | (45,140 | ) |                  |   | (59,307  | )     |  |   | 1,406,319  |   |  |   | (2,298,924 | )
|Impairment and restructuring charges |  |                                      | (380,038   | ) |                      |   | (150     | )                      |  |   |               |   |  |                |        |   |                  |   | (1,853   | )     |  |   |           |   |  |   | (382,041   | )
|Depreciation and amortization        |  |                                      |           |   |                      |   | (28,444  | )                      |  |   | (3,609         | ) |  |                | (275    | ) |                  |   | (44,890  | )     |  |   |           |   |  |   | (77,218    | )
|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Income (loss) from operations        |  | $                                    | (323,735   | ) |                      | $ | 65,425   |                        |  | $ | 70,928         |   |  | $              | (3,233  | ) |                  | $ | (106,050 | )     |  | $ |           |   |  | $ | (296,665   | )
|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|US Oncology Holdings, Inc.           |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Operating expenses                   |  | $                                    |           |   |                      | $ |         |                        |  | $ |               |   |  | $              |        |   |                  | $ | (237     | )     |  | $ |           |   |  | $ | (237       | )
|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Income (loss) from operations        |  | $                                    | (323,735   | ) |                      | $ | 65,425   |                        |  | $ | 70,928         |   |  | $              | (3,233  | ) |                  | $ | (106,287 | )     |  | $ |           |   |  | $ | (296,902   | )
|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Goodwill                             |  | $                                    | 28,913     |   |                      | $ | 191,424  |                        |  | $ | 156,933        |   |  | $              |        |   |                  | $ |         |       |  | $ |           |   |  | $ | 377,270    |  
|                                     |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  



|(1) | Eliminations represent the sale of pharmaceuticals from the distribution center (pharmaceutical services segment) to the practices affiliated under
comprehensive service agreements (medical oncology segment).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



NOTE 10  Commitments and Contingencies

Leases

The Company leases
office space, along with certain comprehensive cancer centers and equipment under noncancelable operating lease agreements. As of September 30, 2009, total future minimum lease payments, including escalation provisions and leases with entities
affiliated with practices, are as follows (in thousands):



|             |  |                                    |        |      |   |        |  |      |        |      |   |            |  |   |        |  |   |        
|------------ |  | ---------------------------------- | ------ | ---- | - | ------ |  | ---- | ------ | ---- | - | ---------- |  | - | ------ |  | - | -------
|             |  | Twelve months ending September 30,
|             |  | 2010                               |        | 2011 |   | 2012   |  | 2013 |        | 2014 |   | Thereafter
|Payments due |  | $                                  | 83,846 |      | $ | 73,852 |  | $    | 67,389 |      | $ | 60,225     |  | $ | 52,248 |  | $ | 271,438

Guarantees

Beginning January 1, 1997, the Company guaranteed that amounts retained by the Companys affiliated practice in Minnesota will amount to a minimum of $5.2 million annually under the terms
of the related service agreement, provided that certain targets are met. The Company has not been required to make any payments associated with this guarantee.

Insurance

The Company and its affiliated practices maintain insurance with
respect to medical malpractice and associated vicarious liability risks on a claims-made basis, in amounts believed to be customary and adequate. The Company is not aware of any outstanding claims or unasserted claims that are likely to be asserted
against the Company or its affiliated practices, which would have a material impact on its financial position or results of operations.

The Company maintains all other traditional insurance coverages on either a fully insured or high-deductible basis, using loss funds for any estimated losses within the retained deductibles.

Holdings Long-Term Cash Incentive Plan

In addition to stock-based incentive plans, Holdings has adopted the US Oncology Holdings, Inc. 2004 Long-Term Cash Incentive Plan (the 2004 Cash Incentive Plan). As of December 31,
2007, no amounts were available for payment under the 2004 Cash Incentive Plan. Effective January 1, 2008, the 2004 Cash Incentive Plan was cancelled and the 2008 Long-Term Cash Incentive Plan (2008 Cash Incentive Plan) was
adopted. Under the 2008 Cash Incentive Plan, which is administered by the Compensation Committee of the Board of Directors of Holdings, management will receive a portion of the enterprise value created as determined by the plan provided that the
maximum value that can be paid to management under the plan is limited to $100 million. The value of the awards under the 2008 Cash Incentive Plan is based upon financial performance of the Company for the period beginning January 1, 2008
and ending on the earlier of the occurrence of a payment event or December 31, 2012, and will only be paid in the event of an initial public offering or a change of control, provided that all shares of preferred stock, together with accrued
dividends, have been redeemed or exchanged for common stock. No events occurred during the nine months ended September 30, 2009 that would require a payment under the 2008 Cash Incentive Plan.

If any of the payment events described above occur, the Company may incur an additional obligation and compensation expense as a result of
such an event. As of September 30, 2009, $9.9 million was available for payment under the 2008 Cash Incentive Plan. Because payments of awards under the Plan are based upon occurrence of a specific event, obligations arising under the 2008 Cash
Incentive Plan will be recognized in the period when a payment event, as discussed above, occurs.

Legal Matters

The Company believes the allegations in suits against it are customary for the size and scope of the Companys operations. However,
adverse judgments, individually or in the aggregate, could have a material adverse effect on the Company.

Assessing the
Companys financial and operational exposure on litigation matters requires the application of substantial subjective judgments and estimates based upon facts and circumstances, resulting in estimates that could change as more information
becomes available.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



U.S. Attorney Subpoena

On July 29, 2009 the Company received a subpoena from the United States Attorneys Office, Eastern District of New York, seeking documents relating to its contracts and
relationships with a pharmaceutical manufacturer and its business and activities relating to that manufacturers products. The Company believes that the subpoena relates to an ongoing investigation being conducted by that office regarding the
manufacturers sales and marketing practices. The Company intends to fully cooperate with the request. At the present time, the U.S. Attorney has not made any allegation of wrongdoing on the part of the Company. However, the Company
cannot provide assurance that such an allegation or litigation will not result from this investigation. While the Company believes that it is operating and has operated its business in compliance with the law, including with respect to the matters
covered by the subpoena, the Company cannot provide assurance that the U.S. Attorney will not make a determination that wrongdoing has occurred.

U.S. Department of Justice Subpoena

During the three months ended December 31, 2005, the Company received
a subpoena from the United States Department of Justices Civil Litigation Division (DOJ) requesting a broad range of information about the Company and its business, generally in relation to the Companys contracts and
relationships with pharmaceutical manufacturers. The Company has cooperated fully with the DOJ in responding to the subpoena. All outstanding document requests from the DOJ were addressed in early 2008, and the Company awaits further direction and
feedback from the DOJ. At the present time, the DOJ has not made any allegation of wrongdoing on the part of the Company. However, the Company cannot provide assurance that such an allegation or litigation will not result from this investigation.
While the Company believes that it is operating and has operated its business in compliance with the law, including with respect to the matters covered by the subpoena, the Company cannot provide assurance that the DOJ will not make a determination
that wrongdoing has occurred. In addition, the Company has devoted significant resources to responding to the DOJ subpoena and anticipates that such resources will be required on an ongoing basis to fully respond to the subpoena.

Qui Tam Lawsuits

From time
to time, the Company has become aware that the Company and certain of its subsidiaries and affiliated practices have been the subject of qui tam lawsuits (commonly referred to as whistle-blower suits). Because qui tam actions are filed
under seal, it is possible that the Company is the subject of other qui tam actions of which it is unaware.

In previous qui
tam suits which the Company has been made aware of, the DOJ has declined to intervene in such suits and the suits have been dismissed. Qui tam suits are brought by private individuals, and there is no minimum evidentiary or legal threshold for
bringing such a suit. The DOJ is legally required to investigate the allegations in these suits. The subject matter of many such claims may relate both to alleged actions of the Company and alleged actions of an affiliated practice. Because the
affiliated practices are separate legal entities not controlled by the Company, such claims necessarily involve a more complicated, higher cost defense, and may adversely impact the relationship between the Company and the practices. If the
individuals who file complaints and/or the United States were to prevail in these claims against the Company, 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 the Company, including potential limitations in future participation in governmental reimbursement programs. In addition, addressing complaints and government investigations requires the Company to devote
significant financial and other resources to the process, regardless of the ultimate outcome of the claims.

Other Litigation

The provision of medical services by the Companys affiliated practices entails an inherent risk of professional
liability claims. The Company does 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. In addition, because of licensing requirements and affiliated practices participation in governmental healthcare programs, the Company and affiliated practices are, from
time to time, subject to governmental audits and investigations, as well as internally initiated audits, some of which may result in refunds to governmental programs. Although the Company and its affiliated practices maintain insurance coverage,
successful malpractice, regulatory or product liability claims asserted against it or one of the affiliated practices, in excess of insurance coverage, could have a material adverse effect on the Company.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



The Company and its network physicians are defendants in a number of lawsuits involving
employment and other disputes and breach of contract claims. In addition, the Company is involved from time to time in disputes with, and claims by, its affiliated practices against the Company.

The Company is also involved in litigation with a practice in Oklahoma that was affiliated with the Company under the net revenue model
until April, 2006. While the Company was still affiliated with the practice, the Company initiated arbitration proceedings pursuant to a provision in the service agreement providing for contract reformation in certain events. The practice countered
with a lawsuit that alleges, among other things, that the Company has breached the service agreement and that the service agreement is unenforceable as a matter of public policy due to alleged violations of healthcare laws. The practice sought
unspecified damages and a termination of the contract. The Company believes that its service agreement is lawful and enforceable and that the Company is operating in accordance with applicable law. As a result of alleged breaches of the service
agreement by the practice, the Company terminated the service agreement in April, 2006. In March 2007, the Oklahoma Supreme Court overturned a lower courts ruling that would have compelled arbitration in this matter and remanded the case back
to the lower court to hold hearings to determine whether and to what extent the arbitration provisions of the service agreement will be applicable to the dispute. The Company expects those hearings to occur in late 2009 or 2010. Because of the need
for further proceedings, the Company believes that the Oklahoma Supreme Court ruling will extend the amount of time it will take to resolve this dispute and increase the risk of the litigation to the Company. In any event, as with any complex
litigation, the Company anticipates that this dispute may take several years to resolve.

As a result of the ongoing
litigation, the Company has been unable to collect on a timely basis a receivable owed to the Company relating to accounts receivable purchased by the Company under the service agreement and amounts for reimbursement of expenses paid by the Company
on the practices behalf. At September 30, 2009, the total owed to the Company for those receivables of $22.4 million is reflected on its balance sheet as other noncurrent assets. Currently, approximately $14.1 million is held in an
escrowed bank account into which the practice has been making, and is required to continue to make, monthly deposits. These amounts will be released upon resolution of the litigation. In addition, $7.6 million is being held in a bank account that
has been frozen pending the outcome of related litigation regarding that account. In addition, the Company has filed a security lien on the receivables of the practice. The Companys management believes that the amounts held in the bank
accounts combined with the receivables of the practice in which the Company has filed a security lien represent adequate collateral to recover the $22.4 million receivable recorded in other noncurrent assets at September 30, 2009. Accordingly,
the Company expects to realize the amount that it believes to be owed by the practice. However, realization is subject to a successful conclusion to the litigation with the practice.

The Company intends to vigorously pursue its claims, including claims for any costs and expenses that it incurs as a result of the termination of the service agreement and to defend
against the practices allegations that it breached the agreement and that the agreement is unenforceable. However, the Company cannot provide assurance as to what the outcome of the litigation will be, or, even if it prevails in the
litigation, whether it will be successful in recovering the full amount, or any, of its costs associated with the litigation and termination of the service agreement. The Company expects to continue to incur expenses in connection with its
litigation with the practice.

Certificate of Need Regulatory Action

During the three months ended September 30, 2006, one of the Companys affiliated practices in North Carolina lost (through state regulatory action) the ability to provide
radiation services at its cancer center in Asheville. The practice continued to provide medical oncology services, but was not permitted to use the radiation services area of the center (approximately 18% of the square footage of the cancer center).
The practice appealed the regulatory action and the North Carolina Court of Appeals ruled in favor of the practice on procedural grounds and ordered the state agency to hold a new hearing on its regulatory action. During the three months ended
March 31, 2008, the practice received a ruling in its appeal, which mandated a rehearing by the state agency. The state agency conducted a rehearing and issued a new ruling upholding the practices right to provide radiation services. That
decision was appealed, and the appellants also sought a stay of the states decision. The request for a stay was denied in July 2008 while the appeal is pending. As a result, the practice resumed diagnostic services in September, 2008 and
radiation services in February, 2009.

Delays during the three months ended March 31, 2007 in pursuing strategic
alternatives led to uncertainty regarding the form and timing associated with alternatives to a successful appeal. Consequently, the Company performed impairment testing as of March 31, 2007 and it recorded an impairment charge of $1.6
million relating to a management services agreement asset and equipment in the three months ended March 31, 2007. No additional impairment charges relating to this regulatory action have been recorded through September 30, 2009.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



As of September 30, 2009, the Companys unaudited Condensed Consolidated
Balance Sheet included net assets in the amount of $0.7 million related to this practice, which includes primarily working capital in the amount of $0.5 million. The construction of the cancer center in which the practice operates was financed as an
operating lease and, as such, is not recorded on the Companys balance sheet. At September 30, 2009, the lease had a remaining term of 17 years and the net present value of minimum future lease payments is approximately $7.2 million.

Antitrust Inquiry

The United States Federal Trade Commission (FTC) and a state Attorney General have informed one of the Companys affiliated physician practices that they have opened an investigation to determine whether a recent
transaction in which another group of physicians became employees of that affiliated group violated relevant state or federal antitrust laws. In addition, the FTC has requested information from the Company regarding its role in that transaction. The
Company is in the process of responding to a request for information on this matter. At present, the Company believes that the scope of the investigation is limited to a single transaction, but the Company cannot provide assurance that the scope
will remain limited. The Company believes that it and its affiliated physician practices comply with relevant antitrust laws. However, if this investigation were to result in a claim against the Company or its affiliated physician practice in which
the FTC or attorney general prevails, the resulting judgment could have a material adverse financial and operational effect on the Company or that practice, including the possibility of monetary damages or fines, a requirement that it unwind the
transaction at issue or the imposition of restrictions on future operations and development. In addition, addressing government investigations requires the Company to devote significant financial and other resources to the process, regardless of the
ultimate outcome of the claims. Furthermore, because of the size and scope of the Companys network, there is a risk that it could be subjected to greater scrutiny by government regulators with regard to antitrust issues.

NOTE 11  Recent Accounting Standards

From time to time, the Financial Accounting Standards Board (FASB), the SEC and other regulatory bodies seek to change accounting rules, including rules applicable to the Companys
business and financial statements. The Company cannot assure that future changes in accounting rules would not require it to make retrospective application to its financial statements.

In September, 2006, the FASB issued guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. In
February, 2008, the FASB delayed the effective date of the fair value guidance for all non-financial assets and non-financial liabilities, except those that are measured on a recurring basis. Effective January 1, 2009, the Company adopted fair
value guidance with respect to non-financial assets and liabilities measured on a non-recurring basis. The application of the fair value framework to these fair value measurements did not have a material impact on the Companys unaudited
condensed consolidated financial statements (see Note 3  Fair Value Measurements).

In December, 2007, the FASB
issued guidance which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements identifiable assets acquired, liabilities assumed, any non-controlling interest in an acquiree and the resulting
goodwill. The guidance also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This guidance was effective for annual reporting periods beginning after December 15, 2008
and was adopted without material impact. The guidance is to be applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009. The Company expects the guidance will have an impact on the
Companys accounting for future business combinations, however the effect is dependent upon acquisitions which may occur in the future.

In April, 2009, the FASB amended and clarified earlier guidance to address application issues raised on the initial recognition and measurement, subsequent measurement and accounting and disclosure of
assets and liabilities arising from contingencies in a business combination. This generally applies to assets acquired and liabilities assumed in a business combination that arise from contingencies if not acquired or assumed in a business
combination for which the acquisition date is on or after January 1, 2009. The adoption of this guidance did not have a material impact on the Companys unaudited condensed consolidated financial statements; however, it may have an impact
on the accounting for any future acquisitions or divestitures.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



In December, 2007, the FASB issued guidance which establishes new standards
governing the accounting for and reporting of noncontrolling interests (NCIs) in partially-owned subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs (previously
referred to as minority interests) be treated as a separate component of equity, rather than a liability; that increases and decreases in the parents ownership interest that leave control intact be treated as equity transactions, rather than
as step acquisitions or dilution gains or losses; and that losses of a partially-owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. This standard also requires changes to certain
presentation and disclosure requirements and was effective for annual reporting periods beginning after December 15, 2008. The provisions of the standard were applied to all NCIs prospectively, except for the presentation and disclosure
requirements, which were applied retrospectively to all periods presented and have been disclosed as such in the Companys unaudited condensed consolidated financial statements contained herein.

In March, 2008, the FASB issued guidance to improve financial reporting for derivative instruments and hedging activities by requiring
enhanced disclosures regarding the impact on financial position, financial performance, and cash flows. The guidance was effective for the Company on January 1, 2009, and was adopted without a material impact on the Companys unaudited
condensed consolidated financial statements.

In April, 2008, the FASB issued guidance which amends the factors that should be
considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. The intent of this guidance is to improve the consistency between the useful life of a recognized intangible asset and the
period of expected cash flows used to measure the fair value of the asset under other U.S. generally accepted accounting principles. The guidance was effective January 1, 2009 for the Company and was adopted without impact to the Company.

In April, 2009, the FASB issued disclosure requirements about the fair value of financial instruments which are to be applied
in interim period financial statements, in addition to the existing requirements for annual periods. The guidance reiterates requirements to disclose the methods and significant assumptions used to estimate fair value. Disclosures for earlier
periods are not required to be presented for comparative purposes at initial adoption. The guidance was effective for the Companys interim period ended June 30, 2009 and adoption did not have a material impact on its unaudited condensed
consolidated financial statements (see Note 6  Indebtedness).

In June, 2009, the FASB issued guidance for
subsequent events which establishes general standards of accounting and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued and requires the Company to disclose the
date through which it has evaluated subsequent events and whether that was the date the financial statements were issued or available to be issued. The guidance became effective for the Company on June 30, 2009 and was adopted without material
impact on its unaudited condensed consolidated financial statements.

In June, 2009, the FASB issued consolidation guidance
for variable interest entities (VIE). The new consolidation model is a more qualitative assessment of power and economics that considers which entity has the power to direct the activities that most significantly impact the
VIEs economic performance and has the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. The guidance is effective for the Company as of January 1, 2010. The Company is currently
evaluating the impact of this standard on its consolidated financial statements.

In July, 2009, the FASB Accounting
Standards Codification (Codification) became the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are
also sources of authoritative GAAP for SEC registrants. On the effective date, the Codification superseded all then-existing non-SEC accounting and reporting standards. Codification was effective for the Company July 1, 2009, and was adopted
without material impact on the Companys unaudited condensed consolidated financial statements.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



In August, 2009, the FASB issued Accounting Standard Update No. 2009-05 Fair Value
Measurements and Disclosures - Measuring Liabilities at Fair Value which amends Subtopic 820-10. This update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a
reporting entity is required to measure fair value using one or more of certain techniques including alternative quoted prices and valuation techniques consistent with the principles of Subtopic 820. This update also clarifies that when estimating
the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. In addition, this update clarifies
that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are
required are Level 1 fair value measurements. The amendments in this update are effective in the interim period ended September 30, 2009, and was adopted without material impact on its unaudited condensed consolidated financial statements.

In October, 2009, the FASB issued Accounting Standard Update No. 2009-13 to Revenue Recognition (Topic 605)
Multiple-Deliverable Revenue Arrangements. This update provides amendments to the criteria in Subtopic 605-25 for separating consideration in multiple-deliverable arrangements. As a result of those amendments, multiple-deliverable arrangements will
be separated in more circumstances than under existing U.S. GAAP. The update also addresses how to measure and allocate arrangement consideration to one or more units of accounting. The amendments in this update will be effective for the Company
prospectively for revenue arrangements entered into or materially modified on or after January 1, 2011. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements.

NOTE 12  Financial Information for Subsidiary Guarantors and Non-Subsidiary Guarantors

The 9.125% Senior Secured Notes (Senior Secured Notes), the 9% Senior Secured Notes (the Senior Notes) which were
redeemed with proceeds from the Senior Secured Notes and the 10.75% Senior Subordinated Notes (the Senior Subordinated Notes) issued by US Oncology, Inc. are guaranteed fully and unconditionally, and on a joint and several basis, by all
of US Oncologys wholly-owned subsidiaries. Certain of US Oncologys subsidiaries, primarily joint ventures, do not guarantee the Senior Secured Notes, the Senior Notes and the Senior Subordinated Notes.

Presented on the following pages are condensed consolidating financial statements for US Oncology, Inc. (the issuer of the Senior Notes and
the Senior Subordinated Notes), the subsidiary guarantors and the non-guarantor subsidiaries as of and for the three months and nine months ended September 30, 2009 and 2008. The equity method has been used with respect to US Oncologys
investments in its subsidiaries.

As of September 30, 2009, the non-guarantor subsidiaries include Cancer Treatment
Associates of Northeast Missouri, Ltd., Colorado Cancer Centers, L.L.C., Southeast Texas Cancer Centers, L.P., East Indy CC, L.L.C., KCCC JV, L.L.C., AOR Real Estate of Greenville, L.P., The Carroll County Cancer Center, Ltd, CCCN NW Building JV,
L.L.C., Oregon Cancer Center, Ltd., and WFCC Radiation Mgmt Co., LLC.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



US Oncology, Inc.

Condensed Consolidating Balance Sheet

As of
September 30, 2009

(unaudited, in thousands, except share information)



|                                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|---------------------------------------------------------------------------- |  | ------------------------------------- | --------- | - | -------------------- | - | ------------------------- |  | - | ------------ | - |  | ------------ | -------- | ---- |  | - | --------- | -
|                                                                             |  | US Oncology, Inc.(ParentCompany Only) |           |   | SubsidiaryGuarantors |   | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |         
|ASSETS                                                                       |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Current assets:                                                              |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Cash and equivalents                                                         |  | $                                     |          |   |                      | $ | 132,534                   |  | $ | 1            |   |  | $            |         |      |  | $ | 132,535   |  
|Accounts receivable                                                          |  |                                       |          |   |                      |   | 362,300                   |  |   | 7,643        |   |  |              |         |      |  |   | 369,943   |  
|Other receivables                                                            |  |                                       |          |   |                      |   | 28,772                    |  |   |             |   |  |              |         |      |  |   | 28,772    |  
|Prepaid expenses and other current assets                                    |  |                                       | 374       |   |                      |   | 23,049                    |  |   | 962          |   |  |              |         |      |  |   | 24,385    |  
|Inventories                                                                  |  |                                       |          |   |                      |   | 120,576                   |  |   |             |   |  |              |         |      |  |   | 120,576   |  
|Deferred income taxes                                                        |  |                                       | 5,424     |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 5,424     |  
|Due from affiliates                                                          |  |                                       | 541,499   |   |                      |   |                          |  |   |             |   |  |              | (512,485 | )(a) |  |   | 29,014    |  
|Investment in subsidiaries                                                   |  |                                       | 474,237   |   |                      |   |                          |  |   |             |   |  |              | (474,237 | )(b) |  |   |          |  
|                                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Total current assets                                                         |  |                                       | 1,021,534 |   |                      |   | 667,231                   |  |   | 8,606        |   |  |              | (986,722 | )    |  |   | 710,649   |  
|Property and equipment, net                                                  |  |                                       |          |   |                      |   | 369,227                   |  |   | 44,149       |   |  |              |         |      |  |   | 413,376   |  
|Service agreements, net                                                      |  |                                       |          |   |                      |   | 260,856                   |  |   | 925          |   |  |              |         |      |  |   | 261,781   |  
|Goodwill                                                                     |  |                                       |          |   |                      |   | 371,677                   |  |   | 5,593        |   |  |              |         |      |  |   | 377,270   |  
|Other assets                                                                 |  |                                       | 26,548    |   |                      |   | 44,950                    |  |   | 1,646        |   |  |              |         |      |  |   | 73,144    |  
|                                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|                                                                             |  | $                                     | 1,048,082 |   |                      | $ | 1,713,941                 |  | $ | 60,919       |   |  | $            | (986,722 | )    |  | $ | 1,836,220 |  
|                                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|LIABILITIES AND EQUITY                                                       |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Current liabilities:                                                         |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Current maturities of long-term indebtedness                                 |  | $                                     | 9,916     |   |                      | $ | 103                       |  | $ | 1,291        |   |  | $            |         |      |  | $ | 11,310    |  
|Accounts payable                                                             |  |                                       |          |   |                      |   | 290,444                   |  |   | 730          |   |  |              |         |      |  |   | 291,174   |  
|Intercompany accounts                                                        |  |                                       | (248,740  | ) |                      |   | 259,054                   |  |   | (10,314      | ) |  |              |         |      |  |   |          |  
|Due to affiliates                                                            |  |                                       |          |   |                      |   | 609,599                   |  |   | 15,560       |   |  |              | (512,485 | )(a) |  |   | 112,674   |  
|Accrued compensation cost                                                    |  |                                       |          |   |                      |   | 43,625                    |  |   | 311          |   |  |              |         |      |  |   | 43,936    |  
|Accrued interest payable                                                     |  |                                       | 14,547    |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 14,547    |  
|Income taxes payable                                                         |  |                                       | 2,047     |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 2,047     |  
|Other accrued liabilities                                                    |  |                                       |          |   |                      |   | 36,314                    |  |   | 278          |   |  |              |         |      |  |   | 36,592    |  
|                                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Total current liabilities                                                    |  |                                       | (222,230  | ) |                      |   | 1,239,139                 |  |   | 7,856        |   |  |              | (512,485 | )    |  |   | 512,280   |  
|Deferred revenue                                                             |  |                                       |          |   |                      |   | 7,509                     |  |   |             |   |  |              |         |      |  |   | 7,509     |  
|Deferred income taxes                                                        |  |                                       | 36,529    |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 36,529    |  
|Long-term indebtedness                                                       |  |                                       | 1,055,305 |   |                      |   | 2,689                     |  |   | 17,650       |   |  |              |         |      |  |   | 1,075,644 |  
|Other long-term liabilities                                                  |  |                                       |          |   |                      |   | 7,806                     |  |   | 3,414        |   |  |              |         |      |  |   | 11,220    |  
|                                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Total liabilities                                                            |  |                                       | 869,604   |   |                      |   | 1,257,143                 |  |   | 28,920       |   |  |              | (512,485 | )    |  |   | 1,643,182 |  
|                                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Commitments and contingencies                                                |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Equity:                                                                      |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Common stock, $0.01 par value, 100 shares authorized, issued and outstanding |  |                                       | 1         |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 1         |  
|Additional paid-in capital                                                   |  |                                       | 551,275   |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 551,275   |  
|Retained deficit                                                             |  |                                       | (372,798  | ) |                      |   |                          |  |   |             |   |  |              |         |      |  |   | (372,798  | )
|                                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Total Company stockholders equity                                           |  |                                       | 178,478   |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 178,478   |  
|                                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Noncontrolling interests                                                     |  |                                       |          |   |                      |   |                          |  |   | 14,560       |   |  |              |         |      |  |   | 14,560    |  
|Subsidiary equity                                                            |  |                                       |          |   |                      |   | 456,798                   |  |   | 17,439       |   |  |              | (474,237 | )(b) |  |   |          |  
|                                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Total equity                                                                 |  |                                       | 178,478   |   |                      |   | 456,798                   |  |   | 31,999       |   |  |              | (474,237 | )    |  |   | 193,038   |  
|                                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|                                                                             |  | $                                     | 1,048,082 |   |                      | $ | 1,713,941                 |  | $ | 60,919       |   |  | $            | (986,722 | )    |  | $ | 1,836,220 |  
|                                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  



|(a) | Elimination of intercompany balances
|--- | ------------------------------------



|(b) | Elimination of investment in subsidiaries
|--- | -----------------------------------------



-31-



---

##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



US Oncology, Inc.

Condensed Consolidating Balance Sheet

As of
December 31, 2008

(in thousands, except share information)



|                                                                            |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|--------------------------------------------------------------------------- |  | ------------------------------------- | --------- | - | -------------------- | - | ------------------------- |  | - | ------------ | - |  | ------------ | -------- | ---- |  | - | --------- | -
|                                                                            |  | US Oncology, Inc.(ParentCompany Only) |           |   | SubsidiaryGuarantors |   | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |         
|ASSETS                                                                      |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Current assets:                                                             |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Cash and equivalents                                                        |  | $                                     |          |   |                      | $ | 104,475                   |  | $ | 1            |   |  | $            |         |      |  | $ | 104,476   |  
|Accounts receivable                                                         |  |                                       |          |   |                      |   | 354,889                   |  |   | 9,447        |   |  |              |         |      |  |   | 364,336   |  
|Other receivables                                                           |  |                                       |          |   |                      |   | 25,707                    |  |   |             |   |  |              |         |      |  |   | 25,707    |  
|Prepaid expenses and other current assets                                   |  |                                       | 527       |   |                      |   | 20,155                    |  |   |             |   |  |              |         |      |  |   | 20,682    |  
|Inventories                                                                 |  |                                       |          |   |                      |   | 130,967                   |  |   |             |   |  |              |         |      |  |   | 130,967   |  
|Deferred income taxes                                                       |  |                                       | 4,373     |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 4,373     |  
|Due from affiliates                                                         |  |                                       | 649,233   |   |                      |   | 95                        |  |   |             |   |  |              | (582,900 | )(a) |  |   | 66,428    |  
|Investment in subsidiaries                                                  |  |                                       | 381,549   |   |                      |   |                          |  |   |             |   |  |              | (381,549 | )(b) |  |   |          |  
|                                                                            |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Total current assets                                                        |  |                                       | 1,035,682 |   |                      |   | 636,288                   |  |   | 9,448        |   |  |              | (964,449 | )    |  |   | 716,969   |  
|Property and equipment, net                                                 |  |                                       |          |   |                      |   | 368,145                   |  |   | 42,103       |   |  |              |         |      |  |   | 410,248   |  
|Service agreements, net                                                     |  |                                       |          |   |                      |   | 269,211                   |  |   | 4,435        |   |  |              |         |      |  |   | 273,646   |  
|Goodwill                                                                    |  |                                       |          |   |                      |   | 371,677                   |  |   | 5,593        |   |  |              |         |      |  |   | 377,270   |  
|Other assets                                                                |  |                                       | 24,339    |   |                      |   | 38,724                    |  |   | 1,657        |   |  |              |         |      |  |   | 64,720    |  
|                                                                            |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|                                                                            |  | $                                     | 1,060,021 |   |                      | $ | 1,684,045                 |  | $ | 63,236       |   |  | $            | (964,449 | )    |  | $ | 1,842,853 |  
|                                                                            |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|LIABILITIES AND EQUITY                                                      |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Current liabilities:                                                        |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Current maturities of long-term indebtedness                                |  | $                                     | 9,507     |   |                      | $ |                          |  | $ | 1,170        |   |  | $            |         |      |  | $ | 10,677    |  
|Accounts payable                                                            |  |                                       |          |   |                      |   | 265,311                   |  |   | 879          |   |  |              |         |      |  |   | 266,190   |  
|Intercompany accounts                                                       |  |                                       | (249,113  | ) |                      |   | 252,374                   |  |   | (3,261       | ) |  |              |         |      |  |   |          |  
|Due to affiliates                                                           |  |                                       |          |   |                      |   | 714,957                   |  |   | 4,856        |   |  |              | (582,900 | )(a) |  |   | 136,913   |  
|Accrued compensation cost                                                   |  |                                       |          |   |                      |   | 40,070                    |  |   | 706          |   |  |              |         |      |  |   | 40,776    |  
|Accrued interest payable                                                    |  |                                       | 26,266    |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 26,266    |  
|Income taxes payable                                                        |  |                                       | 2,727     |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 2,727     |  
|Other accrued liabilities                                                   |  |                                       |          |   |                      |   | 35,636                    |  |   | (832         | ) |  |              |         |      |  |   | 34,804    |  
|                                                                            |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Total current liabilities                                                   |  |                                       | (210,613  | ) |                      |   | 1,308,348                 |  |   | 3,518        |   |  |              | (582,900 | )    |  |   | 518,353   |  
|Deferred revenue                                                            |  |                                       |          |   |                      |   | 6,894                     |  |   |             |   |  |              |         |      |  |   | 6,894     |  
|Deferred income taxes                                                       |  |                                       | 35,139    |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 35,139    |  
|Long-term indebtedness                                                      |  |                                       | 1,040,080 |   |                      |   | 2,418                     |  |   | 18,635       |   |  |              |         |      |  |   | 1,061,133 |  
|Other long-term liabilities                                                 |  |                                       |          |   |                      |   | 8,797                     |  |   | 3,550        |   |  |              |         |      |  |   | 12,347    |  
|                                                                            |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Total liabilities                                                           |  |                                       | 864,606   |   |                      |   | 1,326,457                 |  |   | 25,703       |   |  |              | (582,900 | )    |  |   | 1,633,866 |  
|                                                                            |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Commitments and contingencies                                               |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Equity:                                                                     |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Common stock, $0.01 par value, 100 shares authorized issued and outstanding |  |                                       | 1         |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 1         |  
|Additional paid-in capital                                                  |  |                                       | 560,768   |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 560,768   |  
|Retained deficit                                                            |  |                                       | (365,354  | ) |                      |   |                          |  |   |             |   |  |              |         |      |  |   | (365,354  | )
|                                                                            |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Total Company stockholders equity                                          |  |                                       | 195,415   |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 195,415   |  
|                                                                            |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Noncontrolling interests                                                    |  |                                       |          |   |                      |   |                          |  |   | 13,572       |   |  |              |         |      |  |   | 13,572    |  
|Subsidiary equity                                                           |  |                                       |          |   |                      |   | 357,588                   |  |   | 23,961       |   |  |              | (381,549 | )(b) |  |   |          |  
|                                                                            |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|Total equity                                                                |  |                                       | 195,415   |   |                      |   | 357,588                   |  |   | 37,533       |   |  |              | (381,549 | )    |  |   | 208,987   |  
|                                                                            |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  
|                                                                            |  | $                                     | 1,060,021 |   |                      | $ | 1,684,045                 |  | $ | 63,236       |   |  | $            | (964,449 | )    |  | $ | 1,842,853 |  
|                                                                            |  |                                       |           |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |           |  



|(a) | Elimination of intercompany balances
|--- | ------------------------------------



|(b) | Elimination of investment in subsidiaries
|--- | -----------------------------------------



-32-



---

##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



US Oncology, Inc.

Condensed Consolidating Statement of Operations

For
the Three Months Ended September 30, 2009

(unaudited, in thousands)



|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|--------------------------------------------------------- |  | ------------------------------------- | ------- | - | -------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | ------- | ---- |  | - | ------- | -
|                                                          |  | US Oncology, Inc.(ParentCompany Only) |         |   | SubsidiaryGuarantors |   |         | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Product revenue                                           |  | $                                     |        |   |                      | $ | 599,055 |                           |  | $ | 8,980        |   |  | $            |        |      |  | $ | 608,035 |  
|Service revenue                                           |  |                                       |        |   |                      |   | 287,658 |                           |  |   | 5,761        |   |  |              |        |      |  |   | 293,419 |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Total revenue                                             |  |                                       |        |   |                      |   | 886,713 |                           |  |   | 14,741       |   |  |              |        |      |  |   | 901,454 |  
|Cost of products                                          |  |                                       |        |   |                      |   | 587,402 |                           |  |   | 8,806        |   |  |              |        |      |  |   | 596,208 |  
|Cost of services:                                         |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Operating compensation and benefits                       |  |                                       |        |   |                      |   | 137,876 |                           |  |   | 2,445        |   |  |              |        |      |  |   | 140,321 |  
|Other operating costs                                     |  |                                       |        |   |                      |   | 84,543  |                           |  |   | 281          |   |  |              |        |      |  |   | 84,824  |  
|Depreciation and amortization                             |  |                                       |        |   |                      |   | 17,916  |                           |  |   | 1,174        |   |  |              |        |      |  |   | 19,090  |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Total cost of services                                    |  |                                       |        |   |                      |   | 240,335 |                           |  |   | 3,900        |   |  |              |        |      |  |   | 244,235 |  
|Total cost of products and services                       |  |                                       |        |   |                      |   | 827,737 |                           |  |   | 12,706       |   |  |              |        |      |  |   | 840,443 |  
|General and administrative expense                        |  |                                       | 76      |   |                      |   | 18,716  |                           |  |   |             |   |  |              |        |      |  |   | 18,792  |  
|Impairment and restructuring charges                      |  |                                       |        |   |                      |   | 4,117   |                           |  |   |             |   |  |              |        |      |  |   | 4,117   |  
|Depreciation and amortization                             |  |                                       |        |   |                      |   | 7,700   |                           |  |   |             |   |  |              |        |      |  |   | 7,700   |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|                                                          |  |                                       | 76      |   |                      |   | 858,270 |                           |  |   | 12,706       |   |  |              |        |      |  |   | 871,052 |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Income (loss) from operations                             |  |                                       | (76     | ) |                      |   | 28,443  |                           |  |   | 2,035        |   |  |              |        |      |  |   | 30,402  |  
|Other income (expense)                                    |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Interest expense, net                                     |  |                                       | (27,876 | ) |                      |   | 293     |                           |  |   | (433         | ) |  |              |        |      |  |   | (28,016 | )
|Loss on early extinguishment of debt                      |  |                                       | (3,672  | ) |                      |   |        |                           |  |   |             |   |  |              |        |      |  |   | (3,672  | )
|Other income (expense), net                               |  |                                       |        |   |                      |   |        |                           |  |   |             |   |  |              |        |      |  |   |        |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Income (loss) before income taxes                         |  |                                       | (31,624 | ) |                      |   | 28,736  |                           |  |   | 1,602        |   |  |              |        |      |  |   | (1,286  | )
|Income tax benefit (provision)                            |  |                                       | 1,332   |   |                      |   |        |                           |  |   |             |   |  |              |        |      |  |   | 1,332   |  
|Equity in subsidiaries                                    |  |                                       | 29,426  |   |                      |   |        |                           |  |   |             |   |  |              | (29,426 | )(a) |  |   |        |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Net income                                                |  |                                       | (866    | ) |                      |   | 28,736  |                           |  |   | 1,602        |   |  |              | (29,426 | )    |  |   | 46      |  
|Less: Net income attributable to noncontrolling interests |  |                                       |        |   |                      |   | (609    | )                         |  |   | (303         | ) |  |              |        |      |  |   | (912    | )
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Net income attributable to the Company                    |  | $                                     | (866    | ) |                      | $ | 28,127  |                           |  | $ | 1,299        |   |  | $            | (29,426 | )    |  | $ | (866    | )
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  



|(a) | Elimination of investment in subsidiaries
|--- | -----------------------------------------



-33-



---

##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



US Oncology, Inc.

Condensed Consolidating Statement of Operations

For
the Three Months Ended September 30, 2008

(unaudited, in thousands)



|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|--------------------------------------------------------- |  | ------------------------------------- | ------- | - | -------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | ------- | ---- |  | - | ------- | -
|                                                          |  | US Oncology, Inc.(ParentCompany Only) |         |   | SubsidiaryGuarantors |   |         | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Product revenue                                           |  | $                                     |        |   |                      | $ | 544,657 |                           |  | $ | 11,702       |   |  | $            |        |      |  | $ | 556,359 |  
|Service revenue                                           |  |                                       |        |   |                      |   | 256,020 |                           |  |   | 9,357        |   |  |              |        |      |  |   | 265,377 |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Total revenue                                             |  |                                       |        |   |                      |   | 800,677 |                           |  |   | 21,059       |   |  |              |        |      |  |   | 821,736 |  
|Cost of products                                          |  |                                       |        |   |                      |   | 525,725 |                           |  |   | 11,304       |   |  |              |        |      |  |   | 537,029 |  
|Cost of services:                                         |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Operating compensation and benefits                       |  |                                       |        |   |                      |   | 126,887 |                           |  |   | 4,271        |   |  |              |        |      |  |   | 131,158 |  
|Other operating costs                                     |  |                                       |        |   |                      |   | 80,533  |                           |  |   | 777          |   |  |              |        |      |  |   | 81,310  |  
|Depreciation and amortization                             |  |                                       |        |   |                      |   | 16,461  |                           |  |   | 1,437        |   |  |              |        |      |  |   | 17,898  |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Total cost of services                                    |  |                                       |        |   |                      |   | 223,881 |                           |  |   | 6,485        |   |  |              |        |      |  |   | 230,366 |  
|Total cost of products and services                       |  |                                       |        |   |                      |   | 749,606 |                           |  |   | 17,789       |   |  |              |        |      |  |   | 767,395 |  
|General and administrative expense                        |  |                                       | 59      |   |                      |   | 18,019  |                           |  |   |             |   |  |              |        |      |  |   | 18,078  |  
|Impairment and restructuring charges                      |  |                                       |        |   |                      |   | 271     |                           |  |   |             |   |  |              |        |      |  |   | 271     |  
|Depreciation and amortization                             |  |                                       |        |   |                      |   | 7,684   |                           |  |   |             |   |  |              |        |      |  |   | 7,684   |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|                                                          |  |                                       | 59      |   |                      |   | 775,580 |                           |  |   | 17,789       |   |  |              |        |      |  |   | 793,428 |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Income (loss) from operations                             |  |                                       | (59     | ) |                      |   | 25,097  |                           |  |   | 3,270        |   |  |              |        |      |  |   | 28,308  |  
|Other income (expense)                                    |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Interest expense, net                                     |  |                                       | (22,136 | ) |                      |   | (167    | )                         |  |   | (376         | ) |  |              |        |      |  |   | (22,679 | )
|Other income (expense), net                               |  |                                       |        |   |                      |   |        |                           |  |   |             |   |  |              |        |      |  |   |        |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Income (loss) before income taxes                         |  |                                       | (22,195 | ) |                      |   | 24,930  |                           |  |   | 2,894        |   |  |              |        |      |  |   | 5,629   |  
|Income tax benefit                                        |  |                                       | (1,039  | ) |                      |   |        |                           |  |   |             |   |  |              |        |      |  |   | (1,039  | )
|Equity in subsidiaries                                    |  |                                       | 27,109  |   |                      |   |        |                           |  |   |             |   |  |              | (27,109 | )(a) |  |   |        |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Net income (loss)                                         |  |                                       | 3,875   |   |                      |   | 24,930  |                           |  |   | 2,894        |   |  |              | (27,109 | )    |  |   | 4,590   |  
|Less: Net income attributable to noncontrolling interests |  |                                       |        |   |                      |   | (33     | )                         |  |   | (682         | ) |  |              |        |      |  |   | (715    | )
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Net income (loss) attributable to the Company             |  | $                                     | 3,875   |   |                      | $ | 24,897  |                           |  | $ | 2,212        |   |  | $            | (27,109 | )    |  | $ | 3,875   |  
|                                                          |  |                                       |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  



|(a) | Elimination of investment in subsidiaries
|--- | -----------------------------------------



-34-



---

##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



US Oncology, Inc.

Condensed Consolidating Statement of Operations

For
the Nine Months Ended September 30, 2009

(unaudited, in thousands)



|                                                         |  |                                       |         |   |                      |   |           |                           |  |   |              |   |  |              |         |      |  |   |           |  
|-------------------------------------------------------- |  | ------------------------------------- | ------- | - | -------------------- | - | --------- | ------------------------- |  | - | ------------ | - |  | ------------ | ------- | ---- |  | - | --------- | -
|                                                         |  | US Oncology, Inc.(ParentCompany Only) |         |   | SubsidiaryGuarantors |   |           | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Product revenue                                          |  | $                                     |        |   |                      | $ | 1,740,064 |                           |  | $ | 25,623       |   |  | $            |        |      |  | $ | 1,765,687 |  
|Service revenue                                          |  |                                       |        |   |                      |   | 843,191   |                           |  |   | 16,784       |   |  |              |        |      |  |   | 859,975   |  
|                                                         |  |                                       |         |   |                      |   |           |                           |  |   |              |   |  |              |         |      |  |   |           |  
|Total revenue                                            |  |                                       |        |   |                      |   | 2,583,255 |                           |  |   | 42,407       |   |  |              |        |      |  |   | 2,625,662 |  
|Cost of products                                         |  |                                       |        |   |                      |   | 1,704,906 |                           |  |   | 25,106       |   |  |              |        |      |  |   | 1,730,012 |  
|Cost of services:                                        |  |                                       |         |   |                      |   |           |                           |  |   |              |   |  |              |         |      |  |   |           |  
|Operating compensation and benefits                      |  |                                       |        |   |                      |   | 408,745   |                           |  |   | 7,362        |   |  |              |        |      |  |   | 416,107   |  
|Other operating costs                                    |  |                                       |        |   |                      |   | 247,122   |                           |  |   | 1,046        |   |  |              |        |      |  |   | 248,168   |  
|Depreciation and amortization                            |  |                                       |        |   |                      |   | 51,281    |                           |  |   | 3,309        |   |  |              |        |      |  |   | 54,590    |  
|                                                         |  |                                       |         |   |                      |   |           |                           |  |   |              |   |  |              |         |      |  |   |           |  
|Total cost of services                                   |  |                                       |        |   |                      |   | 707,148   |                           |  |   | 11,717       |   |  |              |        |      |  |   | 718,865   |  
|Total cost of products and services                      |  |                                       |        |   |                      |   | 2,412,054 |                           |  |   | 36,823       |   |  |              |        |      |  |   | 2,448,877 |  
|General and administrative expense                       |  |                                       | 328     |   |                      |   | 52,851    |                           |  |   |             |   |  |              |        |      |  |   | 53,179    |  
|Impairment and restructuring charges                     |  |                                       |        |   |                      |   | 5,907     |                           |  |   |             |   |  |              |        |      |  |   | 5,907     |  
|Depreciation and amortization                            |  |                                       |        |   |                      |   | 22,470    |                           |  |   |             |   |  |              |        |      |  |   | 22,470    |  
|                                                         |  |                                       |         |   |                      |   |           |                           |  |   |              |   |  |              |         |      |  |   |           |  
|                                                         |  |                                       | 328     |   |                      |   | 2,493,282 |                           |  |   | 36,823       |   |  |              |        |      |  |   | 2,530,433 |  
|                                                         |  |                                       |         |   |                      |   |           |                           |  |   |              |   |  |              |         |      |  |   |           |  
|Income (loss) from operations                            |  |                                       | (328    | ) |                      |   | 89,973    |                           |  |   | 5,584        |   |  |              |        |      |  |   | 95,229    |  
|Other income (expense):                                  |  |                                       |         |   |                      |   |           |                           |  |   |              |   |  |              |         |      |  |   |           |  
|Interest expense, net                                    |  |                                       | (72,831 | ) |                      |   | 982       |                           |  |   | (1,273       | ) |  |              |        |      |  |   | (73,122   | )
|Loss on early extinguishment of debt                     |  |                                       | (26,025 | ) |                      |   |          |                           |  |   |             |   |  |              |        |      |  |   | (26,025   | )
|Other income (expense), net                              |  |                                       |        |   |                      |   | 37        |                           |  |   |             |   |  |              |        |      |  |   | 37        |  
|                                                         |  |                                       |         |   |                      |   |           |                           |  |   |              |   |  |              |         |      |  |   |           |  
|Income (loss) before income taxes                        |  |                                       | (99,184 | ) |                      |   | 90,992    |                           |  |   | 4,311        |   |  |              |        |      |  |   | (3,881    | )
|Income tax benefit (provision)                           |  |                                       | (948    | ) |                      |   |          |                           |  |   |             |   |  |              |        |      |  |   | (948      | )
|Equity in subsidiaries                                   |  |                                       | 92,688  |   |                      |   |          |                           |  |   |             |   |  |              | (92,688 | )(a) |  |   |          |  
|                                                         |  |                                       |         |   |                      |   |           |                           |  |   |              |   |  |              |         |      |  |   |           |  
|Net income                                               |  |                                       | (7,444  | ) |                      |   | 90,992    |                           |  |   | 4,311        |   |  |              | (92,688 | )    |  |   | (4,829    | )
|Less: Net income attributable tononcontrolling interests |  |                                       |        |   |                      |   | (1,883    | )                         |  |   | (732         | ) |  |              |        |      |  |   | (2,615    | )
|                                                         |  |                                       |         |   |                      |   |           |                           |  |   |              |   |  |              |         |      |  |   |           |  
|Net income attributable to the Company                   |  | $                                     | (7,444  | ) |                      | $ | 89,109    |                           |  | $ | 3,579        |   |  | $            | (92,688 | )    |  | $ | (7,444    | )
|                                                         |  |                                       |         |   |                      |   |           |                           |  |   |              |   |  |              |         |      |  |   |           |  



|(a) | Elimination of investment in subsidiaries
|--- | -----------------------------------------



-35-



---

##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



US Oncology, Inc.

Condensed Consolidating Statement of Operations

For
the Nine Months Ended September 30, 2008

(unaudited, in thousands)



|                                                         |  |                                       |          |   |                      |   |           |                           |  |   |              |   |  |              |         |     |  |   |           |  
|-------------------------------------------------------- |  | ------------------------------------- | -------- | - | -------------------- | - | --------- | ------------------------- |  | - | ------------ | - |  | ------------ | ------- | --- |  | - | --------- | -
|                                                         |  | US Oncology, Inc.(ParentCompany Only) |          |   | SubsidiaryGuarantors |   |           | Non-guarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Product revenue                                          |  | $                                     |         |   |                      | $ | 1,624,032 |                           |  | $ | 32,638       |   |  | $            |        |     |  | $ | 1,656,670 |  
|Service revenue                                          |  |                                       |         |   |                      |   | 776,838   |                           |  |   | 28,010       |   |  |              |        |     |  |   | 804,848   |  
|                                                         |  |                                       |          |   |                      |   |           |                           |  |   |              |   |  |              |         |     |  |   |           |  
|Total revenue                                            |  |                                       |         |   |                      |   | 2,400,870 |                           |  |   | 60,648       |   |  |              |        |     |  |   | 2,461,518 |  
|Cost of products                                         |  |                                       |         |   |                      |   | 1,578,909 |                           |  |   | 31,732       |   |  |              |        |     |  |   | 1,610,641 |  
|Cost of services:                                        |  |                                       |          |   |                      |   |           |                           |  |   |              |   |  |              |         |     |  |   |           |  
|Operating compensation and benefits                      |  |                                       |         |   |                      |   | 378,921   |                           |  |   | 12,511       |   |  |              |        |     |  |   | 391,432   |  
|Other operating costs                                    |  |                                       |         |   |                      |   | 234,180   |                           |  |   | 3,364        |   |  |              |        |     |  |   | 237,544   |  
|Depreciation and amortization                            |  |                                       |         |   |                      |   | 52,127    |                           |  |   | 3,125        |   |  |              |        |     |  |   | 55,252    |  
|                                                         |  |                                       |          |   |                      |   |           |                           |  |   |              |   |  |              |         |     |  |   |           |  
|Total cost of services                                   |  |                                       |         |   |                      |   | 665,228   |                           |  |   | 19,000       |   |  |              |        |     |  |   | 684,228   |  
|Total cost of products and services                      |  |                                       |         |   |                      |   | 2,244,137 |                           |  |   | 50,732       |   |  |              |        |     |  |   | 2,294,869 |  
|General and administrative expense                       |  |                                       | 248      |   |                      |   | 59,058    |                           |  |   |             |   |  |              |        |     |  |   | 59,306    |  
|Impairment and restructuring charges                     |  |                                       |         |   |                      |   | 382,041   |                           |  |   |             |   |  |              |        |     |  |   | 382,041   |  
|Depreciation and amortization                            |  |                                       |         |   |                      |   | 21,967    |                           |  |   |             |   |  |              |        |     |  |   | 21,967    |  
|                                                         |  |                                       |          |   |                      |   |           |                           |  |   |              |   |  |              |         |     |  |   |           |  
|                                                         |  |                                       | 248      |   |                      |   | 2,707,203 |                           |  |   | 50,732       |   |  |              |        |     |  |   | 2,758,183 |  
|                                                         |  |                                       |          |   |                      |   |           |                           |  |   |              |   |  |              |         |     |  |   |           |  
|Income (loss) from operations                            |  |                                       | (248     | ) |                      |   | (306,333  | )                         |  |   | 9,916        |   |  |              |        |     |  |   | (296,665  | )
|Other income (expense)                                   |  |                                       |          |   |                      |   |           |                           |  |   |              |   |  |              |         |     |  |   |           |  
|Interest expense, net                                    |  |                                       | (70,010  | ) |                      |   | 1,780     |                           |  |   | (1,083       | ) |  |              |        |     |  |   | (69,313   | )
|Other income                                             |  |                                       |         |   |                      |   | 1,370     |                           |  |   |             |   |  |              |        |     |  |   | 1,370     |  
|                                                         |  |                                       |          |   |                      |   |           |                           |  |   |              |   |  |              |         |     |  |   |           |  
|Income (loss) before income taxes                        |  |                                       | (70,258  | ) |                      |   | (303,183  | )                         |  |   | 8,833        |   |  |              |        |     |  |   | (364,608  | )
|Income tax benefit (provision)                           |  |                                       | (3,905   | ) |                      |   |          |                           |  |   |             |   |  |              |        |     |  |   | (3,905    | )
|Equity in subsidiaries                                   |  |                                       | (296,797 | ) |                      |   |          |                           |  |   |             |   |  |              | 296,797 | (a) |  |   |          |  
|                                                         |  |                                       |          |   |                      |   |           |                           |  |   |              |   |  |              |         |     |  |   |           |  
|Net income (loss)                                        |  |                                       | (370,960 | ) |                      |   | (303,183  | )                         |  |   | 8,833        |   |  |              | 296,797 |     |  |   | (368,513  | )
|Less: Net income attributable tononcontrolling interests |  |                                       |         |   |                      |   | (405      | )                         |  |   | (2,042       | ) |  |              |        |     |  |   | (2,447    | )
|                                                         |  |                                       |          |   |                      |   |           |                           |  |   |              |   |  |              |         |     |  |   |           |  
|Net income (loss) attributable to the Company            |  | $                                     | (370,960 | ) |                      | $ | (303,588  | )                         |  | $ | 6,791        |   |  | $            | 296,797 |     |  | $ | (370,960  | )
|                                                         |  |                                       |          |   |                      |   |           |                           |  |   |              |   |  |              |         |     |  |   |           |  



|(a) | Elimination of investment in subsidiaries
|--- | -----------------------------------------



-36-



---

##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



US Oncology, Inc.

Condensed Consolidating Statement of Cash Flows

For
the Nine Months Ended September 30, 2009

(unaudited, in thousands)



|                                               |  |                                       |          |   |                      |   |         |                           |  |   |              |   |  |   |          |  
|---------------------------------------------- |  | ------------------------------------- | -------- | - | -------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | - | -------- | -
|                                               |  | US Oncology, Inc.(ParentCompany Only) |          |   | SubsidiaryGuarantors |   |         | Non-guarantorSubsidiaries |  |   | Consolidated |  
|Cash flows from operating activities:          |  |                                       |          |   |                      |   |         |                           |  |   |              |   |  |   |          |  
|Net cash provided by operating activities      |  | $                                     | 28,609   |   |                      | $ | 102,774 |                           |  | $ | 4,648        |   |  | $ | 136,031  |  
|                                               |  |                                       |          |   |                      |   |         |                           |  |   |              |   |  |   |          |  
|Cash flows from investing activities:          |  |                                       |          |   |                      |   |         |                           |  |   |              |   |  |   |          |  
|Acquisition of property and equipment          |  |                                       |         |   |                      |   | (63,629 | )                         |  |   | (3,067       | ) |  |   | (66,696  | )
|Net payments in affiliation transactions       |  |                                       | (389     | ) |                      |   | (4,004  | )                         |  |   |             |   |  |   | (4,393   | )
|Distributions from unconsolidated subsidiaries |  |                                       |         |   |                      |   | 2,704   |                           |  |   | 805          |   |  |   | 3,509    |  
|Investment in unconsolidated subsidiaries      |  |                                       |         |   |                      |   | (7,895  | )                         |  |   | 105          |   |  |   | (7,790   | )
|                                               |  |                                       |          |   |                      |   |         |                           |  |   |              |   |  |   |          |  
|Net cash used in investing activities          |  |                                       | (389     | ) |                      |   | (72,824 | )                         |  |   | (2,157       | ) |  |   | (75,370  | )
|                                               |  |                                       |          |   |                      |   |         |                           |  |   |              |   |  |   |          |  
|Cash flows from financing activities:          |  |                                       |          |   |                      |   |         |                           |  |   |              |   |  |   |          |  
|Proceeds from Senior Secured Notes             |  |                                       | 758,926  |   |                      |   |        |                           |  |   |             |   |  |   | 758,926  |  
|Repayment of term loan                         |  |                                       | (436,666 | ) |                      |   |        |                           |  |   |             |   |  |   | (436,666 | )
|Repayment of Senior Notes                      |  |                                       | (311,578 | ) |                      |   |        |                           |  |   |             |   |  |   | (311,578 | )
|Repayment of other indebtedness                |  |                                       | (6,650   | ) |                      |   | (1,891  | )                         |  |   | (864         | ) |  |   | (9,405   | )
|Debt financing costs                           |  |                                       | (21,188  | ) |                      |   |        |                           |  |   |             |   |  |   | (21,188  | )
|Net distributions to parent                    |  |                                       | (11,064  | ) |                      |   |        |                           |  |   |             |   |  |   | (11,064  | )
|Distributions to noncontrolling interests      |  |                                       |         |   |                      |   |        |                           |  |   | (1,627       | ) |  |   | (1,627   | )
|                                               |  |                                       |          |   |                      |   |         |                           |  |   |              |   |  |   |          |  
|Net cash used in financing activities          |  |                                       | (28,220  | ) |                      |   | (1,891  | )                         |  |   | (2,491       | ) |  |   | (32,602  | )
|                                               |  |                                       |          |   |                      |   |         |                           |  |   |              |   |  |   |          |  
|Increase in cash and cash equivalents          |  |                                       |         |   |                      |   | 28,059  |                           |  |   |             |   |  |   | 28,059   |  
|Cash and cash equivalents:                     |  |                                       |          |   |                      |   |         |                           |  |   |              |   |  |   |          |  
|Beginning of period                            |  |                                       |         |   |                      |   | 104,475 |                           |  |   | 1            |   |  |   | 104,476  |  
|                                               |  |                                       |          |   |                      |   |         |                           |  |   |              |   |  |   |          |  
|End of period                                  |  | $                                     |         |   |                      | $ | 132,534 |                           |  | $ | 1            |   |  | $ | 132,535  |  
|                                               |  |                                       |          |   |                      |   |         |                           |  |   |              |   |  |   |          |  



-37-



---

##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



US Oncology, Inc.

Condensed Consolidating Statement of Cash Flows

For
the Nine Months Ended September 30, 2008

(unaudited, in thousands)



|                                                         |  |                                       |         |   |                      |   |          |                           |  |   |              |   |  |   |         |  
|-------------------------------------------------------- |  | ------------------------------------- | ------- | - | -------------------- | - | -------- | ------------------------- |  | - | ------------ | - |  | - | ------- | -
|                                                         |  | US Oncology, Inc.(ParentCompany Only) |         |   | SubsidiaryGuarantors |   |          | Non-guarantorSubsidiaries |  |   | Consolidated |  
|Cash flows from operating activities:                    |  |                                       |         |   |                      |   |          |                           |  |   |              |   |  |   |         |  
|Net cash provided by operating activities                |  | $                                     | (4,584  | ) |                      | $ | 76,116   |                           |  | $ | 5,783        |   |  | $ | 77,315  |  
|                                                         |  |                                       |         |   |                      |   |          |                           |  |   |              |   |  |   |         |  
|Cash flows from investing activities:                    |  |                                       |         |   |                      |   |          |                           |  |   |              |   |  |   |         |  
|Acquisition of property and equipment                    |  |                                       |        |   |                      |   | (53,219  | )                         |  |   | (6,818       | ) |  |   | (60,037 | )
|Net payments in affiliation transactions                 |  |                                       | 32,836  |   |                      |   | (74,052  | )                         |  |   |             |   |  |   | (41,216 | )
|Net proceeds from sale of assets                         |  |                                       |        |   |                      |   | 3,747    |                           |  |   |             |   |  |   | 3,747   |  
|Distributions from nonconsolidated interests             |  |                                       |        |   |                      |   | 1,493    |                           |  |   |             |   |  |   | 1,493   |  
|Investment in unconsolidated subsidiaries                |  |                                       |        |   |                      |   | (3,486   | )                         |  |   |             |   |  |   | (3,486  | )
|                                                         |  |                                       |         |   |                      |   |          |                           |  |   |              |   |  |   |         |  
|Net cash provided by (used in) investing activities      |  |                                       | 32,836  |   |                      |   | (125,517 | )                         |  |   | (6,818       | ) |  |   | (99,499 | )
|                                                         |  |                                       |         |   |                      |   |          |                           |  |   |              |   |  |   |         |  
|Cash flows from financing activities:                    |  |                                       |         |   |                      |   |          |                           |  |   |              |   |  |   |         |  
|Proceeds from other indebtedness                         |  |                                       |        |   |                      |   |         |                           |  |   | 4,000        |   |  |   | 4,000   |  
|Net borrowings under revolving facility                  |  |                                       | 20,000  |   |                      |   |         |                           |  |   |             |   |  |   | 20,000  |  
|Repayment of term loan                                   |  |                                       | (34,937 | ) |                      |   |         |                           |  |   |             |   |  |   | (34,937 | )
|Repayment of other indebtedness                          |  |                                       | (336    | ) |                      |   | (255     | )                         |  |   | (702         | ) |  |   | (1,293  | )
|Debt financing costs                                     |  |                                       |        |   |                      |   |         |                           |  |   | (103         | ) |  |   | (103    | )
|Distributions to noncontrolling interests                |  |                                       |        |   |                      |   |         |                           |  |   | (2,626       | ) |  |   | (2,626  | )
|Contributions from noncontrolling interests              |  |                                       |        |   |                      |   |         |                           |  |   | 466          |   |  |   | 466     |  
|Net distributions to parent                              |  |                                       | (13,004 | ) |                      |   |         |                           |  |   |             |   |  |   | (13,004 | )
|Contributions of proceeds from exercise of stock options |  |                                       | 25      |   |                      |   |         |                           |  |   |             |   |  |   | 25      |  
|                                                         |  |                                       |         |   |                      |   |          |                           |  |   |              |   |  |   |         |  
|Net cash provided by (used in) financing activities      |  |                                       | (28,252 | ) |                      |   | (255     | )                         |  |   | 1,035        |   |  |   | (27,472 | )
|                                                         |  |                                       |         |   |                      |   |          |                           |  |   |              |   |  |   |         |  
|Decrease in cash and cash equivalents                    |  |                                       |        |   |                      |   | (49,656  | )                         |  |   |             |   |  |   | (49,656 | )
|Cash and cash equivalents:                               |  |                                       |         |   |                      |   |          |                           |  |   |              |   |  |   |         |  
|Beginning of period                                      |  |                                       |        |   |                      |   | 149,255  |                           |  |   | 1            |   |  |   | 149,256 |  
|                                                         |  |                                       |         |   |                      |   |          |                           |  |   |              |   |  |   |         |  
|End of period                                            |  | $                                     |        |   |                      | $ | 99,599   |                           |  | $ | 1            |   |  | $ | 99,600  |  
|                                                         |  |                                       |         |   |                      |   |          |                           |  |   |              |   |  |   |         |  

NOTE 13  Subsequent Events

Equity Restructuring

On October 1, 2009, the Board of Directors and
stockholders of US Oncology Holdings, Inc. approved the Third Amended and Restated Certificate of Incorporation of US Oncology Holdings, Inc. Pursuant to the terms of the Third Amended and Restated Certificate of Incorporation of US Oncology
Holdings, Inc, the number of authorized $0.001 par value common shares increased from 300.0 million common shares to 500.0 million common shares.

In addition, pursuant to this amendment, each outstanding share of Series A Preferred Stock and Series A-1 Preferred Stock of US Oncology Holdings, Inc. was converted into a number of common shares equal
to its liquidation preference divided by $1.50 plus one additional common share. As a result of the conversion, 13.9 million shares of Series A Preferred Stock and 1.9 million shares of Series A-1 Preferred Stock, with a liquidation
preference of $332.2 million and $50.2 million, respectively, were exchanged for an aggregate 270.6 million common shares.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

(unaudited)



Also, on October 1, 2009, the Board of Directors and stockholders of US Oncology
Holdings, Inc. approved amendments to the Amended and Restated 2004 Equity Incentive Plan and the 2004 Director Stock Option Plan.

The amendment to the Amended and Restated 2004 Equity Incentive Plan, which was effective October 1, 2009, among other things, increased the number of shares of common stock reserved for issuance under the plan from 32.0 million
shares to 59.6 million shares. The aggregate number of shares reserved for issuance includes awards issued and outstanding prior to the effective date of the amendment. Of the shares reserved for issuance under the plan, 33.2 million
shares may be in the form of restricted stock and the remaining shares are available in the form of options to purchase common stock. In connection with the amendment, on October 1, 2009, US Oncology Holdings, Inc. issued an additional
3.4 million shares of restricted stock and 13.6 million options to purchase common stock. Subsequent to these awards, 13.2 million shares remain available for future grants under the plan, of which 1.6 million shares may be in
the form of restricted common stock.

The amendment to the 2004 Director Stock Option Plan, also effective October 1,
2009, increased the number of shares reserved for issuance under the plan to 1.0 million in addition to modifying certain other aspects of the plan. The amendment also provided for a grant of 25,000 shares of common stock for eligible directors
first elected to the board during the year ending December 31, 2009 and of 15,000 shares of common stock for other eligible directors as of the effective date of the amendment. Beginning with the year ending December 31, 2010, eligible
directors (in office after giving effect to the annual meeting of stockholders) will receive annual grants of 10,000 shares of common stock plus an additional 1,000 shares of common stock for each committee on which such eligible director serves.

As a result of the aforementioned transactions, the number of outstanding shares of US Oncology Holdings, Inc. common stock
increased from 148.4 million shares to 422.5 million shares. In addition, the Series A and Series A-1 Preferred Stock is no longer outstanding and its aggregate carrying value, in the amount of $382.4 million, was eliminated and the
stockholders deficit of US Oncology Holdings, Inc. was reduced by the same amount.

Oncology Reimbursement Solutions

In connection with the Companys ongoing evaluation of its growth strategies, in October, the Company determined that it would cease
operations of Oncology Reimbursement Solutions, its centralized billing and collection service, as a separate offering. As a result, the Company expects to incur a charge of approximately $3.0 million during the fourth quarter related to employee
severance payments, vacating leased office space and impairment of certain fixed assets.

Final CMS 2010 Physician Fee Schedule

On October 30, 2009, CMS announced final changes to policies and payment rates for services to be furnished under the
2010 physician fee schedule. Under the statutory formula, the conversion factor for 2010 is estimated to decrease by 21.2% unless Congress again enacts superseding legislation. In addition, CMS projects that changes to the policies and payment rates
will result in a decrease in payments for radiation and medical oncology and diagnostic imaging beginning in 2010 and phased in over four years through 2013 (see Note 2  Revenues).



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS



|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements, related
notes, and other financial information thereto included elsewhere in this report. References to fiscal year refer to the period from January 1 to December 31 of the indicated year. Unless otherwise noted, references to EBITDA
and the combined period have the meaning set forth under Discussion of Non-GAAP Information. In addition, see Forward-Looking Statements and Risk Factors included in our Annual Report on Form 10-K, filed with the SEC on
March 12, 2009, and subsequent filings.

Business Overview

Our mission is to enable physicians to provide the right treatment, at the right time, for the right patient. We strive to expand and improve patient access to high quality,
integrated and advanced cancer care by working closely with physicians, manufacturers and payers to improve the safety, efficiency and effectiveness of the cancer care delivery system. To realize our mission of enhancing patient access to advanced
care, we must maintain a dual emphasis on cost containment and quality improvement. Pursuit of this mission involves strategic initiatives at both the local level, where cancer care is delivered to patients, and at the national level to address the
needs of commercial and governmental payers, pharmaceutical manufacturers and other industry customers. As of September 30, 2009, our network included:



| |  |  | 1,310 affiliated physicians
| | - |  | ---------------------------



| |  |  | 493 sites of service
| | - |  | --------------------



| |  |  | 81 comprehensive cancer centers and 17 facilities providing radiation therapy only
| | - |  | ----------------------------------------------------------------------------------



| |  |  | A research network currently managing 78 active clinical trials
| | - |  | ---------------------------------------------------------------



| |  |  | A pharmaceutical distribution business currently distributing $2.2 billion annually in oncology pharmaceuticals
| | - |  | ---------------------------------------------------------------------------------------------------------------

We provide our services through four operating segments; medical oncology services, cancer center services, pharmaceutical services and
research/other services. Each of our operating segments is described in greater detail below.

We provide practice management
services to practices under comprehensive services agreements in both our medical oncology and cancer center services segments. Our management services are intended to support affiliated physicians in providing high quality, integrated and advanced
cancer care. Both medical oncology and cancer center services may be provided under the same arrangement to provide comprehensive practice management services with the differentiation between these segments relating to the nature of cancer care
being supported. Medical oncology services typically relate to the support of physicians who provide chemotherapy and drug administration, while cancer center services typically relate to physicians performing radiation treatments and diagnostic
radiology.

Our practice management services are designed to encompass all non-clinical aspects of managing an oncology
practice and assist affiliated practices develop and execute long-term strategies for their success. We believe our fee arrangements, which are typically based on a percentage of the affiliated practices earnings, effectively align our
interests and long-term objectives with those of our comprehensively managed practices. We work with affiliated groups to improve practice performance through optimizing reimbursement, implementing Lean Six-Sigma operating processes, providing
customized electronic medical records and information systems, and obtaining nationally-negotiated supply arrangements. We also assist in recruiting additional physicians into our groups, including physicians from established practices and newly
qualified oncologists. Each year approximately 50 oncologists are recruited to join one of our affiliated groups. We believe that a substantial portion of newly qualified oncologists that enter private practice join groups that are affiliated with
us. We also assist affiliated groups in strengthening their market position in an increasingly competitive environment through the development of relationship-building programs targeted to referring physicians, and through local and national
branding campaigns that communicate the benefits of being a member of our network.



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We work with practices to establish budgets, determine goals, set strategic direction
and assess the viability of capital projects or other initiatives to position them for long-term growth. Our network technology infrastructure provides a common platform that facilitates collaboration among physicians, including virtual tumor boards
where challenging cases and treatments can be discussed among peers. In addition, this infrastructure allows for the accumulation of financial information that can be used to establish key performance metrics, benchmark practice results, identify
opportunities to enhance performance and develop best operating practices. We also provide a voice in Washington, D.C. for our affiliated practices and advocate on their behalf, and on behalf of their patients, with state agencies and lawmakers.

In addition, our management services are designed to encompass all non-clinical aspects of managing an oncology practice,
allowing affiliated physicians to spend more time providing care to patients. These services include accounting, billing and collection, personnel management, payroll, benefits administration, risk management and compliance.

Operating Challenges and Strategic Responses

The economics of healthcare and the aging American population mean that pressures to increase the effectiveness of care while reducing the cost of delivery will continue. We work with physicians,
manufacturers and payers to address these issues. In 2008, we launched Innovent Oncology, a service specifically designed to bring physicians and payers together to provide the highest clinical quality while better managing the total cost of care
through evidence-based treatment protocols and patient support services. In 2009, we continue to expand this offering designed to address the fundamental pressures on the cancer care delivery system in America.

We expect that the demand for professional management of physician groups will continue. We recently began packaging key services such as
Oncology Pharmaceutical Services (OPS), Innovent Oncology, iKnowMed and Research into a targeted physician services offering under which physician practices are able to purchase one or more of these key services. This offering is
intended to complement the comprehensive services model (CSA) and address the needs of mid-size practices (five to fifteen physicians). It is available as a suite of services customized to each practices priorities.

Our Strategy

Our mission
is to enable physicians to provide the right treatment, at the right time, for the right patient. We strive to expand and improve patient access to high quality, integrated and advanced cancer care by working closely with physicians, manufacturers
and payers to improve the safety, efficiency and effectiveness of the cancer care delivery system. We know that to realize our mission of enhancing patient access to advanced care, we must maintain a dual emphasis on cost containment and quality
improvement. Pursuit of this mission involves strategic initiatives at both the local level, where cancer care is delivered to patients, and at the national level to address the needs of commercial and governmental payers, pharmaceutical
manufacturers and other industry customers.

We believe declining reimbursement and increasing operating costs have resulted
in a trend toward professional management of physician groups. Since our inception, we have worked with local physician groups to enable affiliated practices to offer state of the art care to cancer patients in outpatient settings, including
professional medical services, chemotherapy infusion, radiation oncology services, access to clinical trials, laboratory services, diagnostic radiology, pharmacy services and patient education. In addition, we work with affiliated groups to improve
practice performance through optimizing reimbursement, implementing Lean Six-Sigma operating processes, recruiting physicians, providing customized electronic medical records and information systems, and obtaining nationally negotiated supply
arrangements. We also assist affiliated groups in strengthening their market position in an increasingly competitive environment through the development of relationship-building programs targeted to referring physicians, and through local and
national branding campaigns that communicate the benefits of being a member of our network. We have also developed other tools for physicians such as the Oncology Portal which was just launched during the third quarter. The portal is a web-based
cancer care community to provide oncologists and clinicians a platform to collaborate, share best practices and gain industry insight and education.

As of September 30, 2009, we were affiliated with 1,310 physicians operating in 493 locations, including 98 radiation oncology facilities, in 39 states. Our affiliated physicians care for
approximately 720,000 patients annually, which we believe is the largest for-profit cancer care network in the United States. We will continue to work with existing affiliated physicians, and seek to enter into new affiliations, to increase the
financial strength of network practice and support their clinical initiatives.



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It is that sizable physician and patient population that allows us to realize volume
efficiencies for the network and a variety of additional industry customers. We provide oncologists with a broad range of innovative products and services through two economic models: a comprehensive services model, under which we provide all of our
practice management products and services under a single contract with one fee typically based on the practices financial performance, and our targeted physician services model, under which physicians purchase a narrower suite of services
based on the types of services required by the practice. We expect our services will increasingly be offered through targeted arrangements where a subset of our comprehensive services, including supplying oncology pharmaceuticals, disease
management, electronic medical records and research can be obtained separately on a fee for service basis. These targeted arrangements are designed to meet the needs of oncology practices that may not be well-suited for a comprehensive management
arrangement but still value a narrower scope of our services.

In addition to assisting physicians in addressing the
challenges in their local markets, we will continue to use the insight gained from working with these practices to assist payers and pharmaceutical manufacturers improve patient access to high quality cancer care and the effectiveness of the care
delivery system.

Our reimbursement expertise helps providers, payers and manufacturers realize cost efficiency and
predictability in a largely unpredictable field of medicine. Innovent Oncology addresses the payers need to avoid the unnecessary costs of care while ensuring the highest level of clinical quality. Innovent Oncology offers a comprehensive
solution to the key cost drivers in cancer care: variable treatments, debilitating side effects that lead to emergency room visits and hospitalizations between treatments, and futile treatment at the end of life.

We also work with pharmaceutical manufacturers in the development and commercialization of oncology pharmaceuticals. The
US Oncology Research Network provides pharmaceutical manufacturers with a centrally managed and efficient system for the clinical development of new therapies from Phase I through IV. This research network is led by industry-leading cancer experts
in all major tumor types and offers access to an unparalleled national sampling of patients. In addition, AccessMed® provides patient financial assistance and product support services to assist pharmaceutical manufacturers commercialize their products while our Healthcare Informatics business collects and analyzes data to provide significant insight into
drug performance and patient outcomes for ongoing product development and evaluation.

Physician Relationship Models

Comprehensive Service Agreements

Under our comprehensive services model (CSA), we own or lease all of the real and personal property used by our affiliated practices. In addition, we generally manage the non-medical business operations of our affiliated
practices and facilitate communication with our affiliated physicians. Each management agreement contemplates a policy board consisting of representatives from the affiliated physician practice and us. Each boards responsibilities include
strategic planning, decision-making and preparation of an annual budget for that practice. While both we and the affiliated practice have an equal vote in matters before the policy board, the practice physicians are solely responsible for all
medical decisions, including the hiring and termination of physicians. We are responsible for all non-medical decisions, including facilities management and information systems management.

During the nine months ended September 30, 2009 and 2008, 80.7% and 80.9% of our revenue, respectively, was derived from CSAs. Under most of our comprehensive service
agreements, or CSAs, we are compensated under the earnings model. Under the earnings model, we account for all expenses that we incur in connection with managing a practice, including rent, pharmaceutical expenses and salaries and benefits of
non-physician employees of the practices, and are paid a management fee based on a percentage of the practices earnings before income taxes, subject to certain adjustments. Our other CSAs are on a fixed management fee basis, as required by
some states.

Targeted Physician Services

Our services are increasingly being offered through targeted arrangements where a subset of the services offered through our comprehensive management agreements are provided separately to oncologists on a
fee-for-service basis. Targeted physician services represented 15.5% and 16.1% of our revenue during the nine months ended September 30, 2009 and 2008, respectively, which was primarily fees for payment for pharmaceuticals and supplies used by
the practice and reimbursement for certain pharmacy-related expenses. A smaller portion of our revenue from targeted arrangements was payment for billing,



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



collection and reimbursement support service and payment for the other services we provide. Rates for our services typically are based on the level of services desired by the practice.

Forward-Looking Statements and Risk Factors

The following statements are or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995: (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 the prospects for any of our businesses or
services and our development activities relating to physician affiliations and cancer centers; (iii) any statements preceded by, followed by or that include the words believes, expects, anticipates,
intends, estimates, plans, projects or similar expressions; and (iv) other statements contained herein regarding matters that are not historical facts.

Our business and results of operations are subject to risks and uncertainties, many of which are beyond managements ability to control
or predict. Because of these risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements, and investors are cautioned not to place undue reliance on such statements, which speak
only as of the date thereof. Such risks and uncertainties include the impact of a recession in the U.S. or global economy, the possibility of healthcare reform in the United States and its impact on cancer care specifically, the Companys
reliance on pharmaceuticals for the majority of its revenues, the Companys ability to maintain favorable pharmaceutical pricing and favorable relationships with pharmaceutical manufacturers and other vendors, concentration of pharmaceutical
purchasing and favorable pricing with a limited number of vendors, prescription drug reimbursement, such as reimbursement for ESAs, and other reimbursement under Medicare (including reimbursement for radiation and diagnostic services), reimbursement
for medical services by non-governmental payers and cost-containment efforts by such payers, including whether such payers adopt coverage guidelines regarding ESAs or pharmaceutical reimbursement methodologies that are similar to Medicare coverage,
other changes in the manner patient care is reimbursed or administered, continued migration to generic alternatives for branded pharmaceuticals, the impact of increasing unemployment (which may result in a larger population of uninsured and under
insured patients), the decisions of employers to increase the financial responsibility of individuals under health insurance programs afforded to their employees, the Companys ability to service its substantial indebtedness and comply with
related covenants in debt agreements, the Companys ability to fund its operations through operating cash flow or utilization of its credit facility or its ability to obtain additional financing on acceptable terms, the instability of capital
and credit markets, including the potential that certain financial institutions may be unable to honor existing financing commitments, the Companys ability to implement strategic initiatives, the Companys ability to maintain good
relationships with existing practices and expand into new markets and development of existing markets, modifications to, and renegotiation of, existing economic arrangements, the Companys ability to complete cancer centers and PET facilities
currently in development and its ability to recover investments in cancer centers, government regulation, investigation and enforcement, increases in the cost of providing cancer treatment services and the operations of the Companys affiliated
physician practices, and potential impairments that could result from declining market valuations.

Please refer to our
filings with the SEC, including our Annual Report on Form 10-K, filed with the SEC on March 12, 2009, and subsequent filings with the SEC, for a more extensive discussion of factors that could cause actual results to differ materially from our
expectations.

The cautionary statements contained or referred to in this report 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 thereof or to reflect the occurrence of unanticipated events.

Reimbursement Matters

Pharmaceutical Reimbursement under Medicare

Erythropoiesis-stimulating agents (ESAs) are drugs used for the treatment of anemia, which is a condition that occurs when the level of healthy red blood cells in the body becomes too low,
thus inhibiting the bloods ability to carry oxygen. Many cancer patients suffer from anemia either as a result of their disease or as a result of the treatments they receive for their cancer. ESAs have historically been used by oncologists to
treat anemia. ESAs are administered to increase levels of healthy red blood cells as an alternative to blood transfusions.



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



On July 30, 2007, Centers for Medicare & Medicaid Services
(CMS) issued a national coverage decision (NCD) establishing criteria for reimbursement by Medicare for ESA usage which led to a significant decline in utilization of these drugs by oncologists, including those affiliated
with US Oncology. In addition, the Oncology Drug Advisory Committee of the FDA (ODAC) met on March 13, 2008, to further consider the use of ESAs in oncology. Based upon the ODAC findings, on July 30, 2008, the FDA
published a final new label for the ESA drugs Aranesp and Procrit. Unlike the NCD from CMS, which governs reimbursement (rather than prescribing) for Medicare beneficiaries only, the label indication directs appropriate physician prescribing and
applies to all patients and payers.

The FDA also mandated implementation of a Risk Evaluation and Mitigation Strategy
(REMS) for ESAs. A proposed REMS for ESAs was filed by ESA manufacturers with the FDA in August 2008, but is not yet final or publicly available. The REMS is expected to focus on future ESA prescribing guidelines and may require
additional patient consent, education requirements, medication guides and physician registration procedures. The length of time required for the FDA to approve the REMS and for manufacturers to implement the new program is uncertain and it presently
remains under discussion between the manufacturers and the FDA. Once implemented, the REMS will outline additional, if any, procedural steps that will be required for qualified physicians to prescribe ESAs for their patients. The REMS is
expected to become effective in late 2009 or early 2010. We believe a possible impact of the REMS could be further reductions in ESA utilization, which could be significant. Because the use of ESAs relates to specific clinical determinations and the
Company does not make clinical decisions for affiliated physicians, analysis of the financial impact of these restrictions is a complex process. As a result, there is inherent uncertainty in making an estimate or range of estimates as to the
ultimate financial impact on the Company. Factors that could significantly affect the financial impact on the Company include ongoing clinical interpretations of coverage restrictions and risks related to ESA use.

The decline in ESA usage has had a significant adverse affect on the Companys results of operations, and, particularly, its Medical
Oncology Services and Pharmaceutical Services segments. Operating income attributable to ESAs administered by our network of affiliated physicians decreased by $0.8 million and $9.0 million during the three and nine months ended September 30,
2009, respectively, from the comparable periods ended September 30, 2008. The operating income reflects results from our Medical Oncology Services segment which relate primarily to the administration of ESAs by practices receiving comprehensive
management services and from our Pharmaceutical Services segment which includes purchases by physicians affiliated under the OPS model, as well as distribution and group purchasing fees received from manufacturers for pharmaceuticals purchased by
physicians affiliated under either of these arrangements.

Decreasing financial performance of affiliated practices as a
result of declining ESA usage also affects their relationship with the Company and, in some instances, has led to increased pressure to amend the terms of their management services agreements. In addition, reduced utilization of ESAs may
adversely impact the Companys ability to continue to receive favorable pricing from ESA manufacturers. Decreased financial performance may also adversely impact the Companys ability to obtain acceptable credit terms from
pharmaceutical manufacturers, including manufacturers of products other than ESAs.

We expect continued payer scrutiny of the
side effects of supportive care products and other drugs that represent significant costs to payers. Such scrutiny by payers or additional scientific data could lead to future restrictions on usage or reimbursement for other pharmaceuticals as a
result of payer or FDA action or reductions in usage as a result of the independent determination of oncologists practicing in our network. Any such reduction could have an adverse effect on our business. In our evidence-based medicine
initiative, affiliated physicians continually review emerging scientific information to develop clinical pathways for use in oncology and remain engaged with payers in determining optimal usage for all pharmaceuticals.

Reimbursement for Physician Services

Medicare reimbursement for physician services is based on a fee schedule, which establishes payment for a given service, in relation to actual resources used in providing the service, through the
application of relative value units (RVUs). The resources used are converted into a dollar amount of reimbursement through a conversion factor, which is updated annually by CMS, based on a formula.

On October 30, 2009, CMS announced final changes to policies and payment rates for services to be furnished during 2010 by physicians
and nonphysician practitioners who are paid under the Medicare physician fee schedule. Under the statutory formula, the conversion factor for 2010 is estimated to decrease by 21.2% unless Congress again enacts superseding



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legislation. Congress and the Administration are considering possible actions to prevent that decrease. In addition, CMS projects that changes to policies and payment rates for 2010 would result
in a 1% decrease (6% decrease in 2013 under 4-year phase-in) in overall payments to the specialty of hematology/oncology and a 1% decrease (5% decrease in 2013) in overall payments to the specialty of radiation oncology. Under the provisions, if
Congress fails to act to avert the scheduled 21.2% cut pursuant to the current Sustainable Growth Rate (SGR) formula for setting aggregate Physician Fee Schedule spending, EBITDA would be reduced by approximately $16 million. We expect
that Congress, as in previous years, will enact legislation to avert a 21.2% SGR reduction. If such legislation is enacted, we currently estimate the impact to 2010 EBITDA of changes to CMS policies and payment rates will be approximately $1 million
to $2 million, reflecting lower reductions to radiation and medical oncology and diagnostic imaging than the proposed changes issued in July which were expected to have between $5 million to $10 million impact to 2010 EBITDA, excluding the SGR cut.

On October 30, 2008, CMS issued a final rule for the Medicare Physician Fee Schedule for calendar year 2009. The
final rule establishes Medicare policy changes and payment rates that went into effect for services furnished by physicians and nonphysician practitioners as of January 1, 2009. The 2009 Medicare Physician Fee Schedule included a 5%
decrease in the conversion factor from the 2008 rates reflecting the discontinuation of a budget neutrality adjustor that had been applied to a portion of the fee schedule calculation for the past two years. This change negatively impacted technical
services and increased reimbursement for services with greater physician work components such as Evaluation and Management services. Under this fee schedule, pretax income for the nine months ended September 30, 2009, decreased by approximately
$0.5 million compared to the nine months ended September 30, 2008.

In November, 2006, CMS released its Final Rule of the
Five-Year Review of Work Relative Value Units (RVUs or Work RVUs) under the Physician Fee Schedule and Proposed Changes to the Practice Expense (PE) Methodology (the Final Rule). The Work RVUs changes
were implemented in full beginning January 1, 2007, while the PE methodology changes are being phased in over a four-year period (2007-2010). For the nine months ended September 30, 2009, the Final Rule resulted in an increase in pretax
income of $2.1 million over the comparable prior year period for Medicare non-drug reimbursement excluding the 2009 conversion factor change.

Imaging Reimbursement

On April 6, 2009, CMS issued a final NCD to expand coverage for initial testing
with positron emission tomography (PET) as a cancer diagnostic tool for Medicare beneficiaries who are diagnosed with and treated for most solid tumor cancers. This NCD also extends coverage to patients to allow PET usage beyond initial
diagnosis, to include subsequent treatment strategies and expanded usage of PET scans, including at US Oncology affiliated practices, beginning in the second quarter of 2009. In April, 2009, many US Oncology affiliated practices began accepting
patients under the expanded coverage. However, a large number of claims have not been paid because CMS had not issued the official change request informing Medicare contractors to alter their claims processing. Due to this claim payment environment,
it is premature to estimate the full impact the expanded coverage will have on PET utilization and reimbursement. The change request notification from CMS is expected to take place in the fourth quarter of 2009 and claim reimbursement will be
retroactive to April 6, 2009.

General Reimbursement Matters

Other reimbursement matters that could impact our future results include the risk factors described herein, as well as:



| |  |  | the extent to which non-governmental payers change their reimbursement rates or implement other initiatives, such as pay for performance, or change
benefit structures;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in our cost structure or the cost structure of affiliated practices, including any change in the prices our affiliated practices pay for
drugs;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in our business, including new cancer centers, PET system installations or otherwise expanding operations of affiliated physician groups;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in patient responsibility to pay for cancer treatment as a result of employer benefit plan design, rising unemployment or other related
factors; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any other changes in reimbursement or practice activity that are unrelated to the prescription drug legislation.
| | - |  | ----------------------------------------------------------------------------------------------------------------



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The Obama administration has identified healthcare as a policy priority and has released
an outline of its healthcare policy initiatives as they relate to the 2010 federal budget. The outline identifies guiding principles for healthcare reform and spending, which include increasing access to and affordability of healthcare, primarily by
ensuring access to health insurance, increasing effectiveness of care, through effective use of technology and an emphasis on evidence-based medicine, maintaining patient choice, emphasizing preventive care and enhancing the fiscal sustainability of
the U.S. healthcare system. Specific initiatives described in the outline include reducing drug costs for federal programs by increasing availability of generics and increasing the Medicaid rebates payable by manufacturers to states, increasing
incentives to reduce unnecessary variability in treatment and to practice evidence-based medicine, incentivizing the use of electronic medical records and other technology, and reducing unnecessary or wasteful spending. Similarly, some states in
which we operate have undertaken, or are considering, healthcare reform initiatives that also address these issues. Currently, the matter of healthcare reform continues to be debated by lawmakers and we are unable to provide guidance on what the
final legislation will be and how it will impact the Company. While many of the stated goals of the administrations initiatives are consistent with our own mission to increase access to care that is effective, efficient and based upon the
latest available scientific evidence, additional regulation and continued fiscal pressure may adversely affect our business.

Critical
Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are
based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial statements. The
preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing
basis, we evaluate these estimates, including those related to accounts receivable, intangible assets, goodwill, income taxes, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those
estimates under different assumptions or conditions.

In addition, as circumstances change, we may revise the basis of our
estimates accordingly. For example, in the past we have recorded charges to reflect revisions in our valuation of accounts receivable as a result of actual collection patterns. We maintain decentralized billing systems and continue to upgrade and
modify those systems. We take this into account as we evaluate the realizability of receivables and record appropriate reserves, based upon the risks of collection inherent in such a structure. In the event subsequent collections are higher or lower
than our estimates, results of operations in subsequent periods could be either positively or negatively impacted as a result of such prior estimates. This risk is particularly relevant for periods in which there is a significant shift in
reimbursement from large payers, such as the changes in Medicare reimbursement.

Refer to the Critical Accounting
Policies and Estimates section of our Annual Report on Form 10-K filed with the SEC on March 12, 2009, for a discussion of our critical accounting policies. Management believes such critical accounting policies affect the more significant
judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements. These critical accounting policies include our policy for recognition of revenue from affiliated practices, valuation of accounts
receivable, impairment of long-lived assets, volume-based pharmaceutical rebates and accounting for income taxes.

Impairment of Long-Lived
Assets

As of September 30, 2009 and December 31, 2008, our Condensed Consolidated Balance Sheet includes
goodwill in the amount of $377.3 million, of which $28.9 million, $191.4 million and $157.0 million was associated with the Medical Oncology Services, Cancer Center Services and Pharmaceutical Services segments, respectively.

The Company assesses the recoverability of goodwill on an annual basis or more frequently if events or circumstances indicate the carrying
value of goodwill may not be recoverable. In its most recent annual assessment, during the fourth quarter of 2008, the Company estimated that the fair values, on a non-controlling basis, of its Medical Oncology Services, Cancer Center Services and
Pharmaceutical Services segments exceeded their carrying values by approximately $290.0 million, $44.0 million and $125.0 million, respectively.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



A future decline in the operating performance or increase in the capital requirements of
the Cancer Center Services segment could result in an impairment of goodwill related to this segment. Goodwill for the Cancer Center Services segment was $191.4 million at September 30, 2009. Factors that could contribute to a decline in
operating performance would include, but are not limited to, a reduction in reimbursement for radiation therapy and diagnostic services by third party payers (including governmental and commercial payers), an increase in operating costs such as
compensation or utilities, or a reduction in our management fees under comprehensive management agreements. On October 30, 2009, CMS issued changes to policies and payment rates under the 2010 Medicare physician fee schedule. This fee schedule
includes reductions in reimbursement for radiation therapy services of approximately 1% in 2010, which increase to 5% in 2013 under the four-year phase-in of the provisions The Company is in the process of evaluating the rules estimated
impact. Additionally, increasing capital requirements as a result of escalating equipment or financing costs or investments in new technology could negatively impact the segments estimated fair value such that an impairment of its goodwill may
be deemed to have occurred. We continue to address the negative factors that could result in an impairment of goodwill related to this segment. During the nine months ended September 30, 2009, we implemented certain cost reduction efforts and
increased our emphasis on capital management, including working capital and investments in new projects. On April 6, 2009, CMS issued a final NCD to expand coverage for initial testing with PET as a cancer diagnostic tool for Medicare
beneficiaries who are diagnosed with and treated for most solid tumor cancers. This NCD also extends coverage to patients to allow PET usage beyond initial diagnosis to include subsequent treatment strategies and is expected to expand usage of PET
scans, and favorably impact the results of the Cancer Center Services segment. However, future adverse changes in actual or anticipated operating results, economic factors and/or market multiples used to estimate the fair value of the Company, could
result in future non-cash impairment charges. Because measuring an impairment charge requires the identification and valuation of intangible assets that have either increased in value or have been created since the goodwill was initially recognized,
it is not possible to estimate the impact of the impairment charge that would be recorded if the estimated fair value of the Cancer Center Services segment were to decline below its carrying value. We perform our annual goodwill assessment as of the
beginning of the fourth quarter, however if events or circumstances change that we conclude would more likely than not reduce the fair value of our Cancer Center Services segment below its carrying amount, we would perform impairment testing before
that date.

Recent Accounting Standards

From time to time, the FASB, the SEC and other regulatory bodies seek to change accounting rules, including rules applicable to our business and financial statements. We cannot provide assurance that
future changes in accounting rules would not require us to make restatements of previously filed financial information. Information regarding new accounting standards is included in Note 11  Recent Accounting Standards to the unaudited
condensed consolidated financial statements.

Discussion of Non-GAAP Information

In this report, the Company uses the term EBITDA which represents earnings before interest, taxes, depreciation and amortization
(including amortization of stock-based compensation), noncontrolling interest and other income (expense). EBITDA is not calculated in accordance with generally accepted accounting principles in the United States (GAAP); rather it is
derived from relevant items in the Companys GAAP-based financial statements. A reconciliation of EBITDA to the unaudited Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) and the unaudited Condensed Consolidated
Statement of Cash Flows is included in this quarterly report.

We believe EBITDA is useful to investors in evaluating the
value of companies in general, and in evaluating the liquidity of companies with debt service obligations and their ability to service their indebtedness. Management uses EBITDA as a key indicator to evaluate liquidity and financial condition, both
with respect to the business as a whole and with respect to individual sites in the US Oncology network. At September 30, 2009, the Companys Senior Secured Revolving Credit Facility required that we comply on a quarterly basis with
certain financial covenants that include EBITDA as a financial measure. Management believes that EBITDA is useful to investors, since it provides investors with additional information that is not directly available in a GAAP presentation.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



As a non-GAAP measure, EBITDA should not be viewed as an alternative to the
Companys income or loss from operations, as an indicator of operating performance, or the Companys cash flow from operations as a measure of liquidity. For example, EBITDA does not reflect:



| |  |  | the Companys significant interest expense, or the cash requirements necessary to service interest and principal payments on the Companys
indebtedness or obligations arising under its interest rate swap agreement;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | cash requirements for the addition or replacement of capital assets being depreciated and amortized, which typically must be replaced in the future,
even though deprecation and amortization are non-cash charges;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in, or cash equivalents available for, the Companys working capital needs;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | the Companys cash expenditures, or future requirements, for other expenditures, such as payments that may be made as consideration to
affiliating physicians joining our network, or contractual commitments; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the fact that other companies may calculate EBITDA differently than we do, which may limit its usefulness as a comparative measure.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------

Despite these limitations, management believes that EBITDA provides investors and analysts with a useful
measure of liquidity and financial condition unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. Management compensates for these limitations by relying
primarily on the Companys GAAP results and using EBITDA as supplemental information for comparative purposes and for analyzing compliance with the Companys loan covenants.

In all events, EBITDA is not intended to be a substitute for GAAP measures. Investors are advised to review such non-GAAP measures in conjunction with GAAP information provided by
us.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



Results of Operations

As of September 30, 2009 and 2008, respectively, we have affiliated with the following number of physicians (including those under OPS agreements), by specialty:



|                                  |  |               |  |      
|--------------------------------- |  | ------------- |  | -----
|                                  |  | September 30,
|                                  |  | 2009          |  | 2008 
|Medical oncologists/hematologists |  | 1,061         |  | 1,006
|Radiation oncologists             |  | 164           |  | 159  
|Other oncologists                 |  | 85            |  | 62   
|                                  |  |               |  |      
|Total physicians                  |  | 1,310         |  | 1,227
|                                  |  |               |  |      

The following tables set forth changes in the number of physicians affiliated with
the Company under both comprehensive and OPS agreements:



|                                                         |  |                                 |   |  |                                |   |  |       |   |  |       |  
|-------------------------------------------------------- |  | ------------------------------- | - |  | ------------------------------ | - |  | ----- | - |  | ----- | -
|Comprehensive Service Agreements(1)                      |  | Three Months EndedSeptember 30, |   |  | Nine Months EndedSeptember 30, |  
|                                                         |  | 2009                            |   |  | 2008                           |   |  | 2009  |   |  | 2008  |  
|Affiliated physicians, beginning of period               |  | 989                             |   |  | 951                            |   |  | 979   |   |  | 903   |  
|Physician practice affiliations                          |  | 9                               |   |  | 6                              |   |  | 49    |   |  | 65    |  
|Recruited physicians                                     |  | 30                              |   |  | 30                             |   |  | 46    |   |  | 40    |  
|Retiring/Other                                           |  | (13                             | ) |  | (12                            | ) |  | (51   | ) |  | (31   | )
|Net conversions to/from OPS agreements                   |  |                                |   |  |                               |   |  | (8    | ) |  | (2    | )
|                                                         |  |                                 |   |  |                                |   |  |       |   |  |       |  
|Affiliated physicians, end of period                     |  | 1,015                           |   |  | 975                            |   |  | 1,015 |   |  | 975   |  
|                                                         |  |                                 |   |  |                                |   |  |       |   |  |       |  
|                                                         |  |                                
|Oncology Pharmaceutical Services Agreements(2)           |  | Three Months EndedSeptember 30, |   |  | Nine Months EndedSeptember 30, |  
|                                                         |  | 2009                            |   |  | 2008                           |   |  | 2009  |   |  | 2008  |  
|Affiliated physicians, beginning of period               |  | 247                             |   |  | 269                            |   |  | 232   |   |  | 296   |  
|Physician practice affiliations                          |  | 56                              |   |  | 4                              |   |  | 101   |   |  | 27    |  
|Physician practice separations                           |  | (11                             | ) |  | (7                             | ) |  | (35   | ) |  | (52   | )
|Retiring/Other(3)                                        |  | 3                               |   |  | (14                            | ) |  | (11   | ) |  | (21   | )
|Net conversions to/from comprehensive service agreements |  |                                |   |  |                               |   |  | 8     |   |  | 2     |  
|                                                         |  |                                 |   |  |                                |   |  |       |   |  |       |  
|Affiliated physicians, end of period                     |  | 295                             |   |  | 252                            |   |  | 295   |   |  | 252   |  
|                                                         |  |                                 |   |  |                                |   |  |       |   |  |       |  
|Affiliated physicians, end of period                     |  | 1,310                           |   |  | 1,227                          |   |  | 1,310 |   |  | 1,227 |  
|                                                         |  |                                 |   |  |                                |   |  |       |   |  |       |  



|(1) | Operations related to comprehensive service agreements are included in the medical oncology and cancer center services segments.
|--- | --------------------------------------------------------------------------------------------------------------------------------



|(2) | Operations related to OPS agreements are included in the pharmaceutical services segment.
|--- | -----------------------------------------------------------------------------------------



|(3) | The third quarter of 2009 includes a year-to-date reclassification of 3 physicians who were part of physician practice separations rather than
retirements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



The following table sets forth the number of radiation oncology facilities and PET
systems managed by us:



|                                                  |  |                                 |  |                                |  |      |   |  |      |  
|------------------------------------------------- |  | ------------------------------- |  | ------------------------------ |  | ---- | - |  | ---- | -
|                                                  |  | Three Months EndedSeptember 30, |  | Nine Months EndedSeptember 30, | 
|                                                  |  | 2009                            |  | 2008                           |  | 2009 |   |  | 2008 |  
|Cancer Centers, beginning of period               |  | 79                              |  | 80                             |  | 80   |   |  | 77   |  
|Cancer Centers opened                             |  | 2                               |  |                               |  | 3    |   |  | 4    |  
|Cancer Centers closed                             |  |                                |  |                               |  | (2   | ) |  | (1   | )
|                                                  |  |                                 |  |                                |  |      |   |  |      |  
|Cancer Centers, end of period                     |  | 81                              |  | 80                             |  | 81   |   |  | 80   |  
|                                                  |  |                                 |  |                                |  |      |   |  |      |  
|Radiation oncology-only facilities, end of period |  | 17                              |  | 12                             |  | 17   |   |  | 12   |  
|                                                  |  |                                 |  |                                |  |      |   |  |      |  
|Total Radiation Oncology Facilities(1)            |  | 98                              |  | 92                             |  | 98   |   |  | 92   |  
|                                                  |  |                                 |  |                                |  |      |   |  |      |  
|Linear Accelerators(2)                            |  | 124                             |  | 118                            |  | 124  |   |  | 118  |  
|                                                  |  |                                 |  |                                |  |      |   |  |      |  
|PET Systems(2)                                    |  | 39                              |  | 36                             |  | 39   |   |  | 36   |  
|                                                  |  |                                 |  |                                |  |      |   |  |      |  
|CT Scanners(3)                                    |  | 65                              |  | 62                             |  | 65   |   |  | 62   |  
|                                                  |  |                                 |  |                                |  |      |   |  |      |  



|(1) | Includes 95 and 86 sites utilizing IMRT and/or IGRT technology at September 30, 2009 and 2008, respectively.
|--- | ------------------------------------------------------------------------------------------------------------



|(2) | Includes 29 and 24 PET/CT systems at September 30, 2009 and 2008, respectively.
|--- | -------------------------------------------------------------------------------



|(3) | Excludes PET/CT systems which are classified as PET systems above.
|--- | ------------------------------------------------------------------

The following table sets forth key operating statistics as a measure of the volume of services provided by our practices affiliated under comprehensive service agreements:



|                                                          |  |                                 |  |                                |  |        |  |       
|--------------------------------------------------------- |  | ------------------------------- |  | ------------------------------ |  | ------ |  | ------
|                                                          |  | Three Months EndedSeptember 30, |  | Nine Months EndedSeptember 30,
|                                                          |  | 2009                            |  | 2008                           |  | 2009   |  | 2008  
|Average Per Operating Day Statistics:                     |  |                                 |  |                                |  |        |  |       
|Medical oncology visits                                   |  | 11,220                          |  | 10,712                         |  | 11,225 |  | 10,708
|Radiation treatments                                      |  | 2,779                           |  | 2,697                          |  | 2,745  |  | 2,720 
|Targeted treatments (included in radiation treatments)(1) |  | 761                             |  | 696                            |  | 756    |  | 680   
|PET scans                                                 |  | 225                             |  | 206                            |  | 223    |  | 203   
|CT scans                                                  |  | 846                             |  | 785                            |  | 840    |  | 775   



|(1) | Includes IMRT,
IGRT, mammosite, brachytherapy and stereotactic radiosurgery treatments.
|--- | ---------------------------------------------------------------------------------------



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



The following table sets forth the percentages of revenue represented by certain items
reflected in our unaudited Condensed Consolidated Statement of Operations and Comprehensive Income (Loss). The following information should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto
included elsewhere herein.



|                                                          |  |                                 |         |   |                                 |       |    |      |   |         |      |  |       |    |  |   |         |   |  |       |    |  |   |         |   |  |       |  
|--------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------- | ----- | -- | ---- | - | ------- | ---- |  | ----- | -- |  | - | ------- | - |  | ----- | -- |  | - | ------- | - |  | ----- | -
|                                                          |  | US Oncology Holdings, Inc.      |         |   | US Oncology, Inc.               |      
|                                                          |  | Three Months EndedSeptember 30, |         |   | Three Months EndedSeptember 30, |      
|                                                          |  | 2009                            |         |   | 2008                            |       |    | 2009 |   |         | 2008 | 
|Product revenue                                           |  | $                               | 608,035 |   |                                 | 67.5  | %  |      | $ | 556,359 |      |  | 67.7  | %  |  | $ | 608,035 |   |  | 67.5  | %  |  | $ | 556,359 |   |  | 67.7  | %
|Service revenue                                           |  |                                 | 293,419 |   |                                 | 32.5  |    |      |   | 265,377 |      |  | 32.3  |    |  |   | 293,419 |   |  | 32.5  |    |  |   | 265,377 |   |  | 32.3  |  
|                                                          |  |                                 |         |   |                                 |       |    |      |   |         |      |  |       |    |  |   |         |   |  |       |    |  |   |         |   |  |       |  
|Total revenue                                             |  |                                 | 901,454 |   |                                 | 100.0 |    |      |   | 821,736 |      |  | 100.0 |    |  |   | 901,454 |   |  | 100.0 |    |  |   | 821,736 |   |  | 100.0 |  
|Cost of products                                          |  |                                 | 596,208 |   |                                 | 66.1  |    |      |   | 537,029 |      |  | 65.4  |    |  |   | 596,208 |   |  | 66.1  |    |  |   | 537,029 |   |  | 65.4  |  
|Cost of services:                                         |  |                                 |         |   |                                 |       |    |      |   |         |      |  |       |    |  |   |         |   |  |       |    |  |   |         |   |  |       |  
|Operating compensation and benefits                       |  |                                 | 140,321 |   |                                 | 15.6  |    |      |   | 131,158 |      |  | 16.0  |    |  |   | 140,321 |   |  | 15.6  |    |  |   | 131,158 |   |  | 16.0  |  
|Other operating costs                                     |  |                                 | 84,824  |   |                                 | 9.4   |    |      |   | 81,310  |      |  | 9.9   |    |  |   | 84,824  |   |  | 9.4   |    |  |   | 81,310  |   |  | 9.9   |  
|Depreciation and amortization                             |  |                                 | 19,090  |   |                                 | 2.1   |    |      |   | 17,898  |      |  | 2.1   |    |  |   | 19,090  |   |  | 2.1   |    |  |   | 17,898  |   |  | 2.1   |  
|                                                          |  |                                 |         |   |                                 |       |    |      |   |         |      |  |       |    |  |   |         |   |  |       |    |  |   |         |   |  |       |  
|Total cost of services                                    |  |                                 | 244,235 |   |                                 | 27.1  |    |      |   | 230,366 |      |  | 28.0  |    |  |   | 244,235 |   |  | 27.1  |    |  |   | 230,366 |   |  | 28.0  |  
|                                                          |  |                                 |         |   |                                 |       |    |     
|Total cost of products and services                       |  |                                 | 840,443 |   |                                 | 93.2  |    |      |   | 767,395 |      |  | 93.4  |    |  |   | 840,443 |   |  | 93.2  |    |  |   | 767,395 |   |  | 93.4  |  
|General and administrative expense                        |  |                                 | 18,913  |   |                                 | 2.1   |    |      |   | 18,216  |      |  | 2.2   |    |  |   | 18,792  |   |  | 2.1   |    |  |   | 18,078  |   |  | 2.2   |  
|Impairment and restructuring charges                      |  |                                 | 4,117   |   |                                 | 0.5   |    |      |   | 271     |      |  |      |    |  |   | 4,117   |   |  | 0.5   |    |  |   | 271     |   |  |      |  
|Depreciation and amortization                             |  |                                 | 7,700   |   |                                 | 0.8   |    |      |   | 7,684   |      |  | 1.0   |    |  |   | 7,700   |   |  | 0.8   |    |  |   | 7,684   |   |  | 1.0   |  
|                                                          |  |                                 |         |   |                                 |       |    |      |   |         |      |  |       |    |  |   |         |   |  |       |    |  |   |         |   |  |       |  
|Total costs and expenses                                  |  |                                 | 871,173 |   |                                 | 96.6  |    |      |   | 793,566 |      |  | 96.6  |    |  |   | 871,052 |   |  | 96.6  |    |  |   | 793,428 |   |  | 96.6  |  
|                                                          |  |                                 |         |   |                                 |       |    |      |   |         |      |  |       |    |  |   |         |   |  |       |    |  |   |         |   |  |       |  
|Income from operations                                    |  |                                 | 30,281  |   |                                 | 3.4   |    |      |   | 28,170  |      |  | 3.4   |    |  |   | 30,402  |   |  | 3.4   |    |  |   | 28,308  |   |  | 3.4   |  
|                                                          |  |                                 |         |   |                                 |       |    |     
|Other expense:                                            |  |                                 |         |   |                                 |       |    |      |   |         |      |  |       |    |  |   |         |   |  |       |    |  |   |         |   |  |       |  
|Interest expense, net                                     |  |                                 | (37,627 | ) |                                 | (4.2  | )  |      |   | (33,132 | )    |  | (4.0  | )  |  |   | (28,016 | ) |  | (3.1  | )  |  |   | (22,679 | ) |  | (2.7  | )
|Loss on early extinguishment of debt                      |  |                                 | (3,672  | ) |                                 | (0.4  | )  |      |   |        |      |  |      |    |  |   | (3,672  | ) |  | (0.4  | )  |  |   |        |   |  |      |  
|Other income (expense)                                    |  |                                 | (7,596  | ) |                                 | (0.8  | )  |      |   | (4,186  | )    |  | (0.5  | )  |  |   |        |   |  | 0.0   |    |  |   |        |   |  |      |  
|                                                          |  |                                 |         |   |                                 |       |    |      |   |         |      |  |       |    |  |   |         |   |  |       |    |  |   |         |   |  |       |  
|Income (loss) before income taxes                         |  |                                 | (18,614 | ) |                                 | (2.0  | )  |      |   | (9,148  | )    |  | (1.1  | )  |  |   | (1,286  | ) |  | (0.1  | )  |  |   | 5,629   |   |  | 0.7   |  
|Income tax benefit (provision)                            |  |                                 | (764    | ) |                                 | (0.1  | )  |      |   | 4,110   |      |  | 0.5   |    |  |   | 1,332   |   |  | 0.1   |    |  |   | (1,039  | ) |  | (0.1  | )
|                                                          |  |                                 |         |   |                                 |       |    |      |   |         |      |  |       |    |  |   |         |   |  |       |    |  |   |         |   |  |       |  
|Net income (loss)                                         |  |                                 | (19,378 | ) |                                 | (2.1  | )  |      |   | (5,038  | )    |  | (0.6  | )  |  |   | 46      |   |  |      |    |  |   | 4,590   |   |  | 0.6   |  
|Less: Net income attributable to noncontrolling interests |  |                                 | (912    | ) |                                 | (0.1  | )  |      |   | (715    | )    |  | (0.1  | )  |  |   | (912    | ) |  | (0.1  | )  |  |   | (715    | ) |  | (0.1  | )
|                                                          |  |                                 |         |   |                                 |       |    |      |   |         |      |  |       |    |  |   |         |   |  |       |    |  |   |         |   |  |       |  
|Net income (loss) attributable to the Company             |  | $                               | (20,290 | ) |                                 | (2.2  | )% |      | $ | (5,753  | )    |  | (0.7  | )% |  | $ | (866    | ) |  | (0.1  | )% |  | $ | 3,875   |   |  | 0.5   | %
|                                                          |  |                                 |         |   |                                 |       |    |      |   |         |      |  |       |    |  |   |         |   |  |       |    |  |   |         |   |  |       |  



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



|                                                          |  |                                |           |   |                                |       |    |      |   |           |      |  |       |    |  |   |           |   |  |       |    |  |   |           |   |  |       |   
|--------------------------------------------------------- |  | ------------------------------ | --------- | - | ------------------------------ | ----- | -- | ---- | - | --------- | ---- |  | ----- | -- |  | - | --------- | - |  | ----- | -- |  | - | --------- | - |  | ----- | --
|                                                          |  | US Oncology Holdings, Inc.     |           |   | US Oncology, Inc.              |      
|                                                          |  | Nine Months EndedSeptember 30, |           |   | Nine Months EndedSeptember 30, |      
|                                                          |  | 2009                           |           |   | 2008                           |       |    | 2009 |   |           | 2008 | 
|Product revenue                                           |  | $                              | 1,765,687 |   |                                | 67.2  | %  |      | $ | 1,656,670 |      |  | 67.3  | %  |  | $ | 1,765,687 |   |  | 67.2  | %  |  | $ | 1,656,670 |   |  | 67.3  | % 
|Service revenue                                           |  |                                | 859,975   |   |                                | 32.8  |    |      |   | 804,848   |      |  | 32.7  |    |  |   | 859,975   |   |  | 32.8  |    |  |   | 804,848   |   |  | 32.7  |   
|                                                          |  |                                |           |   |                                |       |    |      |   |           |      |  |       |    |  |   |           |   |  |       |    |  |   |           |   |  |       |   
|Total revenue                                             |  |                                | 2,625,662 |   |                                | 100.0 |    |      |   | 2,461,518 |      |  | 100.0 |    |  |   | 2,625,662 |   |  | 100.0 |    |  |   | 2,461,518 |   |  | 100.0 |   
|Cost of products                                          |  |                                | 1,730,012 |   |                                | 65.9  |    |      |   | 1,610,641 |      |  | 65.4  |    |  |   | 1,730,012 |   |  | 65.9  |    |  |   | 1,610,641 |   |  | 65.4  |   
|Cost of services:                                         |  |                                |           |   |                                |       |    |      |   |           |      |  |       |    |  |   |           |   |  |       |    |  |   |           |   |  |       |   
|Operating compensation and benefits                       |  |                                | 416,107   |   |                                | 15.8  |    |      |   | 391,432   |      |  | 15.9  |    |  |   | 416,107   |   |  | 15.8  |    |  |   | 391,432   |   |  | 15.9  |   
|Other operating costs                                     |  |                                | 248,168   |   |                                | 9.5   |    |      |   | 237,544   |      |  | 9.7   |    |  |   | 248,168   |   |  | 9.5   |    |  |   | 237,544   |   |  | 9.7   |   
|Depreciation and amortization                             |  |                                | 54,590    |   |                                | 2.1   |    |      |   | 55,252    |      |  | 2.2   |    |  |   | 54,590    |   |  | 2.1   |    |  |   | 55,252    |   |  | 2.2   |   
|                                                          |  |                                |           |   |                                |       |    |      |   |           |      |  |       |    |  |   |           |   |  |       |    |  |   |           |   |  |       |   
|Total cost of services                                    |  |                                | 718,865   |   |                                | 27.4  |    |      |   | 684,228   |      |  | 27.8  |    |  |   | 718,865   |   |  | 27.4  |    |  |   | 684,228   |   |  | 27.8  |   
|                                                          |  |                                |           |   |                                |       |    |     
|Total cost of products and services                       |  |                                | 2,448,877 |   |                                | 93.3  |    |      |   | 2,294,869 |      |  | 93.2  |    |  |   | 2,448,877 |   |  | 93.3  |    |  |   | 2,294,869 |   |  | 93.2  |   
|General and administrative expense                        |  |                                | 53,374    |   |                                | 2.0   |    |      |   | 59,543    |      |  | 2.4   |    |  |   | 53,179    |   |  | 2.0   |    |  |   | 59,306    |   |  | 2.4   |   
|Impairment and restructuring charges                      |  |                                | 5,907     |   |                                | 0.2   |    |      |   | 382,041   |      |  | 15.5  |    |  |   | 5,907     |   |  | 0.2   |    |  |   | 382,041   |   |  | 15.5  |   
|Depreciation and amortization                             |  |                                | 22,470    |   |                                | 0.9   |    |      |   | 21,967    |      |  | 1.0   |    |  |   | 22,470    |   |  | 0.9   |    |  |   | 21,967    |   |  | 1.0   |   
|                                                          |  |                                |           |   |                                |       |    |      |   |           |      |  |       |    |  |   |           |   |  |       |    |  |   |           |   |  |       |   
|Total costs and expenses                                  |  |                                | 2,530,628 |   |                                | 96.4  |    |      |   | 2,758,420 |      |  | 112.1 |    |  |   | 2,530,433 |   |  | 96.4  |    |  |   | 2,758,183 |   |  | 112.1 |   
|                                                          |  |                                |           |   |                                |       |    |      |   |           |      |  |       |    |  |   |           |   |  |       |    |  |   |           |   |  |       |   
|Income (loss) from operations                             |  |                                | 95,034    |   |                                | 3.6   |    |      |   | (296,902  | )    |  | (12.1 | )  |  |   | 95,229    |   |  | 3.6   |    |  |   | (296,665  | ) |  | (12.1 | ) 
|                                                          |  |                                |           |   |                                |       |    |     
|Other expense:                                            |  |                                |           |   |                                |       |    |      |   |           |      |  |       |    |  |   |           |   |  |       |    |  |   |           |   |  |       |   
|Interest expense, net                                     |  |                                | (102,820  | ) |                                | (3.9  | )  |      |   | (101,810  | )    |  | (4.1  | )  |  |   | (73,122   | ) |  | (2.8  | )  |  |   | (69,313   | ) |  | (2.8  | ) 
|Loss on early extinguishment of debt                      |  |                                | (26,025   | ) |                                | (1.0  | )  |      |   |          |      |  |      |    |  |   | (26,025   | ) |  | (1.0  | )  |  |   |          |   |  |      |   
|Other income (expense)                                    |  |                                | (9,975    | ) |                                | (0.4  | )  |      |   | (4,528    | )    |  | (0.2  | )  |  |   | 37        |   |  | 0.1   |    |  |   | 1,370     |   |  | 0.1   |   
|                                                          |  |                                |           |   |                                |       |    |      |   |           |      |  |       |    |  |   |           |   |  |       |    |  |   |           |   |  |       |   
|Income (loss) before income taxes                         |  |                                | (43,786   | ) |                                | (1.7  | )  |      |   | (403,240  | )    |  | (16.4 | )  |  |   | (3,881    | ) |  | (0.1  | )  |  |   | (364,608  | ) |  | (14.8 | ) 
|Income tax benefit (provision)                            |  |                                | 3,260     |   |                                | 0.1   |    |      |   | 9,688     |      |  | 0.4   |    |  |   | (948      | ) |  |      |    |  |   | (3,905    | ) |  | (0.2  | ) 
|                                                          |  |                                |           |   |                                |       |    |      |   |           |      |  |       |    |  |   |           |   |  |       |    |  |   |           |   |  |       |   
|Net income (loss)                                         |  |                                | (40,526   | ) |                                | (1.6  | )  |      |   | (393,552  | )    |  | (16.0 | )  |  |   | (4,829    | ) |  | (0.1  | )  |  |   | (368,513  | ) |  | (15.0 | ) 
|Less: Net income attributable to noncontrolling interests |  |                                | (2,615    | ) |                                | (0.1  | )  |      |   | (2,447    | )    |  | (0.1  | )  |  |   | (2,615    | ) |  | (0.1  | )  |  |   | (2,447    | ) |  | (0.1  | ) 
|                                                          |  |                                |           |   |                                |       |    |      |   |           |      |  |       |    |  |   |           |   |  |       |    |  |   |           |   |  |       |   
|Net income (loss) attributable to the Company             |  | $                              | (43,141   | ) |                                | (1.7  | )% |      | $ | (395,999  | )    |  | (16.1 | )% |  | $ | (7,444    | ) |  | (0.2  | )% |  | $ | (370,960  | ) |  | (15.1 | )%
|                                                          |  |                                |           |   |                                |       |    |      |   |           |      |  |       |    |  |   |           |   |  |       |    |  |   |           |   |  |       |   

In the following discussion, we address the results of operations of US Oncology and
Holdings. With the exception of incremental interest expense associated with its floating rate notes, changes in the fair value of Holdings interest rate swap and nominal administrative expenses, the results of operations of Holdings are
identical to those of US Oncology. Therefore, discussion related to revenue, cost of products and cost of services is identical for both companies. Beginning with the discussion of corporate costs (which includes interest and general and
administrative expense) we first address the results of US Oncology, since it incurs the substantial portion of such expenses. Following the discussion of US Oncology, we separately address the incremental costs incurred by Holdings.

We derive revenue primarily in four areas:



| |  |  | Comprehensive management fees. Under our comprehensive service agreements, we recognize revenues equal to the reimbursement we receive for
all expenses we incur in connection with managing a practice plus an additional management fee (typically based upon a percentage of the practices earnings before income taxes, subject to certain adjustments).
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Oncology pharmaceutical services fees. Under our OPS agreements, we earn revenue from affiliated practices for products delivered and
services rendered. These revenues include payment for all of the pharmaceutical agents purchased by the practice and a service fee for the pharmacy-related services we provide.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | GPO, data and other service fees. We receive fees from pharmaceutical companies for acting as a group purchasing organization
(GPO) for our affiliated practices, and for providing informational and other services to pharmaceutical companies. GPO fees are typically based upon the volume of drugs purchased by the practices. Fees for other services include amounts
paid for data we collect, compile and analyze, as well as fees for other services we provide to pharmaceutical companies, including reimbursement support.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Clinical research fees. We receive fees for clinical research services from pharmaceutical and biotechnology companies. These fees are
separately negotiated for each study and typically include a management fee, per patient accrual fees and fees for achieving various study milestones.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



A portion of our revenue under our comprehensive service agreements and our OPS
agreements with affiliated practices is derived from sales of pharmaceutical products and is reported as product revenues. Our remaining revenues are reported as service revenues. Physician practices that enter into comprehensive service agreements
with us receive a broad range of services and receive pharmaceutical products. These products and services represent multiple deliverables rendered under a single contract, with a single fee. We have analyzed the component of the contract
attributable to the provision of products (pharmaceuticals) and the component of the contract attributable to the provision of services and attributed fair value to each component.

We retain all amounts we collect in respect of practice receivables. On a monthly basis, we calculate what portion of their revenues our affiliated practices are entitled to retain
by subtracting practice expenses and our fees from their revenues. We pay practices this remainder in cash, which they use primarily for physician compensation. The amounts retained by physician groups are excluded from our revenue because they are
not part of our fees. By paying physicians on a cash basis for accrued amounts, we assist in financing their working capital.

Revenue

The following tables reflect our revenue by segment for the three months and nine months ended September 30, 2009 and
2008 (in thousands):



|                                  |  |                                  |          |   |      |   |          |                                 |  |      |      |  |   |            |   |  |        |            |   |  |      |  
|--------------------------------- |  | -------------------------------- | -------- | - | ---- | - | -------- | ------------------------------- |  | ---- | ---- |  | - | ---------- | - |  | ------ | ---------- | - |  | ---- | -
|                                  |  | Three Months Ended September 30, |          |   |      |   |          | Nine Months Ended September 30, |  |      |      | 
|                                  |  | 2009                             |          |   | 2008 |   |          | Change                          |  |      | 2009 |  |   | 2008       |   |  | Change |           
|Medical oncology services         |  | $                                | 610,349  |   |      | $ | 557,402  |                                 |  | 9.5  | %    |  | $ | 1,797,837  |   |  | $      | 1,669,501  |   |  | 7.7  | %
|Cancer center services            |  |                                  | 99,457   |   |      |   | 91,996   |                                 |  | 8.1  |      |  |   | 288,917    |   |  |        | 274,321    |   |  | 5.3  |  
|Pharmaceutical services           |  |                                  | 645,465  |   |      |   | 633,960  |                                 |  | 1.8  |      |  |   | 1,847,229  |   |  |        | 1,881,833  |   |  | (1.8 | )
|Research and other services       |  |                                  | 17,087   |   |      |   | 14,544   |                                 |  | 17.5 |      |  |   | 54,780     |   |  |        | 42,182     |   |  | 29.9 |  
|Eliminations(1)                   |  |                                  | (470,904 | ) |      |   | (476,166 | )                               |  | 1.1  |      |  |   | (1,363,101 | ) |  |        | (1,406,319 | ) |  | 3.1  |  
|                                  |  |                                  |          |   |      |   |          |                                 |  |      |      |  |   |            |   |  |        |            |   |  |      |  
|Total revenue                     |  | $                                | 901,454  |   |      | $ | 821,736  |                                 |  | 9.7  | %    |  | $ | 2,625,662  |   |  | $      | 2,461,518  |   |  | 6.7  | %
|                                  |  |                                  |          |   |      |   |          |                                 |  |      |      |  |   |            |   |  |        |            |   |  |      |  
|As a percentage of total revenue: |  |                                  |          |   |      |   |          |                                 |  |      |      |  |   |            |   |  |        |            |   |  |      |  
|                                  |  |                                  |          |   |      |  
|Medical oncology services         |  |                                  | 67.7     | % |      |   | 67.8     | %                               |  |      |      |  |   | 68.5       | % |  |        | 67.8       | % |  |      |  
|Cancer center services            |  |                                  | 11.0     |   |      |   | 11.2     |                                 |  |      |      |  |   | 11.0       |   |  |        | 11.1       |   |  |      |  
|Pharmaceutical services           |  |                                  | 71.6     |   |      |   | 77.1     |                                 |  |      |      |  |   | 70.4       |   |  |        | 76.5       |   |  |      |  
|Research and other services       |  |                                  | 1.9      |   |      |   | 1.8      |                                 |  |      |      |  |   | 2.1        |   |  |        | 1.7        |   |  |      |  
|Eliminations(1)                   |  |                                  | (52.2    | ) |      |   | (57.9    | )                               |  |      |      |  |   | (52.0      | ) |  |        | (57.1      | ) |  |      |  
|                                  |  |                                  |          |   |      |   |          |                                 |  |      |      |  |   |            |   |  |        |            |   |  |      |  
|Total revenue                     |  |                                  | 100.0    | % |      |   | 100.0    | %                               |  |      |      |  |   | 100.0      | % |  |        | 100.0      | % |  |      |  
|                                  |  |                                  |          |   |      |   |          |                                 |  |      |      |  |   |            |   |  |        |            |   |  |      |  



|(1) | Eliminations represent the sale of pharmaceuticals from our distribution center (Pharmaceutical Services segment) to our affiliated practices
(Medical Oncology segment).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Medical Oncology Services. For the three months ended September 30,
2009, medical oncology services revenue increased $52.9 million, or 9.5 percent, from the three months ended September 30, 2008. The revenue increase reflects higher medical oncology visits due primarily to physician additions, increased
productivity and an increase in other services. Revenue growth was partially offset by lower utilization of ESA drugs by affiliated physicians.

Medical oncology services revenue for the nine months ended September 30, 2009 increased $128.3 million, or 7.7 percent, from the nine months ended September 30, 2008 also resulting from higher
medical oncology visits due primarily to physician additions, increased productivity and an increase in other services partially offset by lower utilization of ESA drugs.

Cancer Center Services. Cancer Center Services revenue for the three months ended September 30, 2009 was $99.5 million, an increase of $7.5 million, or 8.1 percent from the three months ended
September 30, 2008. The increase reflects higher radiation treatment and diagnostic scan volumes due primarily to additional radiation oncologists affiliated under comprehensive service agreements, a continued shift toward advanced targeted
radiation therapies that are reimbursed at higher rates and additional investments in diagnostic and radiation equipment.

For
the nine months ended September 30, 2009, cancer center services revenue increased $14.6 million, or 5.3 percent over the same period of 2008. Similar to the quarterly comparison above, the increase reflects an 8.7 percent increase in
diagnostic scans as well as a shift towards more technologically advanced radiation therapies which increased by 11.2 percent compared to 2008.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



Pharmaceutical Services.Pharmaceutical Services revenue during the three months
ended September 30, 2009 was $645.5 million, an increase of $11.5 million, or 1.8 percent, from the three months ended September 30, 2008. The revenue increase is primarily due to an increase in the number of physicians affiliated under
OPS agreements from the prior year.

During the nine months ended September 30, 2009, pharmaceutical services revenue was
$1,847.2 million, a decrease of $34.6 million from the comparable 2008 period due to a reduction in the average number of physicians during the year-to-date period reflecting credit risk management earlier in the year as well as lower ESA drug
volumes.

Operating Costs

Operating costs including depreciation and amortization related to our operating assets, and are presented in the tables below (in thousands):



|                                    |  |                                  |         |   |        |   |         |                                 |      |      |        |      |   |           |   |  |   |           |   |  |      |  
|----------------------------------- |  | -------------------------------- | ------- | - | ------ | - | ------- | ------------------------------- | ---- | ---- | ------ | ---- | - | --------- | - |  | - | --------- | - |  | ---- | -
|                                    |  | Three Months Ended September 30, |         |   | Change |   |         | Nine Months Ended September 30, |      |      | Change |     
|                                    |  | 2009                             |         |   | 2008   |   |         |                                 | 2009 |      |        | 2008 |   |          
|Cost of products                    |  | $                                | 596,208 |   |        | $ | 537,029 |                                 |      | 11.0 | %      |      | $ | 1,730,012 |   |  | $ | 1,610,641 |   |  | 7.4  | %
|Cost of services:                   |  |                                  |         |   |        |   |         |                                 |      |      |        |      |   |           |   |  |   |           |   |  |      |  
|Operating compensation and benefits |  |                                  | 140,321 |   |        |   | 131,158 |                                 |      | 7.0  |        |      |   | 416,107   |   |  |   | 391,432   |   |  | 6.3  |  
|Other operating costs               |  |                                  | 84,824  |   |        |   | 81,310  |                                 |      | 4.3  |        |      |   | 248,168   |   |  |   | 237,544   |   |  | 4.5  |  
|Depreciation and amortization       |  |                                  | 19,090  |   |        |   | 17,898  |                                 |      | 6.7  |        |      |   | 54,590    |   |  |   | 55,252    |   |  | (1.2 | )
|                                    |  |                                  |         |   |        |   |         |                                 |      |      |        |      |   |           |   |  |   |           |   |  |      |  
|Total cost of services              |  |                                  | 244,235 |   |        |   | 230,366 |                                 |      | 6.0  |        |      |   | 718,865   |   |  |   | 684,228   |   |  | 5.1  |  
|                                    |  |                                  |         |   |        |   |         |                                 |      |      |        |      |   |           |   |  |   |           |   |  |      |  
|Total cost of products and services |  | $                                | 840,443 |   |        | $ | 767,395 |                                 |      | 9.5  | %      |      | $ | 2,448,877 |   |  | $ | 2,294,869 |   |  | 6.7  | %
|                                    |  |                                  |         |   |        |   |         |                                 |      |      |        |      |   |           |   |  |   |           |   |  |      |  
|                                    |  |                                  |         |   |        |  
|As a percentage of revenue:         |  |                                  |         |   |        |   |         |                                 |      |      |        |      |   |           |   |  |   |           |   |  |      |  
|                                    |  |                                  |         |   |        |  
|Cost of products                    |  |                                  | 66.1    | % |        |   | 65.4    | %                               |      |      |        |      |   | 65.9      | % |  |   | 65.4      | % |  |      |  
|Cost of services:                   |  |                                  |         |   |        |   |         |                                 |      |      |        |      |   |           |   |  |   |           |   |  |      |  
|Operating compensation and benefits |  |                                  | 15.6    |   |        |   | 16.0    |                                 |      |      |        |      |   | 15.8      |   |  |   | 15.9      |   |  |      |  
|Other operating costs               |  |                                  | 9.4     |   |        |   | 9.9     |                                 |      |      |        |      |   | 9.5       |   |  |   | 9.7       |   |  |      |  
|Depreciation and amortization       |  |                                  | 2.1     |   |        |   | 2.1     |                                 |      |      |        |      |   | 2.1       |   |  |   | 2.2       |   |  |      |  
|                                    |  |                                  |         |   |        |   |         |                                 |      |      |        |      |   |           |   |  |   |           |   |  |      |  
|Total cost of services              |  |                                  | 27.1    |   |        |   | 28.0    |                                 |      |      |        |      |   | 27.4      |   |  |   | 27.8      |   |  |      |  
|                                    |  |                                  |         |   |        |   |         |                                 |      |      |        |      |   |           |   |  |   |           |   |  |      |  
|Total cost of products and services |  |                                  | 93.2    | % |        |   | 93.4    | %                               |      |      |        |      |   | 93.3      | % |  |   | 93.2      | % |  |      |  
|                                    |  |                                  |         |   |        |   |         |                                 |      |      |        |      |   |           |   |  |   |           |   |  |      |  

Cost of Products. Cost of products consists primarily of oncology
pharmaceuticals and supplies used by affiliated practices in our Medical Oncology Services segment and sold to practices affiliated under the OPS model in our Pharmaceutical Services segment. Product costs increased 11.0% and 7.4% over the three
month and nine month periods ended September 30, 2008, which is consistent with the revenue growth associated with pharmaceutical use from the corresponding period. As a percentage of revenue, cost of products was 66.1% and 65.4% in the three
months ended September 30, 2009 and 2008, respectively, and 65.9% and 65.4% in the nine months ended September 30, 2009 and 2008, respectively.

We continue to experience a shift of certain branded single source drugs to generic status. For each newly generic drug, earnings typically temporarily increase because drug cost declines
significantly, while reimbursement remains at the branded price for a period of months. However, after reimbursement adjusts, earnings with respect to a generic drug are typically significantly lower than the earnings from a branded
pharmaceutical.

Cost of Services. Cost of services includes compensation and benefits related to our operations,
including non-physician employees of our affiliated practices. Cost of services also includes other operating costs such as rent, utilities, repairs and maintenance, insurance and other direct operating costs. As a percentage of revenue, cost of
services was 27.1% and 28.0% in the three months ended September 30, 2009 and 2008, respectively, and 27.4% and 27.8% during the nine months ended September 30, 2009 and 2008, respectively.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



Corporate Costs and Net Income (US Oncology, Inc.)

Corporate costs include general and administrative expenses, depreciation and amortization related to corporate assets and interest expense.
Corporate costs of US Oncology, Inc. are presented in the table below. Incremental corporate costs of US Oncology Holdings, Inc. are addressed in a separate discussion below entitled Corporate Costs and Net Income (Loss) (US Oncology Holdings,
Inc.).



|                                     |  |                                  |        |   |        |   |        |                                 |      |      |        |      |   |        |   |  |   |         |   |  |       |    
|------------------------------------ |  | -------------------------------- | ------ | - | ------ | - | ------ | ------------------------------- | ---- | ---- | ------ | ---- | - | ------ | - |  | - | ------- | - |  | ----- | ---
|                                     |  | Three Months Ended September 30, |        |   | Change |   |        | Nine Months Ended September 30, |      |      | Change |     
|(in thousands)                       |  | 2009                             |        |   | 2008   |   |        |                                 | 2009 |      |        | 2008 |   |       
|General and administrative expense   |  | $                                | 18,792 |   |        | $ | 18,078 |                                 |      | 3.9  | %      |      | $ | 53,179 |   |  | $ | 59,306  |   |  | (10.3 | )% 
|Impairment and restructuring charges |  |                                  | 4,117  |   |        |   | 271    |                                 |      | nm   | (1)    |      |   | 5,907  |   |  |   | 382,041 |   |  | nm    | (1)
|Depreciation and amortization        |  |                                  | 7,700  |   |        |   | 7,684  |                                 |      | 0.2  |        |      |   | 22,470 |   |  |   | 21,967  |   |  | 2.3   |    
|Interest expense, net                |  |                                  | 28,016 |   |        |   | 22,679 |                                 |      | 23.5 |        |      |   | 73,122 |   |  |   | 69,313  |   |  | 5.5   |    
|Loss on early extinguishment of debt |  |                                  | 3,672  |   |        |   |       |                                 |      | nm   | (1)    |      |   | 26,025 |   |  |   |        |   |  | nm    | (1)
|Other (income) expense               |  |                                  |       |   |        |   |       |                                 |      | nm   | (1)    |      |   | (37    | ) |  |   | (1,370  | ) |  | nm    | (1)
|                                     |  |                                  |        |   |        |  
|As a percentage of revenue:          |  |                                  |        |   |        |   |        |                                 |      |      |        |      |   |        |   |  |   |         |   |  |       |    
|                                     |  |                                  |        |   |        |  
|General and administrative expense   |  |                                  | 2.1    | % |        |   | 2.2    | %                               |      |      |        |      |   | 2.0    | % |  |   | 2.4     | % |  |       |    
|Impairment and restructuring charges |  |                                  | 0.5    |   |        |   |       |                                 |      |      |        |      |   | 0.2    |   |  |   | 15.5    |   |  |       |    
|Depreciation and amortization        |  |                                  | 0.8    |   |        |   | 1.0    |                                 |      |      |        |      |   | 0.9    |   |  |   | 1.0     |   |  |       |    
|Interest expense, net                |  |                                  | 3.1    |   |        |   | 2.7    |                                 |      |      |        |      |   | 2.8    |   |  |   | 2.8     |   |  |       |    
|Loss on early extinguishment of debt |  |                                  | 0.4    |   |        |   |       |                                 |      |      |        |      |   | 1.0    |   |  |   |        |   |  |       |    
|Other (income) expense               |  |                                  |       |   |        |   |       |                                 |      |      |        |      |   | (0.1   | ) |  |   | 0.1     |   |  |       |    



|(1) | Not meaningful
|--- | --------------

General and Administrative. General and administrative expense was $18.8 million for the three months ended September 30, 2009 and $18.1 million for the same period in 2008. During the nine months ended September 30, 2009
and 2008, general and administrative expense was $53.2 million and $59.3 million, respectively. General and administrative expense during the three months ended September 30, 2009 was $0.7 million higher than the three months ended
September 30, 2008 due primarily to consulting fees related to accelerating the Companys growth strategies. These fees were partially offset by continued focus on cost management efforts which were implemented earlier in the year. General
and administrative expense during the nine months ended September 30, 2009 was $6.1 million lower than the comparable prior year period due to the continued management of controllable costs, primarily in areas such as personnel expenses and
professional fees which were partially offset by higher consulting fees for accelerating the Companys growth strategies and increased incentives earned on business development.

Impairment and Restructuring Charges. Impairment and restructuring charges recognized during the three months and nine months ended September 30, 2009 and 2008 consisted
of the following amounts (in thousands):



|                        |  |                                  |       |                                 |   |      |  |      |       |  |   |        
|----------------------- |  | -------------------------------- | ----- | ------------------------------- | - | ---- |  | ---- | ----- |  | - | -------
|                        |  | Three Months Ended September 30, |       | Nine Months Ended September 30,
|                        |  | 2009                             |       | 2008                            |   | 2009 |  | 2008
|Goodwill                |  | $                                |      |                                 | $ |     |  | $    |      |  | $ | 380,000
|Severance costs         |  |                                  | 4,117 |                                 |   | 271  |  |      | 5,731 |  |   | 1,933  
|Service agreements, net |  |                                  |      |                                 |   |     |  |      | 150   |  |   |       
|Other, net              |  |                                  |      |                                 |   |     |  |      | 26    |  |   | 108    
|                        |  |                                  |       |                                 |   |      |  |      |       |  |   |        
|Total                   |  | $                                | 4,117 |                                 | $ | 271  |  | $    | 5,907 |  | $ | 382,041
|                        |  |                                  |       |                                 |   |      |  |      |       |  |   |        

During the three months and nine months ended September 30, 2009, the Company
recorded $4.1 million and $5.7 million, respectively, of severance charges primarily related to certain corporate personnel in connection with efforts to further reduce costs. These charges will be paid through the fourth quarter of 2011. During the
three months ended September 30, 2009, the charge of $4.1 million primarily related to benefits payable as a result of the retirement of its Executive Chairman in the third quarter of 2009. In addition, during the nine months ended
September 30, 2009, an unamortized service agreement intangible was impaired for $0.2 million related to a practice that converted from a comprehensive services model to a targeted physician services relationship.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



During the nine months ended September 30, 2008, the Company recorded an impairment
of its goodwill related to the Medical Oncology segment of $380.0 million. Also during the period, charges of $1.9 million were recognized primarily related to employee severance for which payment was made in the fourth quarter of 2008.

Depreciation and Amortization. For the three months ended September 30, 2009, depreciation and amortization expense remained
consistent with the three months ended September 30, 2008. Depreciation and amortization expense increased $0.5 million for the nine months ended September 30, 2009 over the comparable 2008 period.

Interest. Interest expense, net, was $28.0 million and $22.7 million for the three month period ended September 30, 2009 and
2008, respectively. For the nine months ended September 30, 2009 and 2008, interest expense was $73.1 million and $69.3 million, respectively. These increases are due to incremental interest on the $775.0 million 9.125% Senior Secured Notes
issued in June 2009. The impact of the incremental interest was partially offset by lower market interest rates on our variable rate senior secured credit facility during the first half of the year as well as a reduction of indebtedness due to a
$29.4 million repayment as a result of the excess cash flow sweep provision of that facility paid in April, 2008.

Loss on
Early Extinguishment of Debt. In connection with replacing the revolving credit facility in August 2009, and refinancing of the $436.7 million senior secured term loan facility and the $300 million 9.0% senior notes in June 2009 and we
recognized a $3.7 million and $26.0 million extinguishment loss during the three months and nine months ended September 30, 2009. These losses primarily relate to payment of a call premium and call period interest on the senior notes, the write off
of unamortized issuance costs related to the retired debt and certain transaction costs.

Income Taxes. The effective
tax rate for US Oncology, Inc. was a tax benefit of 60.6% for the three months ended September 30, 2009 compared to a tax provision of 21.1% for the three months ended September 30, 2008. For the three months ended September 30, 2009,
the effective tax rate was greater than the statutory rate primarily due to adjustment of deferred state tax balances based on the Companys analysis of state jurisdictional filings. For the three months ended September 30, 2008, the
effective tax rate was less than the statutory rate due to the tax benefit of losses in certain jurisdictions.

The
effective tax rate for US Oncology, Inc. was a tax provision of 14.6% and 1.1% for the nine months ended September 30, 2009 and 2008, respectively. For the nine months ended September 30, 2009, US Oncology had a tax provision of $0.9
million, despite reporting a loss before income taxes of $6.5 million, due to the impact of non-deductible expenses and certain state income taxes. For the nine months ended September 30, 2008, the effective tax rate was less than the statutory
rate as the period included a non-deductible goodwill impairment charge in the amount of $380.0 million of which $376.0 million was not deductible for tax purposes. Accordingly, no tax benefit was associated with a significant portion of the
goodwill impairment.

Net Income (Loss).Net loss for the three months ended September 30, 2009 was $0.9
million, compared to net income of $3.9 million for the three months ended September 30, 2008. Net loss for the nine months ended September 30, 2009 was $7.4 million, compared to net loss of $371.0 million for the nine months ended
September 30, 2008.

Corporate Costs and Net Income (Loss) (US Oncology Holdings, Inc.)

The following table summarizes the incremental costs incurred by US Oncology Holdings, Inc. as compared to the costs incurred by US Oncology,
Inc.



|                                   |  |                                  |       |        |   |        |                                 |       |        |  |   |        |  |   |        |  |       |   
|---------------------------------- |  | -------------------------------- | ----- | ------ | - | ------ | ------------------------------- | ----- | ------ |  | - | ------ |  | - | ------ |  | ----- | --
|                                   |  | Three Months Ended September 30, |       | Change |   |        | Nine Months Ended September 30, |       | Change | 
|(in thousands)                     |  | 2009                             |       | 2008   |   |        | 2009                            |       | 2008   | 
|General and administrative expense |  | $                                | 121   |        | $ | 138    |                                 | (12.3 | )%     |  | $ | 195    |  | $ | 237    |  | (17.7 | )%
|Interest expense, net              |  |                                  | 9,611 |        |   | 10,453 |                                 | (8.1  | )      |  |   | 29,698 |  |   | 32,497 |  | (8.6  | ) 
|Other expense                      |  |                                  | 7,596 |        |   | 4,186  |                                 | 81.5  |        |  |   | 10,012 |  |   | 5,898  |  | 69.8  |   



|(1) | Not meaningful
|--- | --------------

General and Administrative. In addition to the general and administrative expenses incurred by US
Oncology, Holdings incurred general and administrative expenses of $121 thousand and $138 thousand during the three months ended September 30, 2009 and 2008, respectively, and $195 thousand and $237 thousand during the nine months ended
September 30, 2009 and 2008, respectively. These costs primarily represent professional fees required for Holdings to maintain its corporate existence and comply with the terms of the indenture governing its indebtedness (the Holdings
Notes).



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



Interest Expense, net. In addition to interest expense incurred by US Oncology,
Holdings incurred interest related to its indebtedness. Incremental interest expense was approximately $9.6 million and $10.5 million during the three months ended September 30, 2009 and 2008, respectively, and $29.7 million and $32.5 million
for the nine months ended September 30, 2009 and 2008, respectively. The decrease in interest expense when comparing the three months and nine months ended September 30, 2009 to the same periods in 2008 reflects the lower market LIBOR
rates which are the basis for variable interest due on the Holdings Notes. The benefit of lower market interest rates was partially offset by increasing indebtedness as the Company elected to settle interest on the Holdings Notes in kind.

Other Income (Expense). During the three months ended September 30, 2009 and 2008, Holdings recognized an
unrealized loss of $7.6 million and $4.2 million, respectively, related to its interest rate swap. For the nine months ended September 30, 2009 and 2008, Holdings recognized an unrealized loss of $10.0 million and $5.9 million, respectively.
Because the interest rate swap is not accounted for as a cash flow hedge, changes in fair value attributable to the instrument are reported currently in earnings.

Income Taxes. The effective tax rate for US Oncology Holdings, Inc. was a provision of 3.9% for the three months ended September 30, 2009 compared to a benefit of 41.7% for the three months
ended September 30, 2008. For the three months ended September 30, 2009, the effective tax rate was less than the Federal statutory rate because the benefit associated with losses before income taxes was partially offset by the impact of
non-deductible expenses, certain state income taxes whose determination does not consider deductions allowed in the determination of Federal taxable income and a valuation allowance established on the net deferred tax assets of US Oncology Holdings,
Inc.

For the nine months ended September 30, 2009 and 2008, the effective tax rate for US Oncology Holdings, Inc. was a
tax benefit of 7.0% and 2.4%, respectively. For the nine months ended September 30, 2009, the effective tax rate was less than the Federal statutory rate for reasons similar to the three month period ended September 30, 2009 discussed
above. For the nine months ended September 30, 2008, the effective tax rate was less than the Federal statutory rate as the period included a non-deductible goodwill impairment charge in the amount of $380.0 million of which $376.0 million was
not deductible for tax purposes. Accordingly, no tax benefit was associated with a significant portion of the goodwill impairment.

Net Income (Loss). Holdings incremental net loss for the three months ended September 30, 2009 and 2008, was $19.4 million and $9.6 million, respectively. For the nine months ended September 30, 2009 and 2008,
Holdings incremental net loss was $35.7 million and $25.0 million, respectively.

Liquidity and Capital Resources

The following table summarizes the working capital and long-term indebtedness of Holdings and US Oncology as of September 30, 2009 (in
thousands).



|                       |  |          |           |             |   |          
|---------------------- |  | -------- | --------- | ----------- | - | ---------
|                       |  | Holdings |           | US Oncology
|Current assets         |  | $        | 734,443   |             | $ | 710,649  
|Current liabilities    |  |          | 530,839   |             |   | 512,280  
|                       |  |          |           |             |   |          
|Net working capital    |  | $        | 203,604   |             | $ | 198,369  
|                       |  |          |           |             |   |          
|Long-term indebtedness |  | $        | 1,569,598 |             | $ | 1,075,644
|                       |  |          |           |             |   |          

The principal difference between the net working capital of Holdings and US Oncology
relates to higher income taxes payable reported by US Oncology, Inc., which is included in the US Oncology Holdings, Inc. consolidated group for federal income tax reporting purposes offset by current accruals on the Holdings interest rate swap
obligation. For purposes of its separate financial statements, US Oncologys provision for income taxes has been computed on the basis that it filed a separate federal income tax return together with its subsidiaries.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



The following table summarizes the statement of cash flows of Holdings and US Oncology
for the nine months ended September 30, 2009 (in thousands):



|                                          |  |          |         |   |             |   |         |  
|----------------------------------------- |  | -------- | ------- | - | ----------- | - | ------- | -
|                                          |  | Holdings |         |   | US Oncology |  
|Net cash provided by operating activities |  | $        | 125,341 |   |             | $ | 136,031 |  
|Net cash used in investing activities     |  |          | (75,370 | ) |             |   | (75,370 | )
|Net cash used in financing activities     |  |          | (21,538 | ) |             |   | (32,602 | )
|                                          |  |          |         |   |             |   |         |  
|Net increase in cash and equivalents      |  |          | 28,433  |   |             |   | 28,059  |  
|Cash and equivalents:                     |  |          |         |   |             |   |         |  
|December 31, 2008                         |  |          | 104,477 |   |             |   | 104,476 |  
|                                          |  |          |         |   |             |   |         |  
|September 30, 2009                        |  | $        | 132,910 |   |             | $ | 132,535 |  
|                                          |  |          |         |   |             |   |         |  

Cash Flows from Operating Activities

During the nine months ended September 30, 2009, we generated $125.3 million in cash flow from operations compared to $64.3 million generated during the nine months ended
September 30, 2008. The increase in operating cash flow in 2009 was primarily due to increased receivable collections on revenue growth and lower receivable days outstanding, the receipt of an $8.9 million income tax refund, and lower cash
interest paid in the current year due to settling all interest due in kind on the Holdings notes and lower LIBOR rates applied to the variable rate loans that were outstanding under the Senior Secured Credit Facility in the first half of the year.

The operating cash flow of US Oncology exceeds the operating cash flow of Holdings by $10.7 million for the nine months ended
September 30, 2009. The difference primarily relates to dividends paid by US Oncology to Holdings to enable Holdings to service interest obligations related to its senior floating rate notes and interest rate swap. The dividends are considered
to be financing transactions by US Oncology as they represent distributions paid to its parent company, which were ultimately used to settle operating costs of Holdings.

Cash Flows from Investing Activities

During the nine months ended
September 30, 2009, we used $75.4 million for investing activities. Cash flow for investing activities relate primarily to $66.7 million in capital expenditures, including $50.5 million relating to the development and construction of cancer
centers and $16.2 million for maintenance capital expenditures. Compared to the nine months ended September 30, 2008, capital expenditures increased $6.7 million due to increased investments in new cancer centers.

During the nine months ended September 30, 2008, we used $99.5 million for investing activities. The investments consisted primarily of
$60.0 million in capital expenditures, including $38.9 million relating to the development and construction of cancer centers and $20.6 million for maintenance capital expenditures. Also during the nine months ended September 30, 2008, we
funded $41.2 million of cash consideration (as well as $32.8 million of notes issued) to affiliating physicians.

Cash Flows from Financing
Activities

During the nine months ended September 30, 2009, $21.5 million was used in financing activities which
relates primarily to the $775.0 million offering of 9.125% Senior Secured Notes completed in June 2009 and the refinancing of the Senior Secured Revolving Credit Facility in August 2009. Proceeds from the Senior Secured Notes offering along with
cash on hand were used to repay the $436.7 million senior secured term loan facility maturing in 2010 and 2011 and the $300 million 9.0% senior notes due 2012. Cash flow used by US Oncology for financing activities also includes distributions
totaling $11.1 million to its parent company to finance the payment of interest on the Holdings Notes and to settle amounts due under its interest rate swap agreement.

During the nine months ended September 30, 2008, $14.5 million was used in financing activities which relates primarily to repayments made on the senior secured credit facility, including a payment
of $29.4 million due under the excess cash flow provision of the senior secured credit facility which was paid in April, 2008. This was partially offset by $20.0 million in proceeds drawn under the revolving credit facility during the
three months ended September 30, 2008, to confirm the availability of funds in a period of market instability. The revolver borrowing was repaid in October, 2008.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



Earnings before Interest, Taxes, Depreciation and Amortization

EBITDA represents earnings before interest and other expense, net, taxes, depreciation, and amortization (including amortization
of stock-based compensation), noncontrolling interest, and other income (expense). EBITDA is not calculated in accordance with generally accepted accounting principles in the United States (GAAP); rather it is derived from relevant items
in our GAAP-based financial statements. A reconciliation of EBITDA to the unaudited Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) and the unaudited Condensed Consolidated Statement of Cash Flows is included in this
document.

We believe EBITDA is useful to investors in evaluating the value of companies in general, and in evaluating the
liquidity of companies with debt service obligations and their ability to service their indebtedness. Management uses EBITDA as a key indicator to evaluate liquidity and financial condition, both with respect to the business as a whole and with
respect to individual sites in our network. Our Senior Secured Revolving Credit Facility requires that we comply on a quarterly basis with certain financial covenants that include EBITDA as a financial measure. As of September 30, 2009, our
Senior Secured Revolving Credit Facility required that we maintain a leverage ratio (indebtedness divided by EBITDA, as defined by the Credit Agreement) of no more than 7.00:1.

For more information regarding our use of EBITDA and its limitations, see Discussion of Non-GAAP Information.

The following table reconciles net income (loss) as shown in the Companys unaudited Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) to EBITDA,
and reconciles EBITDA to net cash provided by operating activities as shown in the Companys unaudited Condensed Consolidated Statement of Cash Flows (in thousands):



|                                          |  |                                 |         |   |                                 |   |         |      |  |   |         |   |  |   |         |  
|----------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                          |  | US Oncology Holdings, Inc.      |         |   | US Oncology, Inc.               |  
|                                          |  | Three Months EndedSeptember 30, |         |   | Three Months EndedSeptember 30, |  
|                                          |  | 2009                            |         |   | 2008                            |   |         | 2009 |  |   | 2008    |  
|Net income (loss)                         |  | $                               | (19,378 | ) |                                 | $ | (5,038  | )    |  | $ | 46      |   |  | $ | 4,590   |  
|Interest expense, net                     |  |                                 | 37,627  |   |                                 |   | 33,132  |      |  |   | 28,016  |   |  |   | 22,679  |  
|Income tax (benefit) provision            |  |                                 | 764     |   |                                 |   | (4,110  | )    |  |   | (1,332  | ) |  |   | 1,039   |  
|Depreciation and amortization             |  |                                 | 26,790  |   |                                 |   | 25,581  |      |  |   | 26,790  |   |  |   | 25,581  |  
|Amortization of stock compensation        |  |                                 | 735     |   |                                 |   | 649     |      |  |   | 735     |   |  |   | 649     |  
|Other (income) expense                    |  |                                 | 7,596   |   |                                 |   | 4,186   |      |  |   |        |   |  |   |        |  
|                                          |  |                                 |         |   |                                 |   |         |      |  |   |         |   |  |   |         |  
|EBITDA                                    |  |                                 | 54,134  |   |                                 |   | 54,400  |      |  |   | 54,255  |   |  |   | 54,538  |  
|                                          |  |                                 |         |  
|Impairment and restructuring charges      |  |                                 | 4,117   |   |                                 |   | 271     |      |  |   | 4,117   |   |  |   | 271     |  
|Loss on early extinguishment of debt      |  |                                 | 3,672   |   |                                 |   |        |      |  |   | 3,672   |   |  |   |        |  
|Changes in assets and liabilities         |  |                                 | 32,319  |   |                                 |   | 822     |      |  |   | 28,833  |   |  |   | 6,431   |  
|Deferred income taxes                     |  |                                 |        |   |                                 |   | (4,386  | )    |  |   | (1,717  | ) |  |   | (2,431  | )
|Interest expense, net                     |  |                                 | (37,627 | ) |                                 |   | (33,132 | )    |  |   | (28,016 | ) |  |   | (22,680 | )
|Income tax benefit (provision)            |  |                                 | (764    | ) |                                 |   | 4,110   |      |  |   | 1,332   |   |  |   | (1,039  | )
|                                          |  |                                 |         |   |                                 |   |         |      |  |   |         |   |  |   |         |  
|Net cash provided by operating activities |  | $                               | 55,851  |   |                                 | $ | 22,085  |      |  | $ | 62,476  |   |  | $ | 35,090  |  
|                                          |  |                                 |         |   |                                 |   |         |      |  |   |         |   |  |   |         |  



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



|                                          |  |                                |          |   |                                |   |          |      |  |   |         |   |  |   |          |  
|----------------------------------------- |  | ------------------------------ | -------- | - | ------------------------------ | - | -------- | ---- |  | - | ------- | - |  | - | -------- | -
|                                          |  | US Oncology Holdings, Inc.     |          |   | US Oncology, Inc.              |  
|                                          |  | Nine Months EndedSeptember 30, |          |   | Nine Months EndedSeptember 30, |  
|                                          |  | 2009                           |          |   | 2008                           |   |          | 2009 |  |   | 2008    |  
|Net income (loss)                         |  | $                              | (40,526  | ) |                                | $ | (393,552 | )    |  | $ | (4,829  | ) |  | $ | (368,513 | )
|Interest expense, net                     |  |                                | 102,820  |   |                                |   | 101,810  |      |  |   | 73,122  |   |  |   | 69,313   |  
|Income tax (benefit) provision            |  |                                | (3,260   | ) |                                |   | (9,688   | )    |  |   | 948     |   |  |   | 3,905    |  
|Depreciation and amortization             |  |                                | 77,060   |   |                                |   | 77,218   |      |  |   | 77,060  |   |  |   | 77,218   |  
|Amortization of stock compensation        |  |                                | 1,571    |   |                                |   | 1,769    |      |  |   | 1,571   |   |  |   | 1,769    |  
|Other (income) expense                    |  |                                | 9,975    |   |                                |   | 4,528    |      |  |   | (37     | ) |  |   | (1,370   | )
|                                          |  |                                |          |   |                                |   |          |      |  |   |         |   |  |   |          |  
|EBITDA                                    |  |                                | 147,640  |   |                                |   | (217,915 | )    |  |   | 147,835 |   |  |   | (217,678 | )
|                                          |  |                                |          |  
|Impairment and restructuring charges      |  |                                | 5,907    |   |                                |   | 382,041  |      |  |   | 5,907   |   |  |   | 382,041  |  
|Loss on early extinguishment of debt      |  |                                | 26,025   |   |                                |   |         |      |  |   | 26,025  |   |  |   |         |  
|Changes in assets and liabilities         |  |                                | 51,363   |   |                                |   | 3,078    |      |  |   | 29,995  |   |  |   | (9,383   | )
|Deferred income taxes                     |  |                                | (6,034   | ) |                                |   | (10,756  | )    |  |   | 339     |   |  |   | (4,447   | )
|Interest expense, net                     |  |                                | (102,820 | ) |                                |   | (101,810 | )    |  |   | (73,122 | ) |  |   | (69,313  | )
|Income tax benefit (provision)            |  |                                | 3,260    |   |                                |   | 9,688    |      |  |   | (948    | ) |  |   | (3,905   | )
|                                          |  |                                |          |   |                                |   |          |      |  |   |         |   |  |   |          |  
|Net cash provided by operating activities |  | $                              | 125,341  |   |                                | $ | 64,326   |      |  | $ | 136,031 |   |  | $ | 77,315   |  
|                                          |  |                                |          |   |                                |   |          |      |  |   |         |   |  |   |          |  



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



Following is the EBITDA for our operating segments for the three months and nine months
ended September 30, 2009 and 2008 (in thousands):



|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|---------------------------------------- |  | ------------------------------------- | -------- | - | -------------------- | - | ------- | ---------------------- |  | - | -------------- | - |  | -------------- | ------- | - | ---------------- | - | ------- | ----- |  | - | -------- | - |  | - | -------- | -
|                                         |  | Three Months Ended September 30, 2009 |         
|                                         |  | MedicalOncologyServices               |          |   | CancerCenterServices |   |         | PharmaceuticalServices |  |   | Research/Other |   |  | CorporateCosts |         |   | Eliminations (1) |   |         | Total | 
|US Oncology, Inc.                        |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |  
|                                         |  |                                       |          |   |                      |   |        
|Product revenues                         |  | $                                     | 450,202  |   |                      | $ |        |                        |  | $ | 628,737        |   |  | $              |        |   |                  | $ |        |       |  | $ | (470,904 | ) |  | $ | 608,035  |  
|Service revenues                         |  |                                       | 160,147  |   |                      |   | 99,457  |                        |  |   | 16,728         |   |  |                | 17,087  |   |                  |   |        |       |  |   |         |   |  |   | 293,419  |  
|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Total revenues                           |  |                                       | 610,349  |   |                      |   | 99,457  |                        |  |   | 645,465        |   |  |                | 17,087  |   |                  |   |        |       |  |   | (470,904 | ) |  |   | 901,454  |  
|Operating expenses                       |  |                                       | (591,204 | ) |                      |   | (74,739 | )                      |  |   | (620,503       | ) |  |                | (17,060 | ) |                  |   | (34,333 | )     |  |   | 470,904  |   |  |   | (866,935 | )
|Impairment and restructuring charges     |  |                                       | 1        |   |                      |   |        |                        |  |   |               |   |  |                |        |   |                  |   | (4,118  | )     |  |   |         |   |  |   | (4,117   | )
|Loss on early extinguishment of debt     |  |                                       |         |   |                      |   |        |                        |  |   |               |   |  |                |        |   |                  |   | (3,672  | )     |  |   |         |   |  |   | (3,672   | )
|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Income (loss) from operations            |  |                                       | 19,146   |   |                      |   | 24,718  |                        |  |   | 24,962         |   |  |                | 27      |   |                  |   | (42,123 | )     |  |   |         |   |  |   | 26,730   |  
|                                         |  |                                       |          |   |                      |   |        
|Add back:                                |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Depreciation and amortization            |  |                                       |         |   |                      |   | 10,695  |                        |  |   | 392            |   |  |                | 64      |   |                  |   | 15,639  |       |  |   |         |   |  |   | 26,790   |  
|Amortization of stock-based compensation |  |                                       |         |   |                      |   |        |                        |  |   |               |   |  |                |        |   |                  |   | 735     |       |  |   |         |   |  |   | 735      |  
|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|EBITDA                                   |  | $                                     | 19,146   |   |                      | $ | 35,413  |                        |  | $ | 25,354         |   |  | $              | 91      |   |                  | $ | (25,749 | )     |  | $ |         |   |  | $ | 54,255   |  
|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|                                         |  |                                       |          |   |                      |   |        
|US Oncology Holdings, Inc.               |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|                                         |  |                                       |          |   |                      |   |        
|Operating expenses                       |  | $                                     |         |   |                      | $ |        |                        |  | $ |               |   |  | $              |        |   |                  | $ | (121    | )     |  | $ |         |   |  | $ | (121     | )
|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|EBITDA                                   |  | $                                     | 19,146   |   |                      | $ | 35,413  |                        |  | $ | 25,354         |   |  | $              | 91      |   |                  | $ | (25,870 | )     |  | $ |         |   |  | $ | 54,134   |  
|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|                                         | 
|                                         |  | Three Months Ended September 30, 2008 |         
|                                         |  | MedicalOncologyServices               |          |   | CancerCenterServices |   |         | PharmaceuticalServices |  |   | Research/Other |   |  | CorporateCosts |         |   | Eliminations (1) |   |         | Total | 
|US Oncology, Inc.                        |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|                                         |  |                                       |          |   |                      |   |        
|Product revenues                         |  | $                                     | 413,596  |   |                      | $ |        |                        |  | $ | 618,929        |   |  | $              |        |   |                  | $ |        |       |  | $ | (476,166 | ) |  | $ | 556,359  |  
|Service revenues                         |  |                                       | 143,806  |   |                      |   | 91,996  |                        |  |   | 15,031         |   |  |                | 14,544  |   |                  |   |        |       |  |   |         |   |  |   | 265,377  |  
|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Total revenues                           |  |                                       | 557,402  |   |                      |   | 91,996  |                        |  |   | 633,960        |   |  |                | 14,544  |   |                  |   |        |       |  |   | (476,166 | ) |  |   | 821,736  |  
|Operating expenses                       |  |                                       | (540,452 | ) |                      |   | (70,399 | )                      |  |   | (609,476       | ) |  |                | (15,887 | ) |                  |   | (33,109 | )     |  |   | 476,166  |   |  |   | (793,157 | )
|Impairment and restructuring charges     |  |                                       |         |   |                      |   |        |                        |  |   |               |   |  |                |        |   |                  |   | (271    | )     |  |   |         |   |  |   | (271     | )
|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Income (loss) from operations            |  |                                       | 16,950   |   |                      |   | 21,597  |                        |  |   | 24,484         |   |  |                | (1,343  | ) |                  |   | (33,380 | )     |  |   |         |   |  |   | 28,308   |  
|                                         |  |                                       |          |   |                      |   |        
|Add back:                                |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|Depreciation and amortization            |  |                                       |         |   |                      |   | 9,496   |                        |  |   | 971            |   |  |                | 84      |   |                  |   | 15,030  |       |  |   |         |   |  |   | 25,581   |  
|Amortization of stock-based compensation |  |                                       |         |   |                      |   |        |                        |  |   |               |   |  |                |        |   |                  |   | 649     |       |  |   |         |   |  |   | 649      |  
|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|EBITDA                                   |  | $                                     | 16,950   |   |                      | $ | 31,093  |                        |  | $ | 25,455         |   |  | $              | (1,259  | ) |                  | $ | (17,701 | )     |  | $ |         |   |  | $ | 54,538   |  
|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|                                         |  |                                       |          |   |                      |   |        
|US Oncology Holdings, Inc.               |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|                                         |  |                                       |          |   |                      |   |        
|Operating expenses                       |  | $                                     |         |   |                      | $ |        |                        |  | $ |               |   |  | $              |        |   |                  | $ | (138    | )     |  | $ |         |   |  | $ | (138     | )
|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  
|EBITDA                                   |  | $                                     | 16,950   |   |                      | $ | 31,093  |                        |  | $ | 25,455         |   |  | $              | (1,259  | ) |                  | $ | (17,839 | )     |  | $ |         |   |  | $ | 54,400   |  
|                                         |  |                                       |          |   |                      |   |         |                        |  |   |                |   |  |                |         |   |                  |   |         |       |  |   |          |   |  |   |          |  



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---

##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|---------------------------------------- |  | ------------------------------------ | ---------- | - | -------------------- | - | -------- | ---------------------- |  | - | -------------- | - |  | -------------- | ------- | - | ---------------- | - | -------- | ----- |  | - | ---------- | - |  | - | ---------- | -
|                                         |  | Nine Months Ended September 30, 2009 |           
|                                         |  | MedicalOncologyServices              |            |   | CancerCenterServices |   |          | PharmaceuticalServices |  |   | Research/Other |   |  | CorporateCosts |         |   | Eliminations (1) |   |          | Total | 
|US Oncology, Inc.                        |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|                                         |  |                                      |            |   |                      |   |         
|Product revenues                         |  | $                                    | 1,329,256  |   |                      | $ |         |                        |  | $ | 1,799,532      |   |  | $              |        |   |                  | $ |         |       |  | $ | (1,363,101 | ) |  | $ | 1,765,687  |  
|Service revenues                         |  |                                      | 468,581    |   |                      |   | 288,917  |                        |  |   | 47,697         |   |  |                | 54,780  |   |                  |   |         |       |  |   |           |   |  |   | 859,975    |  
|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Total revenues                           |  |                                      | 1,797,837  |   |                      |   | 288,917  |                        |  |   | 1,847,229      |   |  |                | 54,780  |   |                  |   |         |       |  |   | (1,363,101 | ) |  |   | 2,625,662  |  
|Operating expenses                       |  |                                      | (1,744,915 | ) |                      |   | (217,359 | )                      |  |   | (1,775,689     | ) |  |                | (51,075 | ) |                  |   | (98,589  | )     |  |   | 1,363,101  |   |  |   | (2,524,526 | )
|Impairment and restructuring charges     |  |                                      | (176       | ) |                      |   |         |                        |  |   |               |   |  |                |        |   |                  |   | (5,731   | )     |  |   |           |   |  |   | (5,907     | )
|Loss on early extinguishment of debt     |  |                                      |           |   |                      |   |         |                        |  |   |               |   |  |                |        |   |                  |   | (26,025  | )     |  |   |           |   |  |   | (26,025    | )
|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Income (loss) from operations            |  |                                      | 52,746     |   |                      |   | 71,558   |                        |  |   | 71,540         |   |  |                | 3,705   |   |                  |   | (130,345 | )     |  |   |           |   |  |   | 69,204     |  
|                                         |  |                                      |            |   |                      |   |         
|Add back:                                |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Depreciation and amortization            |  |                                      |           |   |                      |   | 29,711   |                        |  |   | 1,566          |   |  |                | 210     |   |                  |   | 45,573   |       |  |   |           |   |  |   | 77,060     |  
|Amortization of stock-based compensation |  |                                      |           |   |                      |   |         |                        |  |   |               |   |  |                |        |   |                  |   | 1,571    |       |  |   |           |   |  |   | 1,571      |  
|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|EBITDA                                   |  | $                                    | 52,746     |   |                      | $ | 101,269  |                        |  | $ | 73,106         |   |  | $              | 3,915   |   |                  | $ | (83,201  | )     |  | $ |           |   |  | $ | 147,835    |  
|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|                                         |  |                                      |            |   |                      |   |         
|US Oncology Holdings, Inc.               |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|                                         |  |                                      |            |   |                      |   |         
|Operating expenses                       |  | $                                    |           |   |                      | $ |         |                        |  | $ |               |   |  | $              |        |   |                  | $ | (195     | )     |  | $ |           |   |  | $ | (195       | )
|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|EBITDA                                   |  | $                                    | 52,746     |   |                      | $ | 101,269  |                        |  | $ | 73,106         |   |  | $              | 3,915   |   |                  | $ | (83,396  | )     |  | $ |           |   |  | $ | 147,640    |  
|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|                                         | 
|                                         |  | Nine Months Ended September 30, 2008 |           
|                                         |  | MedicalOncologyServices              |            |   | CancerCenterServices |   |          | PharmaceuticalServices |  |   | Research/Other |   |  | CorporateCosts |         |   | Eliminations (1) |   |          | Total | 
|US Oncology, Inc.                        |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|                                         |  |                                      |            |   |                      |   |         
|Product revenues                         |  | $                                    | 1,226,411  |   |                      | $ |         |                        |  | $ | 1,836,578      |   |  | $              |        |   |                  | $ |         |       |  | $ | (1,406,319 | ) |  | $ | 1,656,670  |  
|Service revenues                         |  |                                      | 443,090    |   |                      |   | 274,321  |                        |  |   | 45,255         |   |  |                | 42,182  |   |                  |   |         |       |  |   |           |   |  |   | 804,848    |  
|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Total revenues                           |  |                                      | 1,669,501  |   |                      |   | 274,321  |                        |  |   | 1,881,833      |   |  |                | 42,182  |   |                  |   |         |       |  |   | (1,406,319 | ) |  |   | 2,461,518  |  
|Operating expenses                       |  |                                      | (1,613,198 | ) |                      |   | (208,746 | )                      |  |   | (1,810,905     | ) |  |                | (45,415 | ) |                  |   | (104,197 | )     |  |   | 1,406,319  |   |  |   | (2,376,142 | )
|Impairment and restructuring charges     |  |                                      | (380,038   | ) |                      |   | (150     | )                      |  |   |               |   |  |                |        |   |                  |   | (1,853   | )     |  |   |           |   |  |   | (382,041   | )
|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Income (loss) from operations            |  |                                      | (323,735   | ) |                      |   | 65,425   |                        |  |   | 70,928         |   |  |                | (3,233  | ) |                  |   | (106,050 | )     |  |   |           |   |  |   | (296,665   | )
|                                         |  |                                      |            |   |                      |   |         
|Add back:                                |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|Depreciation and amortization            |  |                                      |           |   |                      |   | 28,444   |                        |  |   | 3,609          |   |  |                | 275     |   |                  |   | 44,890   |       |  |   |           |   |  |   | 77,218     |  
|Amortization of stock-based compensation |  |                                      |           |   |                      |   |         |                        |  |   |               |   |  |                |        |   |                  |   | 1,769    |       |  |   |           |   |  |   | 1,769      |  
|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|EBITDA                                   |  | $                                    | (323,735   | ) |                      | $ | 93,869   |                        |  | $ | 74,537         |   |  | $              | (2,958  | ) |                  | $ | (59,391  | )     |  | $ |           |   |  | $ | (217,678   | )
|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|                                         |  |                                      |            |   |                      |   |         
|US Oncology Holdings, Inc.               |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|                                         |  |                                      |            |   |                      |   |         
|Operating expenses                       |  | $                                    |           |   |                      | $ |         |                        |  | $ |               |   |  | $              |        |   |                  | $ | (237     | )     |  | $ |           |   |  | $ | (237       | )
|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  
|EBITDA                                   |  | $                                    | (323,735   | ) |                      | $ | 93,869   |                        |  | $ | 74,537         |   |  | $              | (2,958  | ) |                  | $ | (59,628  | )     |  | $ |           |   |  | $ | (217,915   | )
|                                         |  |                                      |            |   |                      |   |          |                        |  |   |                |   |  |                |         |   |                  |   |          |       |  |   |            |   |  |   |            |  



|(1) | Eliminations represent the sale of pharmaceuticals from our distribution center (Pharmaceutical Services segment) to our practices affiliated under
comprehensive service agreements (Medical Oncology segment).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Below is a discussion of EBITDA generated by
our three primary operating segments. Please refer to Results of Operations for a discussion of our consolidated results presented in accordance with generally accepted accounting principles.

Medical Oncology Services. Medical Oncology Services EBITDA for the three months ended September 30, 2009 increased $2.2 million
compared to the three months ended September 30, 2008 primarily due to earnings associated with revenue growth and margin increases in the current period from the conversion of a particular chemotherapy drug to generic status. We continue to
experience a shift toward generic alternatives for certain oncology pharmaceuticals. We expect that this trend toward greater use of generic oncology drugs will continue for the foreseeable future (see Results of Operations  Cost of
Products).



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##### Table of Contents

US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



EBITDA for the nine months ended September 30, 2009 increased $376.5 million, or
116.3 percent, compared to the nine months ended September 30, 2008 due to the goodwill impairment charge recorded in the prior year period. Excluding the goodwill impairment charge, EBITDA for the nine months ended September 30, 2009
decreased from the prior year due to lower drug margins including the impact of reduced utilization of ESA drugs partially offset by higher medical oncology visits primarily due to physician additions.

Cancer Center Services. Cancer Center Services EBITDA for the three months ended September 30, 2009 was $35.4 million compared
to $31.1 million for the three months ended September 30, 2008 and EBITDA for the nine months ended September 30, 2009 was $101.3 million compared to $93.9 million for the nine months ended September 30, 2008. These increases reflect
higher radiation treatment and diagnostic scan volumes due primarily to additional radiation oncologists affiliated under comprehensive service agreements and additional investments in diagnostic and radiation equipment. In addition, we continue to
experience a shift toward advanced targeted radiation therapies. Targeted therapies (such as intensity-modulated radiation therapy (IMRT), image guided radiation therapy (IGRT), mammosite and brachytherapy) enhance patient
care by providing more intense radiation treatment to the tumor site while reducing damage to the surrounding healthy tissue. These treatment modalities generally have fewer sessions throughout the course of treatment than conventional
radiation but are reimbursed at higher rates. For example, due to improved screening and awareness, breast cancer is increasingly diagnosed in the early stages and a segment of those patients may be treated on an accelerated schedule with mammosite
radiation therapy, which uses an internally implanted radiation source rather than an external beam. Mammosite radiation therapy typically requires about one third of treatment sessions necessary under conventional radiation therapy but has
approximately the same total reimbursement.

Pharmaceutical Services.Pharmaceutical Services EBITDA was $25.4 million
for the three months ended September 30, 2009, and $25.5 million for the three months ended September 30, 2008, as the impact of increased EBITDA from our Healthcare Informatics and AccessMed services was offset by reduced margins on fees
under OPS agreements. EBITDA was $73.1 million for the nine months ended September 30, 2009, a decrease of $1.4 million from the nine months ended September 30, 2008 due to reduced utilization of ESA drugs, partially offset by increased
EBITDA from our Healthcare Informatics and AccessMed services.

Research and Other.During the three months ended
September 30, 2009, EBITDA from research and other services was $0.1 million, an increase of $1.4 million from the three months ended September 30, 2008, and EBITDA was $3.9 million for the nine months ended September 30, 2009, an
increase of $6.9 million from the nine months ended September 30, 2008. The EBITDA increase as compared to the three months and nine months ended September 30, 2008, was primarily due to an increase in blood and marrow transplant
cases at some of our CSA physicians practices and reduced accruals for amounts payable to physicians for research activities under new incentive programs. The new incentives reflect our strategy to expand the existing research network, launch
a contract research organization, and create aligned incentives with participating physicians that encourage long-term value creation. Because the new incentives focus on long-term growth, accruals for amounts due to researchers for activities
during the three months and nine months ended September 30, 2009 is lower than in the prior year. These increases are partially offset by higher start up costs for new service offerings such as Innovent Oncology.

Anticipated Capital Requirements

We
currently expect our principal uses of funds in the near future to be the following:



| |  |  | Payments for acquisition of assets and additional consideration in connection with new practice affiliations under comprehensive service agreements;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Purchase of real estate and medical equipment for the development of new cancer centers, as well as installation of upgraded and replacement medical
equipment at existing centers;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Funding of working capital;
| | - |  | ---------------------------



| |  |  | Investments in information systems, including systems related to our electronic medical record product, iKnowMed;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | Debt service requirements on our outstanding indebtedness; and
| | - |  | --------------------------------------------------------------



| |  |  | Payments made for possible acquisitions to support strategic initiatives or capital investments in new businesses, such as Innovent.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



For all of 2009, we anticipate spending $75 to $85 million for the development of cancer
centers, purchases of clinical equipment, investments in information systems and other capital expenditures. While the Company has traditionally focused on disciplined use of its capital, we expect to reduce our historic levels of capital investment
as a mechanism to preserve cash given the current instability in the general economy and financial markets.

As of
November 4, 2009, we had cash and cash equivalents of approximately $160 million and $89.6 million available under our $120.0 million Senior Secured Revolving Credit Facility (which had been reduced by outstanding letters of credit, totaling
$30.4 million). This entire amount is available to be drawn without violating leverage ratio requirements under financial covenants of the Senior Secured Revolving Credit Facility. In the event that cash on hand, combined with amounts available
under the Senior Secured Revolving Credit Facility, are insufficient to fund our anticipated working capital requirements, we may be required to obtain additional financing. Recently, due to instability in the credit markets, a number of financial
institutions have failed or announced plans to merge with other institutions. The credit markets have not yet stabilized and continued weakness in the financial sector may create the potential risk of additional failures and consolidation, which may
negatively impact the ability of institutions that participate in our Senior Secured Revolving Credit Facility to satisfy their financial commitments to us. We continue to monitor the creditworthiness of financial institutions that participate in
our credit facility and will periodically test the availability of funds through short-term advances under the facility. However, there is no assurance that all such lenders will fund future borrowing requests for amounts currently available under
our Senior Secured Revolving Credit Facility in accordance with the terms of the facility. In the event we require additional capital and are unable to utilize our existing credit facility to finance our operations, we would be required to seek
alternative funding. There can be no assurance that additional funding would be available to the Company on terms that the Company considers acceptable.

We expect to fund our current capital needs with (i) cash flow generated from operations, (ii) borrowings under the Senior Secured Revolving Credit Facility, (iii) lease or purchase money
financing for certain equipment purchases and (iv) indebtedness to physicians in connection with new affiliations. Our success in implementing our capital plans could be adversely impacted by poor operating performance which would result in
reduced cash flow from operations. In addition, to the extent that poor performance or other factors impact our compliance with financial and other covenants under our Senior Secured Revolving Credit Facility, our ability to borrow under that
facility or to find other financing sources could be limited. Furthermore, capital at financing terms satisfactory to management may be limited, due to market conditions or operating performance.

The Company and its subsidiaries, affiliates (subject to certain limitations imposed by existing indebtedness) or significant shareholders,
in their sole discretion, may from time to time, purchase, redeem, exchange or retire any of the Companys outstanding debt in open market purchases (privately negotiated or open market transactions) or otherwise. Such transactions, if any,
will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

Indebtedness

We have a significant amount of indebtedness. As of September 30, 2009 we had aggregate indebtedness of approximately
$1,580.9 million. Of this amount, $1,086.9 million (including current maturities of $11.3 million) represents obligations of US Oncology, Inc., and $494.0 million represents an obligation of Holdings.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



As of September 30, 2009 and December 31, 2008, the Companys long-term
indebtedness consisted of the following (in thousands):



|                                                |  |                   |           |   |                  |   |           |  
|----------------------------------------------- |  | ----------------- | --------- | - | ---------------- | - | --------- | -
|                                                |  | September 30,2009 |           |   | December 31,2008 |  
|US Oncology, Inc.                               |  |                   |           |   |                  |   |           |  
|9.125% Senior Secured Notes, due 2017           |  | $                 | 759,331   |   |                  | $ |          |  
|Senior Secured Credit Facility                  |  |                   |          |   |                  |   | 436,666   |  
|9.0% Senior Notes, due 2012                     |  |                   |          |   |                  |   | 300,000   |  
|10.75% Senior Subordinated Notes, due 2014      |  |                   | 275,000   |   |                  |   | 275,000   |  
|9.625% Senior Subordinated Notes, due 2012      |  |                   | 3,000     |   |                  |   | 3,000     |  
|Subordinated notes                              |  |                   | 27,891    |   |                  |   | 34,956    |  
|Mortgage, capital lease obligations and other   |  |                   | 21,732    |   |                  |   | 22,188    |  
|                                                |  |                   |           |   |                  |   |           |  
|                                                |  |                   | 1,086,954 |   |                  |   | 1,071,810 |  
|Less current maturities                         |  |                   | (11,310   | ) |                  |   | (10,677   | )
|                                                |  |                   |           |   |                  |   |           |  
|                                                |  |                   | 1,075,644 |   |                  |   | 1,061,133 |  
|                                                |  |                   |           |   |                  |   |           |  
|US Oncology Holdings, Inc.                      |  |                   |           |   |                  |   |           |  
|Senior Floating Rate PIK Toggle Notes, due 2012 |  |                   | 493,954   |   |                  |   | 456,751   |  
|                                                |  |                   |           |   |                  |   |           |  
|                                                |  | $                 | 1,569,598 |   |                  | $ | 1,517,884 |  
|                                                |  |                   |           |   |                  |   |           |  

On June 18, 2009, US Oncology, Inc. issued $775.0 million aggregate principal
amount of senior secured notes maturing August 15, 2017 (the Senior Secured Notes) in a private offering to institutional investors. Interest on these notes accrues at a fixed rate of 9.125% per annum and are payable
semi-annually in arrears on February 15 and August 15, commencing on August 15, 2009. As of September 30, 2009, the net carrying value of the Senior Secured Notes was $759.3 million, which reflects their $775.0 million face
value, net of unamortized original issue discount in the amount of $15.7 million.

Net proceeds from the Senior Secured Notes
of approximately $744.4 million, along with cash on hand, were used to repay the previously existing $436.7 million Senior Secured Term Loan facility maturing in 2010 and 2011 and the $300 million 9.0% Senior Notes due 2012, which effectively
extended these maturities through August 15, 2017 when the Senior Secured Notes are due.

As a result of these
transactions, we will incur approximately $20.0 million in additional annual interest cost due primarily to the difference between the fixed 9.125% interest rate on the Senior Secured Notes and the variable rate interest (LIBOR plus 2.75%)
associated with the retired Senior Secured Term Loan facility. The 9% Senior Notes were refinanced at a rate consistent with their existing coupon. Because the Senior Secured Term Loan facility was scheduled to mature in quarterly installments
beginning on September 30, 2010, and because we expected to refinance the facility, likely at rates exceeding its existing terms, prior to its ultimate maturity on August 20, 2011, we anticipate a portion, if not all, of this incremental
interest would have been incurred at the time the Senior Secured Term Loan facility was refinanced. In addition, due to recent instability in the financial markets, we could not be assured of future opportunities to refinance the Senior Secured Term
Loan facility prior to its maturity.

We incurred approximately $17.2 million in transaction expenses related to the Senior
Secured Notes offering which are included as Other Assets in our balance sheet at September 30, 2009. In connection with retiring the Senior Secured Term Loan facility and 9.0% Senior Notes, we recognized a $22.4 million loss on early
extinguishment of debt primarily related to payment of a 2.25 percent call premium and call period interest on the 9.0% Senior Notes and the write off of unamortized issuance costs related to the retired Senior Notes and Senior Secured Term Loan
facility.

On August 26, 2009 and in connection with the refinancing of the Senior Secured Term Loan facility and the 9%
Senior Notes, we entered into a credit agreement (the Credit Agreement) for a $120.0 million Senior Secured Revolving Credit Facility, including a letter of credit sub-facility and a swingline loan sub-facility, which matures on
August 31, 2012. At September 30, 2009, availability had been reduced by outstanding letters of credit amounting to $30.4 million and $89.6 million was available for borrowing. At September 30, 2009, no amounts had been borrowed under
the Senior Secured Revolving Credit Facility.

We incurred approximately $4.0 million in transaction expenses related to the
Senior Secured Revolving Credit Facility which are included as Other Assets in our balance sheet at September 30, 2009. In connection with terminating the previous revolving credit facility, we recognized a $3.7 million loss on early
extinguishment of debt primarily related to the write off of unamortized debt issuance costs and transaction costs associated with terminating the previous credit agreement.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



The Senior Secured Revolving Credit Facility, the Senior Secured Notes and the Senior
Subordinated Notes due 2014 contain affirmative and negative covenants including the maintenance of certain financial ratios, restrictions on sales, leases or other dispositions of property, restrictions on other indebtedness, prohibitions on the
payment of dividends and other customary restrictions. Events of default under the Senior Secured Notes and the unsecured notes include cross-defaults to all material indebtedness, including each of those financings. Substantially all of our assets,
including certain real property, are pledged as security on a second lien basis under the Senior Secured Notes.

Holdings Notes

During the three months ended March 31, 2007, Holdings, whose principal asset is its investment in US Oncology,
issued $425.0 million of senior floating rate PIK toggle notes, due March 15, 2012. A portion of the proceeds of the notes were used to repay Holdings $250.0 million floating rate notes. These notes are senior unsecured obligations
of Holdings. Holdings may elect to pay interest on the Notes entirely in cash, by increasing the principal amount of the Notes (PIK interest), or by paying 50% in cash and 50% by increasing the principal amount of the Notes. Cash
interest will accrue on the Notes at a rate per annum equal to 6-month LIBOR plus the applicable spread. PIK interest will accrue on the Notes at a rate per annum equal to the cash interest rate plus 0.75%. LIBOR will be reset semiannually. The
Company must make an election regarding whether subsequent interest payments will be made in cash or through PIK interest prior to the start of the applicable interest period. The applicable spread is 4.50% and increased by 0.50% on March 15,
2009 and will increase by another 0.50% on March 15, 2010. A portion of the impact of the spread increases has been recognized in interest expense as they are amortized over the term of the Notes. During the three months ended
September 30, 2009 and 2008, interest on the Holdings Notes was $9.6 million and $10.4 million, respectively. During the nine months ended September 30, 2009 and 2008, interest on the Holdings Notes was $29.7 million and $32.5 million,
respectively. In the three months ended September 30, 2009 and 2008, $9.0 million and $5.4 million, respectively, accrued under the election to pay interest in kind and the remaining $0.6 million and $5.0 million, respectively, accrued as cash
interest or interest related to future spread increases and the amortization of debt issuance costs. In the nine months ended September 30, 2009 and 2008, $27.4 million and $20.2 million, respectively, accrued under the election to pay interest
in kind and the remaining $2.3 million and $12.3 million, respectively, accrued as cash interest or interest related to future spread increases and the amortization of debt issuance costs.

US Oncologys senior subordinated notes limit its ability to make restricted payments from US Oncology, including dividends paid by US Oncology to Holdings. As of
September 30, 2009, US Oncology has the ability to make approximately $23.7 million in restricted payments, which amount increases based on capital contributions to US Oncology, Inc. and by 50 percent of US Oncologys net income and is
reduced by i) the amount of any restricted payments made and ii) 50 percent of net losses of US Oncology, excluding certain non-cash charges such as the $380.0 million goodwill impairment during the three months ended March 31, 2008 and the
$26.0 million loss on early extinguishment of debt during the nine months ended September 30, 2009. Because the Senior Secured Notes result in incremental debt and interest expense to US Oncology, the refinancing transaction will negatively
impact the amount available to make future restricted payments to Holdings. The Senior Secured Notes also restrict such payments to Holdings but are generally less restrictive than the senior subordinated notes. Delaware law also requires that US
Oncology be solvent both at the time, and immediately following, a dividend payment to Holdings. Because Holdings relies on dividends from US Oncology to fund cash interest payments on the Holdings Notes, in the event that such restrictions prevent
US Oncology from paying such a dividend, Holdings would be unable to pay interest on the notes in cash and would instead be required to pay PIK interest. Unlike interest on the Holdings Notes, which may be settled in cash or through the issuance of
additional notes, payments due to the swap counterparty must be made in cash. As a result of the current and projected low interest rate environment, and the related expectation that Holdings will continue to be net payer on the interest rate swap,
the Company believes that cash payments for the interest rate swap obligations will reduce the availability under the restricted payments provisions in US Oncologys indebtedness to a level that additional payments for cash interest for the
Holdings Notes may not be prudent and therefore, no longer remain probable for the foreseeable future. Based on projected LIBOR interest rates as of September 30, 2009, the Company expects there will be available funds under the restricted
payments provision in order to service, at a minimum, the estimated interest rate swap obligations through September 30, 2010. The Companys semiannual payment obligations on the interest rate swap increase by $2.1 million for each 1.00%
that the fixed interest rate of 4.97% paid to the counterparty exceeds the variable interest rate received from the counterparty. Similarly, the Companys semiannual payment obligations on the interest rate swap decrease by $2.1 million when
the difference between the fixed interest rate paid to the counterparty and the variable interest rate received from the counterparty reduces by 1.00%. In the event amounts available under the restricted payments provision are insufficient for the
Company to service interest on the Holdings Notes, including any obligation related to the interest rate swap, the Company may be required to arrange a capital infusion and use such proceeds to satisfy these obligations. There can be no assurance
that additional financing, if available, will be made on terms that are acceptable to the Company. We issued $18.3 million in



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



notes to settle the interest due in September, 2009 and expects to issue $15.7 million in notes to settle the interest due in March 2010. In addition, we paid $6.6 million to settle the
obligation under our interest rate swap agreement for the interest period ended September 15, 2009. During the nine months ended September 30, 2009, US Oncology paid dividends in the amount of $11.1 million to Holdings to finance
obligations related to the Holdings Notes and interest rate swap. Dividends of $4.1 million and $7.0 million were paid in the first and third quarters of 2009, respectively.

Financial Covenants

At September 30, 2009, the Senior Secured
Revolving Credit Facility contained the most restrictive covenants related to our indebtedness. The Senior Secured Revolving Credit Facility requires US Oncology to comply, on a quarterly basis, with certain financial covenants, including a maximum
leverage ratio test, which becomes more restrictive over time. At September 30, 2009, the terms of the Senior Secured Revolving Credit Facility required that we maintain a maximum leverage ratio of 7.00:1. As of September 30, 2009, we were
in compliance with the financial covenants of the Senior Secured Revolving Credit Facility. Our ability to access the Senior Secured Revolving Credit Facility may be limited if we are not able to maintain compliance with these covenants through the
facilitys maturity in August 2012.

Excess Cash Flow Sweep

Under its previously existing senior secured credit facility, the Company was obligated (based on certain leverage thresholds) to make payments on its term loan facility of up to 75%
of excess cash flow. Excess cash flow, as defined by the senior secured credit facility, is approximately equal to operating cash flow, as presented in the statement of cash flows, less capital expenditures, consideration paid in
affiliation transactions, principal repayments of indebtedness, restricted payments (primarily distributions from US Oncology, Inc. to US Oncology Holdings, Inc.) and cash paid for taxes. There was no payment required for the year ended
December 31, 2008 under this provision. The payment required for the year ended December 31, 2007 under this provision was approximately $29.4 million, which was paid in April, 2008.

This provision was terminated when the term loan portion of the senior secured credit facility was retired in June, 2009.

Excess Proceeds Prepayment Offers

Under its Senior Secured Notes indenture, the Company may be obligated (based on certain thresholds) to make prepayment offers on the Senior Secured Notes of up to 100% of allocable excess proceeds from any permitted asset
sales. No prepayment offer was required for the nine months ended September 30, 2009. The term allocable excess proceeds is equal to the product of the Excess Proceeds (defined below), and a fraction:



| |  |  | the numerator of which is the aggregate principal amount of the notes outstanding on the date of the prepayment offer, plus accrued and unpaid
interest, if any, to such date, and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the denominator of which is the sum of (x) the aggregate principal amount of the notes outstanding on the date of the prepayment offer, plus
accrued and unpaid interest, if any, to such date, and (y) the aggregate principal amount of certain other debt of the Company outstanding on the date of the prepayment offer, plus accrued and unpaid interest, if any, to such date.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Excess Proceeds are approximately equal to cash payments received from the asset sale reduced by:



| |  |  | certain taxes, fees and other expenses associated with the asset sale,
| | - |  | ----------------------------------------------------------------------



| |  |  | all payments made on debt secured by the asset being sold,
| | - |  | ----------------------------------------------------------



| |  |  | all distributions and payments to noncontrolling interest holders,
| | - |  | ------------------------------------------------------------------



| |  |  | appropriate reserve amounts accrued in accordance with GAAP,
| | - |  | ------------------------------------------------------------



| |  |  | all payments made on debt secured by a first priority security interest (excluding affiliate debt), and
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | any cash reinvested in Additional Assets, as defined by the notes indenture.
| | - |  | ----------------------------------------------------------------------------



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



Scheduled Maturities

As a result of the refinancing transaction in June, 2009, the Company has effectively extended maturities of the refinanced indebtedness through August, 2017. Previously, the
terminated senior secured credit facility matured in four quarterly installments of approximately $110 million each beginning on September 30, 2010 and concluding on August 20, 2011 and the retired $300.0 million of 9% Senior Notes matured
in August, 2012.

Currently, $494.0 million of indebtedness is outstanding under the US Oncology Holdings, Inc. Floating Rate
PIK Toggle Notes and we expect to settle future interest payments on this indebtedness in kind for the foreseeable future. Based on LIBOR rates as of September 30, 2009, if the Company were to settle all future interest payments in kind, the
principal balance of the Notes would be approximately $582 million at maturity in March, 2012.

The Company may need to seek
additional financing to satisfy its capital needs by accessing the public or private equity markets, refinancing existing obligations through issuance of new indebtedness, modifying the terms of existing indebtedness or through a combination of
these alternatives. There can be no assurance that additional financing, if available, will be made on terms acceptable to the Company.

Interest Rate Swap

We manage our debt portfolio to achieve an overall desired position of fixed and variable
rates and may employ interest rate swaps to achieve that goal. The major risks from interest rate derivatives include changes in the interest rates affecting the fair value of such instruments and the creditworthiness of the counterparty in such
transactions. We engage in interest rate swap transactions only with commercial financial institutions we believe to be creditworthy. In connection with issuing the Notes, Holdings entered into an interest rate swap agreement, with a notional amount
of $425.0 million, fixing the LIBOR base rate at 4.97% through maturity in 2012. Our interest rate swap counterparty is a subsidiary of Wachovia Corporation, which was recently acquired by Wells Fargo & Company. The circumstances of
Wachovia Corporation have not impacted Wachovia Bank, NAs credit rating and Wachovia Bank, NA remains highly rated (AA by Standard & Poors). Although we believe that our swap counterparty remains creditworthy, we cannot provide
assurance that we are not at risk of counterparty default.

The swap agreement was initially designated as a cash flow hedge
against the variability of cash future interest payments on the Holdings Notes. Based on our financial projections, and due to limitations on the restricted payments that will be available to service the Notes, we no longer believe that payment of
cash interest on the Holdings Notes remains probable and have discontinued cash flow hedge accounting for this instrument.

The Company recorded an unrealized loss of $10.0 million and $5.9 million during the nine months ended September 30, 2009 and 2008, respectively. The Companys Condensed Consolidated Balance Sheet as of September 30, 2009 and
December 31, 2008 includes a liability of $29.9 million and $30.5 million, respectively, to reflect the fair market value of the interest rate swap as of that date and is classified as follows (in thousands):



|                            |  |                    |        |                   |   |       
|--------------------------- |  | ------------------ | ------ | ----------------- | - | ------
|                            |  | Fair Value as of   |        | Fair Value as of 
|                            |  | September 30, 2009 |        | December 31, 2008
|Liabilities                 |  |                    |        |                   |   |       
|Other accrued liabilities   |  | $                  | 16,313 |                   | $ | 10,537
|Other long-term liabilities |  |                    | 13,560 |                   |   | 19,999
|                            |  |                    |        |                   |   |       
|Total                       |  | $                  | 29,873 |                   | $ | 30,536
|                            |  |                    |        |                   |   |       

In addition, we paid $6.6 million to settle the obligation under our interest rate
swap agreement for the nine month period ended September 15, 2009.

The fair value of the interest rate swap is estimated
based upon the expected future cash settlements, as reported by the counterparty, using observable market information. The most significant factors in estimating the value of the interest rate swap is the assumption made regarding the future
interest rates that will be used to establish the variable rate payments to be received by the Company and the discount rate used to determine the present value of those estimated future payments. The Company considers both counterparty credit risk
and its own credit risk when estimating the fair market value of the interest rate swap. Because of negative differential between the current (and projected) LIBOR rate and the fixed interest rate paid by the Company, as well as the
counterpartys high credit rating, counterparty credit risk is assessed to be minimal and did not impact the fair value of the interest rate swap. The Company also assesses its own credit risk in the valuation of its obligation under the
interest rate swap using Company-specific market information. The most significant market information considered was the credit spread between the Holdings Notes, an instrument with a similar credit profile and term as the interest rate



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



swap, and the like-term treasury spread (as an estimate of a risk free rate). As a
result of evaluating the Companys nonperformance risk, the estimated fair value of the interest rate swap was reduced by $4.9 million and $10.8 million as of September 30, 2009 and December 31, 2008, respectively. An increase in
future LIBOR rates of 1.00 percent would increase (in the Companys favor) the fair value of the of the interest rate swap by $6.9 million and a decrease in future interest rates of 1.00 percent would negatively impact its fair value by the
same amount.

Because the fair market value of the interest rate swap is based upon expectations of future interest rates,
changes in its fair value reflect the anticipation of future rates that are not reflected in the carrying value of our indebtedness or interest expense for the period. As a result, changes in the fair market value of the interest rate swap that
relate to expectations of future interest rates are recorded currently in earnings and are not offset by changes in the fair market of our indebtedness or changes in interest expense for the current period. Cash settlements related to the interest
rate swap are established semiannually to coincide with the determination of the variable interest rate associated with the Holdings Notes.

The Company does not believe the election to pay all or a portion of the interest due on the Holdings Notes in kind results in the instrument no longer being an economically effective hedge because the
notional principal of Holdings Notes issued to pay interest will increase or decrease based on market interest rates in the same manner as if cash had been paid for interest.

Interest rates

As a result of the refinancing transaction in June 2009,
substantially all of our outstanding indebtedness either bears a fixed rate of interest or is subject to an interest rate swap agreement where the Company has fixed the LIBOR rate associated with outstanding variable rate indebtedness.

Equity Restructuring

On
October 1, 2009, the Board of Directors and stockholders of US Oncology Holdings, Inc. approved the Third Amended and Restated Certificate of Incorporation of US Oncology Holdings, Inc. Pursuant to the terms of the Third Amended and Restated
Certificate of Incorporation of US Oncology Holdings, Inc, the number of authorized $0.001 par value common shares increased from 300.0 million common shares to 500.0 million common shares.

In addition, pursuant to this amendment, each outstanding share of Series A Preferred Stock and Series A-1 Preferred Stock of US Oncology
Holdings, Inc. was converted into a number of common shares equal to its liquidation preference divided by $1.50 plus one additional common share. As a result of the conversion, 13.9 million shares of Series A Preferred Stock and
1.9 million shares of Series A-1 Preferred Stock, with a liquidation preference of $332.2 million and $50.2 million, respectively, were exchanged for an aggregate 270.6 million common shares.

Also, on October 1, 2009, the Board of Directors and stockholders of US Oncology Holdings, Inc. approved amendments to the Amended and
Restated 2004 Equity Incentive Plan and the 2004 Director Stock Option Plan.

The amendment to the Amended and Restated 2004
Equity Incentive Plan, which was effective October 1, 2009, among other things, increased the number of shares of common stock reserved for issuance under the plan from 32.0 million shares to 59.6 million shares. The aggregate number
of shares reserved for issuance includes awards issued and outstanding prior to the effective date of the amendment. Of the shares reserved for issuance under the plan, 33.2 million shares may be in the form of restricted stock and the
remaining shares are available in the form of options to purchase common stock. In connection with the amendment, on October 1, 2009, US Oncology Holdings, Inc. issued an additional 3.4 million shares of restricted stock and
13.6 million options to purchase common stock. Subsequent to these awards, 13.2 million shares remain available for future grants under the plan, of which 1.6 million shares may be in the form of restricted common stock.

The amendment to the 2004 Director Stock Option Plan, also effective October 1, 2009, increased the number of shares reserved for
issuance under the plan to 1.0 million in addition to modifying certain other aspects of the plan. The amendment also provided for a grant of 25,000 shares of common stock for eligible directors first elected to the board during the year



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS - continued



ending December 31, 2009 and of 15,000 shares of common stock for other eligible directors as of the effective date of the amendment. Beginning with the year ending December 31, 2010,
eligible directors (in office after giving effect to the annual meeting of stockholders) will receive annual grants of 10,000 shares of common stock plus an additional 1,000 shares of common stock for each committee on which such eligible director
serves.

As a result of the aforementioned transactions, the number of outstanding shares of US Oncology Holdings, Inc. common
stock increased from 148.4 million shares to 422.5 million shares. In addition, the Series A and Series A-1 Preferred Stock is no longer outstanding and its aggregate carrying value, in the amount of $382.4 million, was eliminated and the
stockholders deficit of US Oncology Holdings, Inc. was reduced by the same amount.

Inflation

The healthcare industry is labor intensive. Wages and other expenses increase during periods of inflation and when labor shortages occur in
the marketplace. In addition, suppliers pass along rising costs or reduced consumption to us in the form of higher prices. We have implemented cost control measures to curtail increases in operating costs and expenses. We cannot predict our ability
to cover or offset future cost increases.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15 as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2009, our disclosure
controls and procedures were effective and designed to provide reasonable assurance that the information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange
Commission rules and forms. For the purpose of this review, disclosure controls and procedures means controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that we file or submit is
recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that we file or submit is accumulated and communicated to management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate to allow timely
decisions regarding required disclosure.

There was no change in internal control over financial reporting that occurred
during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management previously acknowledged its responsibility for internal controls and seeks to continue to improve those controls. The Company was first subject to certain requirements of Section 404,
including inclusion of managements report on internal control over financial reporting, when it filed its annual report for the fiscal year ended December 31, 2007 on Form 10-K as filed on February 29, 2008. The annual reports
filed for the years ended December 31, 2008 and December 31, 2007 do not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Managements
report was not subject to attestation by the companys registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only managements report in the annual
report. The independent registered accounting firms assessment of internal controls and its report thereon is first required with respect to the fiscal year ending December 31, 2010.



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PART II  Other Information



|Item 1. | Legal Proceedings
|------- | -----------------

Professional
Liability Claims and Reimbursement Related Claims

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 control 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. In addition, because of licensing requirements and affiliated practices participation in governmental healthcare programs, we and affiliated
practices are, from time to time, subject to governmental audits and investigations, as well as internally initiated audits, some of which may result in refunds to governmental programs. Although we and our practices maintain insurance coverage,
successful malpractice, regulatory or product liability claims asserted against us or one of the practices in excess of insurance coverage could have a material adverse effect on us.

U.S. Department of Justice Subpoena

During the fourth quarter of 2005, we
received a subpoena from the United States Department of Justices Civil Litigation Division (DOJ) requesting a broad range of information about us and our business, generally in relation to our contracts and relationships with
pharmaceutical manufacturers. We have cooperated fully with the DOJ in responding to the subpoena. All outstanding document requests from the DOJ were addressed in early 2008, and we continue to await further direction and feedback from the DOJ. At
the present time, the DOJ has not made any allegation of wrongdoing on the part of the Company. However, we cannot provide assurance that such an allegation or litigation will not result from this investigation. While we believe that we are
operating and have operated our business in compliance with law, including with respect to the matters covered by the subpoena, we cannot provide assurance that the DOJ will not make a determination that wrongdoing has occurred. In addition, we have
devoted significant resources to responding to the DOJ subpoena and anticipate that such resources will be required on an ongoing basis to fully respond to the subpoena.

U.S. Attorney Subpoena

On July 29, 2009 the Company received a
subpoena from the United States Attorneys Office, Eastern District of New York, seeking documents relating to its contracts and relationships with a pharmaceutical manufacturer and its business and activities relating to that
manufacturers products. The Company believes that the subpoena relates to an ongoing investigation being conducted by that office regarding the manufacturers sales and marketing practices. The Company intends to fully cooperate with
the request. At the present time, the U.S. Attorney has not made any allegation of wrongdoing on the part of the Company. However, the Company cannot provide assurance that such an allegation or litigation will not result from this
investigation. While the Company believes that it is operating and has operated its business in compliance with the law, including with respect to the matters covered by the subpoena, the Company cannot provide assurance that the U.S. Attorney will
not make a determination that wrongdoing has occurred.

Qui Tam Suits

From time to time, we have become aware that we and certain of our subsidiaries and affiliated practices have been the subject of qui tam lawsuits (commonly referred to as
whistle-blower suits). Because qui tam actions are filed under seal, it is possible that we are the subject of other qui tam actions of which we are unaware.

In previous qui tam suits of which we have been made aware, the DOJ has declined to intervene in such suits and the suits have been dismissed. Qui tam suits are brought by private individuals, and there
is no minimum evidentiary or legal threshold for bringing such a suit. The DOJ 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 the practices and us.
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.



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Breach of Contract Claims

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.

We are also involved in litigation with a practice
in Oklahoma that was affiliated with us under the net revenue model until April, 2006. While we were still affiliated with the practice, we initiated arbitration proceedings pursuant to a provision in the service agreement providing for contract
reformation in certain events. The practice countered with a lawsuit that alleges, among other things, that we have breached the service agreement and that our service agreement is unenforceable as a matter of public policy due to alleged violations
of healthcare laws. The practice sought unspecified damages and a termination of the contract. We believe that our service agreement is lawful and enforceable and that we are operating in accordance with applicable law. As a result of alleged
breaches of the service agreement by the practice, we terminated the service agreement in April, 2006. In March, 2007, the Oklahoma Supreme Court overturned a lower courts ruling that would have compelled arbitration in this matter and
remanded the case back to the lower court to hold hearings to determine whether and to what extent the arbitration provisions of the service agreement will be applicable to the dispute. We expect these hearings to occur in late 2009 or 2010. Because
of the need for further proceedings, we believe that the Oklahoma Supreme Court ruling will extend the amount of time it will take to resolve this dispute and increase the risk of the litigation to us. In any event, as with any complex litigation,
we anticipate that this dispute may take several years to resolve.

As a result of the ongoing litigation, we have been unable
to collect on a timely basis a receivable owed to us relating to accounts receivable purchased by us under the service agreement and amounts for reimbursement of expenses paid by us on the practices behalf. At September 30, 2009, the
total receivable owed to us of $22.4 million is reflected on our balance sheet as other assets. Currently, approximately $14.1 million are held in an escrowed bank account into which the practice has been making, and is required to continue to make,
monthly deposits. These amounts will be released upon resolution of the litigation. In addition, approximately $7.6 million are being held in a bank account that has been frozen pending the outcome of related litigation regarding that account. In
addition, we have filed a security lien on the receivables of the practice. We believe that the amounts held in the bank accounts combined with the receivables of the practice in which we have filed a security lien represent adequate collateral to
recover the $22.4 million receivable recorded in other assets at September 30, 2009. Accordingly, we expect to realize the amount that we believe to be owed by the practice. However, realization is subject to a successful conclusion to the
litigation with the practice, and we cannot assure you as to when the litigation will be finally concluded or as to what the ultimate outcome of the litigation will be. We expect to continue to incur expenses in connection with our litigation with
the practice.

We intend to vigorously pursue our claims, including claims for any costs and expenses that we incur as a
result of the termination of the service agreement and to defend against the practices allegations that we breached the agreement and that the agreement is unenforceable. However, we cannot provide assurance as to what the outcome of the
litigation will be, or, even if we prevail in the litigation, whether we will be successful in recovering the full amount, or any, of our costs associated with the litigation and termination of the service agreement.

Assessing our financial and operational exposure on litigation matters requires the application of substantial subjective judgments and
estimates based upon facts and circumstances, resulting in estimates that could change as more information becomes available.

Certificate
of Need Regulatory Action

During the third quarter of 2006, one of our affiliated practices in North Carolina lost
(through state regulatory action) the ability to provide radiation services at its cancer center in Asheville. The practice continued to provide medical oncology services, but was not permitted to use the radiation services area of the center
(approximately 18% of the square footage of the cancer center). The practice appealed the regulatory action and the North Carolina Court of Appeals ruled in favor of the practice on procedural grounds and ordered the state agency to hold a new
hearing on its regulatory action. During the three months ended March 31, 2008, the practice received a ruling in its appeal, which mandated a rehearing by the state agency. The state agency conducted a rehearing and issued a new ruling
upholding the practices right to provide radiation services. That decision was appealed, and the appellants also sought a stay of the states decision. The request for a stay was denied in July 2008 while the appeal is still pending. As a
result, the practice resumed diagnostic services in September, 2008 and radiation services in February, 2009.



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Delays during the three months ended March 31, 2007 in pursuing strategic
alternatives led to uncertainty regarding the form and timing associated with alternatives to a successful appeal. Consequently, we performed impairment testing as of March 31, 2007 and we recorded an impairment charge of $1.6 million
relating to a management services agreement asset and equipment in the three months ended March 31, 2007. No additional impairment charges relating to this regulatory action have been recorded through September 30, 2009.

At September 30, 2009, our unaudited Condensed Consolidated Balance Sheet included net assets in the amount of $0.7 million related to
this practice, which includes primarily working capital in the amount of $0.5 million. The construction of the cancer center in which the practice operates was financed as an operating lease and, as such, is not recorded on our balance
sheet. At September 30, 2009, the lease had a remaining term of 17 years and the net present value of minimum future lease payments is approximately $7.2 million.

Antitrust Inquiry

The United States Federal Trade Commission
(FTC) and a state Attorney General have informed one of our affiliated physician practices that they have opened an investigation to determine whether a recent transaction in which another group of physicians became employees of that
affiliated group violated relevant state or federal antitrust laws. In addition, the FTC has requested information from us regarding our role in that transaction. We are in the process of responding to a request for information on this matter. At
present, we believe that the scope of the investigation is limited to a single transaction, but we cannot assure you that the scope will remain limited. We believe that we and our affiliated physician practices comply with relevant antitrust laws.
However, if this investigation were to result in a claim against us or our affiliated physician practice in which the FTC or attorney general prevails, the resulting judgment could have a material adverse financial and operational effect on us or
that practice, including the possibility of monetary damages or fines, a requirement that we unwind the transaction at issue or the imposition of restrictions on our future operations and development. In addition, addressing government
investigations requires us to devote significant financial and other resources to the process, regardless of the ultimate outcome of the claims. 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.



|Item 1A. | Risk Factors
|-------- | ------------

You
should carefully consider the risks described below. The risks described below are not the only ones facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and
adversely affect our business, financial condition or results of operations. In general, because our revenues depend upon the revenues of our affiliated practices, any risks that harm the economic performance of the practices will, in turn, harm us.

Risks Relating to Our Industry

Continued efforts by commercial payers to reduce reimbursement levels, change reimbursement methodologies or control the way in which services are provided could adversely affect us.

Commercial payers continue to seek to negotiate lower levels of reimbursement for cancer care services, with a particular focus on
reimbursement for pharmaceuticals. A disproportionate majority of affiliated practices profitability is attributable to reimbursement from commercial payers. There is a risk that commercial payers will seek reductions in pharmaceutical
reimbursement similar to those included in the recent decisions by Medicare and Medicaid, formally the Centers for Medicare and Medicaid Services or CMS, and in federal legislation discussed below. Any reductions in reimbursement levels could harm
us and our affiliated physicians. In addition, several payers are trying to implement Mandatory Vendor Imposition 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. Private payers have the ability to implement such programs through benefit designs that offer patients significant incentives to receive drugs in this fashion as well as through
negotiations with practices. As described below, the United States Department of Health and Human Services, or HHS, was required to implement a program under which oncologists may elect to receive drugs from a Medicare contractor, rather than
purchase drugs and seek reimbursement. If such a program is successfully implemented for Medicare, private payers may follow. Commercial payers are also attempting to reduce reimbursement for other services, such as diagnostic imaging tests,



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by requiring that such tests be performed by specific providers within a given market or otherwise limiting the circumstances under which they will provide reimbursement for those services. In
the event that payers succeed with these initiatives, our practices and our results of operations could be adversely affected.

Changes in Medicare reimbursement may continue to adversely affect our results of operations.

Government organizations, such as CMS are the largest payers for our collective group of affiliated practices. For the nine months ended September 30, 2009 and 2008, the affiliated practices under comprehensive service agreements
derived 39.6% and 38.5%, respectively, of their net patient revenue from services provided under the Medicare program (of which 6.8% and 6.1%, respectively, relates to Medicare managed care programs). As such, changes in Medicare reimbursement
practices have been initiated over the past several years, are continuing through 2009, and may adversely affect our results of operations. Several changes which have and may continue to adversely affect us include:



| |  |  | Change in Medicare reimbursement methodology based on average wholesale price, or AWP, to average sales price, or ASP, for oncology pharmaceuticals
administered in physicians offices effective January 1, 2005 and its impact on differential pricing offered on pharmaceuticals;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Elimination of payments for data submission under the Medicare Demonstration Project under which physicians were reimbursed during 2005 and 2006 for
providing certain data relating to quality of care for cancer patients;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Implementation of the Competitive Acquisition Program, or CAP, which began August 1, 2006 should any affiliated practices elect to participate
in this program;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | CMS changes to the Practice Expense, or PE, Methodology for non-drug services reimbursement which is being phased in from 2007 to 2010;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Change in Medicare fee schedule conversion factors;
| | - |  | ---------------------------------------------------



| |  |  | Capping of Medicare imaging reimbursement at the lower of Hospital Outpatient Prospective Payment System, or HOPPS, rates or Physician Fee Schedule,
or PFS, or National Payment Amounts under the Deficit Reduction Act, or DRA; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A National Coverage Determination, or NCD, issued by the CMS on July 30, 2007 eliminating coverage of erythropoiesis-stimulating agents, or
ESAs, for patients with certain types of cancer or receiving certain types of drug therapy, and limiting coverage of ESAs in certain other circumstances, and subsequent label change by the Food and Drug Administration, or FDA, including similar
restrictions, which are discussed in greater detail below.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Obama administration has identified
healthcare as a policy priority and has released an outline of its healthcare policy initiatives as they relate to the 2010 federal budget. The outline identifies guiding principles for healthcare reform and spending, which include increasing access
to and affordability of healthcare, primarily by ensuring access to health insurance, increasing effectiveness of care, through effective use of technology and an emphasis on evidence-based medicine, maintaining patient choice, emphasizing
preventive care and enhancing the fiscal sustainability of the U.S. healthcare system. Specific initiatives described in the outline include reducing drug costs for federal programs by increasing availability of generics and increasing the Medicaid
rebates payable by manufacturers to states, increasing incentives to reduce unnecessary variability in treatment and to practice evidence-based medicine, incentivizing the use of electronic medical records and other technology, and reducing
unnecessary or wasteful spending. Similarly, some states in which we operate have undertaken, or are considering, healthcare reform initiatives that also address these issues. Currently, the matter of healthcare reform continues to be debated by
lawmakers and we are unable to provide guidance on what the final legislation will be and how it will impact us. While many of the stated goals of the administrations initiatives are consistent with our own mission to increase access to
care that is effective, efficient and based upon the latest available scientific evidence, additional regulation and continued fiscal pressure may adversely affect our business.

The 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 or they may cease charging for drugs administered in the office by choosing to obtain drugs through CAP. 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. Recently, CMS has implemented a pilot program in which third party contractors are retained to seek
recovery of allegedly erroneous payments by governmental programs and are paid based upon successful recoveries. We believe that the increasing national budget deficit, aging population and the prescription drug benefit will mean that pressure to
reduce healthcare costs, and drug costs in particular, will continue to intensify. For a more complete description of the Medicare reimbursement changes and their impact on us, see Managements Discussion and Analysis of Financial
Condition and Results of Operations  Reimbursement Matters.



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Restrictions on reimbursement by government programs for ESAs have resulted in a
material and continuing reduction in revenues and profits of our affiliated practices and us.

ESAs are widely-used
drugs for the treatment of anemia, which is a condition that occurs when the level of healthy red blood cells in the body becomes too low, thus inhibiting the bloods ability to carry oxygen. Many cancer patients suffer from anemia either as a
result of their disease or as a result of the treatments they receive to treat their cancer. ESAs have historically been used by oncologists to treat anemia caused by chemotherapy, as well as anemia in cancer patients who are not currently receiving
chemotherapy. ESAs are administered to increase levels of healthy red blood cells and are an alternative to blood transfusions.

In March, 2007, the FDA issued a public health advisory outlining new safety information, including revised product labeling, about ESAs which it later revised on November 8, 2007. In particular, the FDA highlighted studies that
concluded that an increased risk of death may occur in cancer patients who are not receiving chemotherapy and who are treated with ESAs. The FDA advisory and subsequent actions led the CMS to open a NCA, on March 14, 2007, on the use of ESAs
for conditions other than advanced kidney disease, which was the first step toward issuing a proposed national coverage determination. The NCD was released on July 30, 2007, and was effective as of that date.

The NCD went significantly beyond limiting coverage for ESAs in patients who are not currently receiving chemotherapy that was referenced in
the initial FDA advisory referred to above. The NCD included determinations that eliminate coverage for anemia not related to cancer treatment. Coverage was also eliminated for patients with certain other risk factors. In circumstances where ESA
treatment is reimbursed, the NCD established conditions for Medicare coverage that (i) require that in order to commence ESA treatment, patients be significantly more anemic than was common practice prior to the NCD; (ii) impose
limitations on the duration of ESA therapy and the circumstances in which it should be continued and (iii) limit dosing and dose increases in nonresponsive patients.

Subsequent to the issuance of the NCD, the Oncologic Drug Advisory Committee of the FDA, or ODAC, met on March 13, 2008, to further consider the use of ESAs in oncology. Based upon the ODAC findings
on July 30, 2008, FDA published final new labeling for the ESA drugs Aranesp and Procrit. Unlike the NCD from CMS, which governs reimbursement, rather than prescribing, for Medicare beneficiaries only, the FDA approved labeling indicates the
conditions under which the FDA believes that use of a product is safe and effective. The revised labeling was effective as of August 14, 2008, and primarily changed the labeled use of ESAs in the following areas:



| |  |  | ESAs are not indicated for patients receiving chemotherapy when the anticipated outcome is cure;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | ESA therapy should not be initiated when hemoglobin levels are 3 10 grams per deciliter, or g/dL; and
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | References in the labeling to an upper limit of 12 g/dL have been removed.
| | - |  | --------------------------------------------------------------------------

The FDA did not adopt an ODAC recommendation to limit ESA in head/neck and breast cancers, or any other tumor type. FDAs action on
this point significantly reduced the impact of a possible decrease in utilization.

FDA also mandated implementation of a Risk
Evaluation and Mitigation Strategy, or REMS, for ESAs. A proposed REMS for ESAs was filed by ESA manufacturers was submitted to the FDA in late August, 2008. The REMS may require additional patient consent/education requirements, medical guides and
physician registration procedures. The length of time required for the FDA to approve a REMS and for the manufacturers to implement the new program is uncertain and it presently remains under discussion between the manufacturers and the FDA. Once
implemented, the REMS will outline additional, if any, procedural steps that will be required for qualified physicians to order and prescribe ESAs for their patients.

Operating income attributable to ESAs administered by our network of affiliated physicians decreased $0.8 million and $9.0 million during the three months and nine months ended September 30, 2009,
respectively, from the comparable periods ended September 30, 2008. The operating income reflects results from our Medical Oncology Services segment which relate primarily to the administration of ESAs by practices receiving comprehensive
management services and from our Pharmaceutical Services segment which includes purchases by physicians affiliated under the OPS model, as well as distribution and group purchasing fees received from manufacturers. As the NCD was effective
July 30, 2007, the impact of reduced ESA utilization was not fully reflected in the results for the last half of 2007. In addition, there was a net increase in ESA pricing, the impacts of which are included in the 2008 financial results.



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The REMS is expected to become effective in late 2009 or early 2010. We believe a
possible impact of the REMS could be further reductions in ESA utilization. The significant decline in ESA usage has had a significant adverse affect on our results of operations, and, particularly, our Medical Oncology Services and Pharmaceutical
Services segments, and we cannot assure you that a further decline will not occur. Decreased financial performance of affiliated practices as a result of declining ESA usage could also have an effect on their relationship with us and lead to
increased pressure to amend the terms of their management services agreements. In addition, reduced utilization of ESAs may adversely impact our ability to continue to receive favorable pricing from ESA manufacturers. Decreased financial performance
may also adversely impact our ability to obtain acceptable credit terms from pharmaceutical manufacturers, including manufacturers of products other than ESAs.

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

Continued review of pharmaceutical companies by government payers could result in lowered reimbursement for pharmaceuticals, which could harm
us. Because Medicare reimbursement is no longer based on AWP, governmental scrutiny of AWP, which has been a focus of several investigations by government agencies may be expected to decline. However, many state Medicaid programs continue to
reimburse for drugs on an AWP-based model. Moreover, existing and prior lawsuits and investigations regarding AWP have resulted and could continue to result in significant settlements that include corporate integrity agreements affecting
pharmaceutical manufacturer behavior. Corporate integrity agreements subject healthcare providers, including pharmaceutical manufacturers, to burdensome and costly monitoring and reporting requirements to the Office of Inspector General of the HHS.
Additionally, many of the concerns of government agencies will continue to apply under any reimbursement model. Because our network is a significant purchaser of pharmaceuticals, the other services we provide to, and relationships we have with
pharmaceutical manufacturers, could be subject to scrutiny to the extent they are not viewed as bona fide arms length relationships or are inappropriately linked to pharmaceutical purchasing. Furthermore, possibly in response to such scrutiny as
well as significant adverse coverage by the media, some pharmaceutical manufacturers could alter pricing or marketing strategies that increase the cost of pharmaceuticals to oncologists, which in turn could adversely affect us. Finally, because our
network of affiliated practices participates in a group purchasing organization that is a significant purchaser of pharmaceuticals paid for by government programs, we or our network of affiliated practices have become involved in these
investigations or lawsuits, and are the target of such pharmaceutical-related scrutiny. Any of these events could have a material adverse effect on us.

ASP-based reimbursement 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.
Starting January 1, 2005, Medicare began reimbursing for oncology pharmaceuticals based on 106% of 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 drugs administered in all physician offices. We believe that this change has made pharmaceutical companies more reluctant to offer market-differentiated pricing to us or reduced the degree of such
differentiation. 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 new customers and retain existing customers, particularly under our
OPS model, and could adversely affect our business and results of operations.

Continued migration from branded to generic
pharmaceuticals may negatively impact our operating results.

The Company continues to experience a shift of certain
branded single source drugs to generic status. For each newly generic drug, the Companys earnings typically temporarily increase because drug cost declines significantly, while reimbursement remains at the branded price for a period of
months. However, after reimbursement adjusts, the Companys earnings with respect to a generic drug are typically significantly lower than the earnings from a branded pharmaceutical. The timing and impact of a particular
pharmaceutical becoming available in generic form is difficult to predict because of potential delays resulting from legal challenges that often arise in connection with the introduction of new generic compounds and uncertainty regarding how generic
products will be priced in the marketplace. However, the Company has identified 3 currently branded products, which represent approximately 10 percent of its revenue related to pharmaceuticals, that may become available in generic form during the
year ending December 31, 2010.



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We conduct business in a heavily regulated industry, and changes in regulations or
violations of regulations may directly or indirectly, reduce our revenues and harm our business.

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. Several areas of regulatory compliance that may affect our ability to conduct
business include:



| |  |  | federal and state anti-kickback laws;
| | - |  | -------------------------------------



| |  |  | federal and state self-referral and financial inducement laws, including the federal Ethics in Patient Referrals Act of 1989, also known as the
Stark Law;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | federal and state false claims laws;
| | - |  | ------------------------------------



| |  |  | state laws regarding prohibitions on the corporate practice of medicine;
| | - |  | ------------------------------------------------------------------------



| |  |  | state laws regarding prohibitions on fee splitting;
| | - |  | ---------------------------------------------------



| |  |  | federal and state laws regarding pharmacy regulations;
| | - |  | ------------------------------------------------------



| |  |  | federal and state laws regarding pharmaceutical distribution; and
| | - |  | -----------------------------------------------------------------



| |  |  | federal and state laws and regulations applicable to the privacy and security of health information and other personal information.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------

These federal and state laws and regulations are extremely complex. In many instances, the industry does
not have the benefit of significant regulatory or judicial interpretation of these laws and regulations. It also is possible that the courts could ultimately interpret these laws in a manner that is different from our interpretations. In addition,
federal and state agencies responsible for enforcement and interpretation of these laws, as well as courts, continue to issue new interpretations and change prior interpretations of these laws, including some changes that may have an adverse impact
on our operations or require us to alter certain of our business arrangements. While we believe that we are currently in compliance in all material respects with applicable laws and regulations, a determination that we have violated these laws, or
the public announcement or perception that we are being investigated for possible violations of these laws, would have an adverse effect on our business, financial condition and results of operations. In addition to our affiliated practices,
hospitals and other healthcare providers with which we, or our affiliated practices, have entered into various arrangements are also heavily regulated. To the extent that our arrangements with these parties or their independent activities fail to
comply with applicable laws and regulations, our business and financial condition could be adversely affected. For a more complete description of these regulations, see Government Regulation.

We face the risk of governmental investigation and qui tam litigation relating to regulations governing billing for medical services.

The federal government is aggressive in examining billing practices and seeking repayments and penalties allegedly
resulting from improper billing and reimbursement practices. In addition, federal and some state laws authorize private whistleblowers to bring false claim, or qui tam suits, on behalf of the government and reward the whistleblower with a portion of
any final recovery. We have previously been named in qui tam suits. In each of the qui tam suits naming us of which we are aware, the United States Department of Justice, or DOJ, has not intervened and such suits have been dismissed. However,
because qui tam lawsuits are filed under seal, we could be named in other such suits of which we are not aware. For the past several years, the number of qui tam suits filed against healthcare companies and the aggregate amount of recoveries under
such suits have increased significantly. This trend increases the risk that we may become subject to additional qui tam lawsuits.

Although we believe that our operations comply with applicable laws and we intend to vigorously defend ourselves against allegations of wrongdoing, the costs of addressing such suits, as well as the amount of any recovery in the event of a
finding of wrongdoing on our part, could be significant. The existence of qui tam litigation involving us may also strain our relationships with our affiliated physicians, particularly those physicians or practices named in such suits, or with our
pharmaceutical suppliers.

In previous qui tam suits of which we have been made aware, the DOJ has declined to intervene in
such suits and the suits have been dismissed. Qui tam suits are brought by private individuals, and there is no minimum evidentiary or legal threshold for bringing such a suit. The DOJ 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



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are separate legal entities not controlled by us, such claims necessarily involve a more complicated, higher cost of defense, and may adversely impact the relationship between the practices and
us. 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 operate in a highly competitive industry.

We have existing competitors, as well as a number of potential new competitors, some of whom have greater name recognition and
significantly greater financial, technical, marketing and managerial 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 additional strategic relationships with providers, pharmaceutical companies and payers, which could result in increased competition. The introduction of new and
enhanced services, acquisitions, industry consolidation and the development of additional strategic relationships by our competitors could cause price competition, a decline in revenue or a loss of market acceptance of our services, or make our
services less attractive. Additionally, in developing cancer centers, we compete with a number of non-profit organizations that can finance acquisitions and capital expenditures on a tax-exempt basis or receive charitable contributions unavailable
to us. Such organizations may be willing to provide services at rates lower than we would require to operate profitably.

With
respect to research activities, the competitive landscape is fragmented, with competitors ranging from small limited-service providers to large full-service contract research organizations with global operations. Some of these large contract
research organizations have access to more financial resources than we do.

Industry forces are affecting us and our
competitors. In recent years, the healthcare industry has undergone significant changes driven by various efforts to reduce costs, including national healthcare reform, trends toward managed care, limits in Medicare coverage and reimbursement
levels, consolidation of healthcare service companies and collective purchasing arrangements by office-based healthcare practitioners. The changes in our industry have caused greater competition among industry participants. Our inability to predict
accurately, or react competitively to, changes in the healthcare industry could adversely affect our operating results. We cannot assure you that we will be able to compete successfully against current or future competitors or that competitive
pressures will not have a material adverse effect on our business, financial condition and results of operations.

Risks Relating to Our
Business

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

During the nine months ended
September 30, 2009, approximately 70% of the patient revenue generated by our affiliated practices under comprehensive service agreements was attributable to pharmaceuticals. Under the comprehensive services model, our medical oncology revenues
are dependent on the earnings of our affiliated practices related to pharmaceuticals. Under the OPS model, our revenues are dependent on use of pharmaceuticals by affiliated practices. Because revenues attributable to pharmaceuticals and our ability
to procure pharmaceuticals at competitive prices are such a significant part of the affiliated practices earnings and, consequently, our revenues, factors that adversely affect those revenues, such as changes in reimbursement or usage, or the
cost structure underlying those revenues are likely to adversely affect our business.

In addition, there is a risk that a
change in treatment patterns or reduction in use of a particular drug could result from new scientific findings or regulatory or reimbursement actions, as has occurred with ESAs. Any such change that impacts a significant amount of pharmaceutical
utilization would adversely affect our results of operations.



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We derive a substantial portion of our revenue and profitability from the
utilization of pharmaceuticals manufactured and sold by a very limited number of suppliers and any termination or modification of relations with those suppliers could have a material adverse impact on our business.

We derive a substantial portion of our revenue and profitability from the utilization of a limited number of pharmaceutical products
manufactured and sold by a very limited number of, or in several cases, a single manufacturer. During the nine months ended September 30, 2009, approximately 43% of patient revenue generated by our affiliated practices resulted from
pharmaceuticals sold exclusively by five manufacturers. Included among these are ESAs, which accounted for 3.6% of our 2009 year to date revenue and a larger proportion of our earnings before interest, taxes, depreciation and amortization, or
EBITDA, and net income. In addition, a limited number of manufacturers are responsible for a disproportionately large amount of market-differentiated pricing we offer to practices. Our agreements with these manufacturers are typically for one to
three years and are cancelable by either party without cause with 30 days prior notice. Further, several of the agreements provide favorable pricing that can be adjusted periodically based on specified volume levels, growth levels, or a specified
level of use of a specific drug as a percentage of the overall use of drugs within a given therapeutic class.

In some cases,
compliance with the contract is measured on a quarterly basis and pricing concessions are given in the form of rebates payable at the end of the measurement period. Unanticipated changes in usage patterns, including changes in reimbursement policies
such as those which may affect ESAs or the introduction of standardized treatment regimens or clinical pathways that disfavor a given drug, could result in lower-than-anticipated utilization of a given pharmaceutical product, and cause us to fail to
attain the performance levels required to earn rebates. A departure of a significant number of physicians from our network could also cause us to fail to reach contract targets. Failure to attain performance levels could result in our not earning
rebates, including cost-reductions that may already have been reflected in our financial statements. Furthermore, certain manufacturers pay rebates under multi-product agreements. Under these types of agreements, our pricing on several products
could be adversely impacted based upon our failure to meet predetermined targets with respect to any single product. Any termination or adverse adjustment to these relationships could have a material adverse effect on our business, financial
condition and results of operations.

Our ability to negotiate the purchase of pharmaceuticals on behalf of our network of
affiliated physicians, or to expand the scope of pharmaceuticals purchased, from a particular supplier at prices below those generally offered to all oncologists is largely dependent upon such suppliers assessment of the value of our network.
Many pharmaceuticals used by our affiliated physicians are single-sourced drugs and available from only one manufacturer and, accordingly, the lack of competitive products makes differentiated pricing difficult to achieve. To the extent that our
pharmaceutical services structure or other factors cause pharmaceutical suppliers to perceive our network as less valuable, our relationships and any pricing advantages with such suppliers could be harmed. Our inability to negotiate prices of
pharmaceuticals with any of our significant suppliers at prices below those generally available to all oncologists could have a material adverse effect on our business, results of operations and financial condition.

Our centralized business operations, particularly our distribution operation, may be adversely affected by business interruptions
resulting from events that are beyond our control.

Our centralized business operations, particularly our distribution
operation, may be adversely affected by business interruptions resulting from events that are beyond our control. We have only one pharmaceutical distribution facility, which is located in Fort Worth, Texas. In addition, certain of our other
business functions are centralized at our headquarters in The Woodlands, Texas. A significant interruption in the operation of any of these facilities, whether as a result of natural disaster or other unexpected damage from fire, floods, power loss,
telecommunications failures, break-in, terrorist attacks, acts of war and other events, could significantly impair our ability to operate our business and adversely impact our and our affiliated practices operations. If we seek to replicate
our centralized operations at other locations, we will face a number of technical as well as financial challenges, which we may not be able to address successfully. In particular, with respect to distribution, although we and our affiliated
practices would be able to obtain pharmaceuticals from other sources, we cannot assure you that we will be able to do so at a price that is comparable or in as efficient a manner as through our own distribution operation. Although we carry property
and business interruption insurance, our coverage may not be adequate to compensate us for all losses that may occur.

A
significant portion of our revenues are represented by our affiliate practice, Texas Oncology. A deterioration of our relationship with this practice or any adverse effects on this practice could significantly harm our business.

One affiliated practice, Texas Oncology, represented approximately 25% of our revenue for the nine months ended September 30, 2009
and 2008. We perceive our relationship with this practice to be positive, however if the relationship were to deteriorate, or the practice were to disaffiliate, we would experience a material, adverse impact on our results of operations and
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If our affiliated practices terminate their agreements with us, we could be seriously harmed.

Our affiliated practices under certain circumstances are allowed, and may attempt, to terminate their agreements with
us. If any of our larger practices were to succeed in such a termination, our business 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 that are not part of our network but which are affiliated with other companies, have attempted to end or restructure their affiliations with such
companies, although they may not have a contractual right to do so, by arguing that their affiliations violate some aspect of healthcare law and have been successful in doing so.

Specifically, we are involved in litigation with a practice in Oklahoma that was affiliated with us under the net revenue model (a subset of what is now the comprehensive services
model) until April, 2006. While we were still affiliated with the practice, we initiated arbitration proceedings pursuant to a provision in the service agreement providing for contract reformation in certain events. The practice countered with a
lawsuit that alleges, among other things, that we have breached the service agreement and that our service agreement is unenforceable as a matter of public policy due to alleged violations of healthcare laws. The practice sought unspecified damages
and a termination of the contract. We believe that our service agreement is lawful and enforceable and that we are operating in accordance with applicable law. As a result of alleged breaches of the service agreement by the practice, we terminated
the service agreement in April, 2006. In March 2007, the Oklahoma Supreme Court overturned a lower courts ruling that would have compelled arbitration in this matter and remanded the case back to the lower court to hold hearings to determine
whether and to what extent the arbitration provisions of the service agreement will be applicable to the dispute. We expect these hearings to occur in late 2009 or 2010. Because of the need for further proceedings, we believe that the Oklahoma
Supreme Court ruling will extend the amount of time it will take to resolve this dispute and increase the risk of the litigation to us. In any event, as with any complex litigation, we anticipate that this dispute may take several years to resolve.

As a result of the ongoing litigation, we have been unable to collect on a timely basis a receivable owed to us relating to
accounts receivable purchased by us under the service agreement and amounts for reimbursement of expenses paid by us on the practices behalf. At September 30, 2009, the total receivable owed to us of $22.4 million is reflected on our
balance sheet as other assets. Currently, a deposit of approximately $14.1 million is held in an escrowed bank account into which the practice has been making, and is required to continue to make, monthly deposits. These amounts will be released
upon resolution of the litigation. In addition, approximately $7.6 million is being held in a bank account that has been frozen pending the outcome of related litigation regarding that account. In addition, we have filed a security lien on the
receivables of the practice. We believe that the amounts held in the bank accounts combined with the receivables of the practice in which we have filed a security lien represent adequate collateral to recover the $22.4 million receivable recorded as
other noncurrent assets at September 30, 2009. Accordingly, we expect to realize the amount that we believe to be owed by the practice. However, realization is subject to a successful conclusion to the litigation with the practice, and we
cannot assure you as to when the litigation will be finally concluded or as to what the ultimate outcome of the litigation will be. We expect to continue to incur expenses in connection with our litigation with the practice.

In addition to loss (if any) 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 affiliated physicians or affiliated practices terminate their affiliation with
us, this could result in a material adverse effect on our business.

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 affiliation. We and our affiliated practices seek to maintain and renew such contracts once they expire. We cannot predict whether
a court will enforce the non-competition covenants in these agreements. If practices are unable to enforce these non-competition provisions or otherwise enforce these employment agreements, physicians may leave our network and compete with our
affiliated practices. In addition, physicians leave our network from time to time as a result of retirement, disability or death. 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, our business could be seriously harmed.



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We are subject to numerous legal proceedings, many of which could be material.

See Part II, Item 1  Legal Proceedings for description and update.

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. Qualified oncologists are in short supply nationwide, and we expect this shortage, relative to patient demand, to continue or worsen. There can be no assurance that our
affiliated groups will be successful in recruiting or retaining physicians. Our affiliated practices may also encounter other difficulties attracting additional physicians and expanding their operations or may choose not to do so. The failure of
practices to expand their patient base and increase revenues could harm us.

Our affiliated practices may be
unsuccessful in obtaining favorable contracts with third-party payers, which could result in lower operating margins.

We facilitate negotiation of commercial payer contracts and advise our affiliated physicians accordingly under our comprehensive services model. Commercial payers, such as managed care organizations, often request fee structures or
alternative reimbursement methodologies that could have a material adverse effect on our affiliated physicians and therefore, on our operating results. Reductions in reimbursement rates for services offered by our affiliated physicians and other
commercial payer cost containment measures could affect our liquidity and results of operations with respect to our comprehensive service agreements.

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 the practices. At the same time, an affiliated practice may have difficulty in effectively governing the practices of its
individual physicians. In addition, we have only limited control over the business decisions of the practices even under the comprehensive services 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, business strategy, our profitability and the strength of our network.

Loss of revenues or a decrease in income of our affiliated practices, including as a result of cost containment efforts by third-party payers, 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 comprehensive service agreements and our ability to collect fees under our OPS model depend upon
the profitability of the practices. Any failure by the practices to contain costs effectively will adversely impact our results of operations. 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 sole 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.

Physician practices typically bill third-party payers for the healthcare services provided to their patients. Third-party
payers such as private insurance plans and commercial managed care plans negotiate the prices charged for medical services and supplies in order to lower the cost of the healthcare services and products they pay for and to shift the financial risk
of providing care to healthcare providers. Third-party payers can also deny reimbursement for medical services and supplies by concluding that they believe a treatment was not appropriate, and these reimbursement denials are difficult to appeal or
reverse. Third-party payers are also seeking to contain costs by moving certain services, particularly pharmaceutical services, outside of the physicians office. We believe that self-injectable supportive care drugs used by oncologists, which
account for approximately 10% of the pharmaceutical revenue generated by our affiliated practices for the nine months ended September 30, 2009, are particularly susceptible to this trend. Also, any adverse impact on the financial condition of a
third party payer could subject receivables from that payer to greater collection risk. Our affiliated practices also derive a significant portion of their revenues from governmental programs. Governmental programs, such as Medicare and Medicaid,
are collectively the affiliated practices largest payers. For the nine months ended September 30, 2009, the affiliated practices under comprehensive service agreements derived 39.6% of their net patient revenue from services provided
under the



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Medicare program (of which 6.8%, relates to Medicare managed care). Reimbursement by governmental programs generally is not subject to negotiation and is established by governmental regulation.
There is a risk that other payers could reduce rates of reimbursement to match any reduction by governmental payers. Our management fees under the comprehensive services model are dependent on the financial performance of the practices and would be
adversely affected by a reduction in reimbursement. From time to time, due to market conditions and other factors, we may also renegotiate our management fee arrangements, reducing our management fee income. In addition, to the extent physician
practices affiliated with us under the OPS model are impacted adversely by reduced reimbursement levels, our business could be harmed generally and receivables owed to us by those practices could be subject to greater credit risk.

The development or operation of cancer centers could cause us to incur unexpected costs, and our existing or future centers may not be
profitable.

The development and operation of integrated cancer centers is subject to a number of risks, including not
obtaining regulatory permits or approval, delays that often accompany construction of facilities and environmental liabilities related to the disposal of radioactive, chemical and medical waste. Our strategy includes the development of additional
integrated cancer centers. As of September 30, 2009, we have one cancer center under construction, and several others in various planning stages. Any failure or delay in successfully building new integrated cancer centers, as well as
liabilities from ongoing 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 our investment. We may decide to close or sell cancer centers, either because of underperformance or other market developments.

Our success depends on our ability to attract and retain highly qualified technical staff and other key personnel, and we may not be
able to hire enough qualified personnel to meet our hiring needs.

Our ability to offer and maintain high quality
service is dependent upon our ability to attract and maintain arrangements with qualified professional and technical staff and with executives on our management team. Clinical staffs at affiliated practices are practice employees, but we assist in
recruiting them. There is a high level of competition for such skilled personnel among healthcare providers, research and academic institutions, government entities and other organizations, and there is a nationwide shortage in many specialties,
including oncology nursing and technical radiation staff. We cannot assure that we or our affiliated practices will be able to hire sufficient numbers of qualified personnel or that employment arrangements with such staff can be maintained on terms
advantageous to our affiliated practices or us. In addition, if one or more members of our management team become unable or unwilling to continue in their present positions, we could be harmed.

Our failure to remain technologically competitive in a declining payment environment for imaging and radiation services could
adversely affect our business.

Rapid technological advancements have been made in the radiation oncology and
diagnostic imaging industry. Although we believe that our equipment and software can generally be upgraded as necessary, the development of new technologies or refinements of existing technologies might make existing equipment technologically
obsolete. If such obsolescence were to occur, we may be compelled to incur significant costs to replace or modify the equipment, which could have a material adverse effect on our business, financial condition and results of operations. In addition,
some of our cancer centers compete against local centers, which may own more advanced imaging or radiation therapy equipment or provide additional technologies. Our performance is dependent upon physician and patient confidence in the quality of our
technology and equipment as compared to that of our competitors.

Advances in other cancer treatment methods, such as
chemotherapy, surgery and immunotherapy, or in cancer prevention techniques could reduce demand for the radiation therapy services provided at the cancer centers we operate. The development and commercialization of new radiation therapy technologies
could have a material adverse effect on our affiliated practices and on our business, financial condition and results of operations.

Our working capital could be impacted by delays in reimbursement for services.

The healthcare industry
is characterized by delays that can be as much as three to six months between when services are provided and when the reimbursement or payment for these services is received. Under our comprehensive service agreements, our working capital is
dependent on such collections. Although we believe our collection experience is generally consistent with that of the industry, industry reimbursement practices make working capital management, including prompt and diligent billing and collection,
an important factor in our results of operations and liquidity. At practices affiliated under



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the OPS model we do not control the billing and collection function and reduced liquidity could adversely affect their ability to pay amounts owed to us. We cannot provide assurance that trends
in the industry or in the economy generally will not further extend the collection period and negatively impact our or their working capital.

Our services could give rise to liability to clinical trial participants and the parties with whom we contract.

In connection with clinical research programs, we provide several services focused on bringing new drugs to market, which is time consuming and expensive. Such clinical research involves the testing of
new drugs on human volunteers. Clinical research involves the inherent risk of liability for personal injury or death to patients resulting from, among other things, unforeseen adverse side effects or improper administration of the new drugs by
physicians. In certain cases, these patients are already seriously ill and are at risk of further illness or death. In addition, under the privacy regulations promulgated pursuant to the Health Insurance Portability and Accountability Act, or HIPAA,
there are specific privacy standards associated with clinical trial agreements. Violations of such standards could subject us to an enforcement action by HHS. If we do not perform our services in accordance with contractual or regulatory standards,
the clinical trial process and the participants in such trials could be adversely affected. These events would create a risk of liability to us from either the pharmaceutical companies with which we contract or the study participants.

We also contract with physicians to serve as investigators in conducting clinical trials. Third parties could claim that we should be held
liable for losses arising from any professional malpractice of the investigators with whom we contract or in the event of personal injury to or death of patients for the medical care rendered by third-party investigators. Although we would
vigorously defend any such claims, it is possible that we could be held liable for such types of losses.

We could be
subject to malpractice claims and other harmful lawsuits not covered by insurance.

In the past, we have been named in
suits related to medical services provided by our affiliated physicians. We cannot provide assurance that claims relating to services delivered by a network physician will not be brought against us in the future. In addition, because affiliated
physicians prescribe and dispense pharmaceuticals and we operate pharmacies and participate in the drug procurement and distribution process, we and our affiliated physicians could be subject to product liability claims.

Although we maintain malpractice insurance, there can be no assurance that it will be adequate in the event of a judgment against us. There
can be no assurance that any claim asserted against us for professional liability will not be successful. The availability and cost of professional liability insurance varies widely from state to state and is affected by various factors, many of
which are beyond our control. We may be unable to obtain insurance in the amounts we seek or at prices we are prepared to pay.

Under OPS relationships, our agreements with affiliated practices have shorter terms than our comprehensive services agreements, and we have less input with respect to the business operations of the practices.

Currently, most of our revenues are derived from providing comprehensive management services to practices under long-term agreements that
generally have 10 to 40 year initial terms and that are not terminable except under specified circumstances. Agreements under our comprehensive services model allow us to be the exclusive provider of management services, including all services
contemplated under the OPS structure, to each of the affiliated practices. In addition, under those agreements, the affiliated practices are required to bind their physicians to specified employment terms or restrictive covenants. Under the OPS
structure, our agreements with affiliated practices have 1 to 3 year terms, and are more easily terminable. A number of the other input mechanisms that we currently have with respect to affiliated comprehensive services practices do not exist under
our oncology pharmaceutical services model. This may increase the ability of affiliated practices to change their internal composition to our detriment and may result in arrangements that are easier for individual physicians and practices to exit,
exposing us to increased credit risk and competition from other companies, especially in the pharmacy services sector. Departure of a significant number of physicians or practices from participation in our OPS structure could harm us. These risks
will increase as we grow our business under the OPS structure.

Changes in estimates related to our recoverability of
long-lived assets, including goodwill, could result in an impairment of those assets.

The carrying values of our fixed
assets, service agreement intangibles and goodwill are tested for impairment on an annual basis and more frequently if events or changes in circumstances indicate their recorded value may not be recoverable. The impairment review of goodwill must be
based on estimated fair values. With the assistance of a third party valuation firm, we estimate the fair value of the operating segments to which goodwill has been allocated based upon widely-accepted valuation



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techniques, including the use of peer market multiples (on a trailing and forward basis) and discounted cash flow analysis, in the absence of market capitalization data. Our goodwill is impaired
if the carrying value of goodwill exceeds the estimated fair value. Future adverse changes in actual or anticipated operating results, as well as unfavorable changes in economic factors and market multiples used to estimate our fair value, could
result in future non-cash impairment charges.

For fixed assets and service agreements, the carrying value is compared to our
projected cash flows associated with the affiliated practice that is utilizing the fixed assets or that is party to the management services agreement. We may be required to recognize an impairment charge in the event these analyses indicate that our
fixed assets or management service agreement intangible assets are not recoverable.

We are required to evaluate our
internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on our
cost of financing or ability to obtain financing.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002,
beginning with the filing of the Annual Report on Form 10-K for the fiscal year ended December 31, 2007, we are required to furnish, an annual report by our management on our internal control over financial reporting. Such a report contains an
assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year, including a statement as to whether or not our internal control over financial reporting is effective. This assessment would include
disclosure of any material weaknesses in our internal control over financial reporting if any were identified by management. Effective with the year ending December 31, 2010, such report must also contain a statement that our independent
registered public accounting firm has issued an attestation report on the effectiveness of our internal control over financial reporting.

We began preparing the system and process documentation and evaluation needed to comply with Section 404 during 2004. Our assessment as of December 31, 2008 indicated that our internal control
over financial reporting is effective. However, in the future, if our management identifies one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control is effective. If we
are unable to assert that our internal control over financial reporting is effective, or if, for the year ending December 31, 2010, our independent registered public accounting firm is unable to express an opinion that our internal controls are
effective, we could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our cost of financing or our ability to obtain financing.

Our business may be significantly impacted by a downturn in the economy.

While we believe the patient demand for cancer care will not generally be impacted by a downturn in the economy, unfavorable economic conditions may result in some patients electing
to defer treatment, as well as increased pricing pressure from payers and vendors. In addition, vendors that have historically extended credit to the Company may restrict, or eliminate, the terms on which credit is extended or require additional
collateral related to these business arrangements. In addition, many of our customers and suppliers may rely on the availability of short-term financing to support their operations. An adverse change in the ability of our customers or suppliers to
obtain necessary financing could disrupt their operations and, consequently, limit their ability to pay obligations owed to us or provide goods and services necessary to our operations. These events could negatively impact our operating results and
cash flows.

Any downturn in the economy could result in a reduction in the ability of our affiliated practices patients
to pay co-insurance amounts or deductibles. In addition, increased unemployment will likely result in an increase in the number of patients not covered by adequate insurance. Even for patients who are insured, in the event a significant third party
payer, such as insurance company or self-funded benefit plan of another organization encounters significant deterioration in its financial condition, receivables from such payer or other organization could be subject to delay or greater risk of
uncollectibility. While we provide services to physician practices throughout the United States, individual physician practices typically have a local customer and, to a lesser extent, payer base. Therefore, we would expect that practices located in
regions or localities disproportionally affected by an economic downturn, would be particularly adversely affected by such trends and, in fact, we believe that such practices are already experiencing a rise in uncollectibility.

The current economic environment may increase our exposure to bad debt or decrease demand for cancer care.

We continue to experience downward trends in reimbursement, which has been exacerbated as a result of the current economic environment. As
more patients become uninsured as a result of job losses or receive reduced coverage as a result of cost-control measures by employers, patients are becoming increasingly responsible for the cost of treatment, which is increasing our exposure to bad
debt. The shifting responsibility to pay for care has, in some instances, resulted in patients electing not to



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receive treatment. Third party payers are also becoming more aggressive in their efforts to deny or reduce reimbursement. In response to this environment, we have accelerated cost reduction
efforts and our ongoing lean six sigma process to improve the efficiency of care delivery, increased the rigor of its patient financial counseling and claim submission processes, raised its capital investment requirements and tightened our
management of working capital.

Risks Relating to our Capitalization

Our substantial indebtedness could adversely affect our financial condition and restrict our current and future operations.

We have a significant amount of indebtedness. As of September 30, 2009, our total debt was approximately $1,580.9 million, including
indebtedness of US Oncology Holdings, Inc in the amount of $494.0 million and obligations of US Oncology, Inc. in the amount of $1,086.9 million. On August 26, 2009, we terminated our then existing senior secured credit facility and entered
into a new senior secured revolving credit facility which will allow us to borrow up to $120.0 million (under which availability has been reduced by $30.4 million for outstanding letters of credit as of September 30, 2009. Our total debt as of
September 30, 2009 excludes $89.6 million of unused commitments under our senior secured revolving credit facility. Our substantial indebtedness could have important consequences by adversely affecting our financial condition and thus making it
more difficult for us to satisfy our obligations, make strategic investments, increase our service offerings or expand our network of affiliated practices. Our substantial indebtedness could:



| |  |  | increase our vulnerability to adverse general economic and industry conditions;
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| |  |  | require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of
our cash flow to fund working capital, capital expenditures, research and development efforts and other general corporate purposes;
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| |  |  | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
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| |  |  | place us at a competitive disadvantage compared to our competitors that have less debt;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | limit our ability to borrow additional funds;
| | - |  | ---------------------------------------------



| |  |  | limit our ability to obtain credit from suppliers such as pharmaceutical companies on terms acceptable to us; and
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| |  |  | restrict the ability of US Oncology, Inc. to pay dividends to Holdings in order to service Holdings indebtedness and interest rate swap
obligation.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

In addition, the indentures governing our indebtedness contain financial and other restrictive
covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default, which, if not cured or waived, could result in the acceleration of
all of our debts.

Despite our current level of indebtedness, we may be able to incur substantially more debt. This
could further exacerbate the risks to our financial condition described above.

We may be able to incur significant
additional indebtedness in the future. Although the indenture governing the 9.125% senior secured notes, the indenture governing the 10.75% senior subordinated notes, the indenture governing Holdings senior unsecured floating rate toggle notes
and the credit agreement governing our senior secured revolving credit facility contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions and the additional
indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. On August 26, 2009, we terminated our then existing
senior secured credit facility and entered into a new senior secured revolving credit facility which will allow us to borrow up to $120.0 million (under which availability has been reduced by $30.4 million for outstanding letters of credit as of
September 30, 2009. As of September 30, 2009, our senior secured revolving credit facility provided for unused commitments of $89.6 million.

Pursuant to the indenture governing Holdings senior floating rate PIK toggle notes due 2012, we may elect not to pay cash interest due on the Holdings notes on any interest payment date and may
instead elect to pay the interest due by increasing the principal amount of the notes, known as PIK interest. In addition, we may be prohibited from paying cash interest on the Holdings notes. US Oncologys senior notes and senior subordinated
notes also limit its ability to make restricted payments from US Oncology, including dividends paid by US Oncology to Holdings. As of September 30, 2009, US Oncology had the ability to make $23.7 million in restricted payments, which amount
increases based on capital contributions to US Oncology,



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Inc. and by an amount equal to 50 percent of US Oncologys net income (as defined in the indenture governing the senior notes and senior subordinated notes) and be reduced by (i) the
amount of any restricted payments made and (ii) net losses of US Oncology. Delaware law also requires that US Oncology be solvent both at the time, and immediately following, a dividend payment to Holdings. Because Holdings relies on dividends
from US Oncology to fund cash interest payments on its notes, in the event that such restrictions prevent US Oncology from paying such a dividend, Holdings would be unable to pay interest on the notes in cash and would instead be required to pay PIK
interest (see Note 6  Indebtedness). However, pursuant to the terms of those notes, the interest installment due on September 15, 2007 was paid in cash and subsequently we have settled $69.0 million of interest, including $37.2 million
during the nine months ended September 30, 2009, by increasing the principal amount of the outstanding Holdings notes. The failure to pay cash interest on the notes on any interest payment date (other than the first interest payment date) does
not constitute an event of default under the indenture governing the notes. Under such circumstances, interest will be paid in the form of PIK interest by increasing the principal amount of the Holdings notes thus increasing our overall
indebtedness.

We do not expect to service the Holdings notes in cash and, accordingly, the outstanding balance that will
mature on March 15, 2012 will likely be increased due to the issuance of additional notes to settle interest obligations. Assuming that we elect to settle all future interest payments in kind, and that LIBOR interest rates do not change
significantly from current levels, the outstanding Holdings notes could increase to approximately $582 million at maturity. An increase in LIBOR rates of 1.00% would increase the amount due at maturity to approximately $593 million. To the extent
new debt is added to our currently anticipated debt levels, the substantial leverage risks described above would increase. In addition, such new debt could be incurred by our subsidiaries, including US Oncology, and, as a result, the Holdings notes
would be structurally subordinated to such new indebtedness.

To service our indebtedness, we will require a significant
amount of cash. Our ability to generate cash depends on many factors beyond our control.

Our ability to generate
sufficient cash flow from operations to make scheduled payments on debt obligations including distributions of sufficient funds from US Oncology to Holdings to enable Holdings to satisfy its obligations under its indebtedness will depend on our
future financial performance, which will be affected by a range of economic, competitive, regulatory, legislative and business factors, many of which are outside of our control. In addition, the payment and reimbursement practices in our industry
require significant amounts of working capital because of delays that often occur between the time that a claim is submitted for payment and the date payment is actually received. If we do not generate sufficient cash flow from operations to satisfy
our debt obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot provide assurance
that our business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or that additional financing, if available, will be made available on terms
acceptable to us. Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms, would have an adverse effect on our business, financial condition and results of
operations, as well as on our ability to satisfy our debt obligations. Additionally, any downgrades to our credit rating may increase the cost and reduce the availability of any refinancing.

We may not be able to satisfy all scheduled maturities of indebtedness through cash on hand and cash generated through operations. We may be dependent upon our ability to obtain
external capital to satisfy the Holdings notes maturing in 2012 and the senior subordinated notes maturing in 2014. We may be required to seek additional financing to satisfy its capital needs by accessing the public or private equity markets,
refinancing these obligations through issuance of new indebtedness, modifying the terms of existing indebtedness or through a combination of these alternatives.

The terms of our senior secured notes, senior secured revolving credit facility and the indentures governing other indebtedness may restrict our current and future operations, particularly our
ability to respond to changes or to take certain actions.

Our senior secured notes, senior secured revolving credit
facility and the indentures governing other indebtedness contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best
interests. Our senior secured notes and senior secured revolving credit facility both include covenants restricting, among other things, our ability to:



| |  |  | incur, assume or guarantee additional debt;
| | - |  | -------------------------------------------



| |  |  | pay dividends and make other restricted payments;
| | - |  | -------------------------------------------------



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| |  |  | create liens;
| | - |  | -------------



| |  |  | sell assets and subsidiary stock;
| | - |  | ---------------------------------



| |  |  | enter into sale and leaseback transactions;
| | - |  | -------------------------------------------



| |  |  | make capital expenditures;
| | - |  | --------------------------



| |  |  | change our business;
| | - |  | --------------------



| |  |  | enter into agreements that restrict dividends from subsidiaries;
| | - |  | ----------------------------------------------------------------



| |  |  | enter into certain transactions with affiliates; and
| | - |  | ----------------------------------------------------



| |  |  | transfer all or substantially all of our assets or enter into merger or consolidation transactions.
| | - |  | ---------------------------------------------------------------------------------------------------

The indentures for our other indebtedness also contain numerous operating and financial covenants including, among other things,
restrictions on our ability to:



| |  |  | incur additional debt;
| | - |  | ----------------------



| |  |  | pay dividends and make other restricted payments, including a limitation on the amount of these payments;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | create liens;
| | - |  | -------------



| |  |  | use the proceeds from sales of assets and subsidiary stock;
| | - |  | -----------------------------------------------------------



| |  |  | enter into sale and leaseback transactions;
| | - |  | -------------------------------------------



| |  |  | enter into agreements that restrict dividends from subsidiaries;
| | - |  | ----------------------------------------------------------------



| |  |  | make investments and acquisitions;
| | - |  | ----------------------------------



| |  |  | change our business;
| | - |  | --------------------



| |  |  | enter into transactions with affiliates; and
| | - |  | --------------------------------------------



| |  |  | transfer all or substantially all of our assets or enter into merger or consolidation transactions.
| | - |  | ---------------------------------------------------------------------------------------------------

Our senior secured revolving credit facility also includes a requirement that we maintain a maximum leverage ratio.

With respect to the covenant limiting asset sales, US Oncology may be obligated (based on certain thresholds) to make prepayment offers on
the senior secured notes of up to 100% of allocable excess proceeds, as defined by the notes indenture, from any such sale.

A failure to comply with the covenants contained in the senior secured revolving credit facility or the indentures could result in an event of default. In the event of any default under the senior secured
revolving credit facility, the lenders under that facility could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable, enforce their security interest, require US Oncology to apply
all of its available cash to repay these borrowings or prevent US Oncology from making debt service payments on its other indebtedness, any of which would result in an event of default under those notes. In addition, any default under the senior
secured revolving credit facility or other indebtedness would (unless the default is waived) prevent US Oncology from paying dividends to Holdings to enable Holdings to pay cash interest under the Holdings notes. In addition, future indebtedness
could contain financial and other covenants more restrictive than those applicable to our existing indebtedness.

We may not be able to
generate sufficient cash flow to meet our debt service obligations.

On August 26, 2009, we terminated our
then-existing senior secured credit facility and entered into a new senior secured revolving credit facility. As of September 30, 2009, our cash on hand and unused commitments under our senior secured revolving credit facility were $132.9
million and $89.6 million, respectively. Our ability to generate sufficient cash flow from operations to make scheduled payments on our debt obligations will depend on our future financial performance, which will be affected by a range of economic,
competitive, regulatory, legislative and business factors, many of which are outside of our control. In addition, the payment and reimbursement practices in our industry require significant amounts of working capital because of delays that often
occur between the time that a claim is submitted for payment and the date payment is actually



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received. If we do not generate sufficient cash flow from operations to satisfy our debt obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring
our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot assure you that any refinancing would be possible or that any assets could be sold on acceptable terms or otherwise. Our inability
to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms, would have an adverse effect on our business, financial condition and results of operations, as well as on our
ability to satisfy our obligations under the notes. Additionally, any downgrades to our credit rating may increase the cost and reduce the availability of any refinancing.

Fluctuations in interest rates could adversely affect our liquidity and ability to meet our debt service obligations.

Holdings senior unsecured floating rate toggle notes bear interest at variable interest rates. As of September 30, 2009, $494.0 million aggregate principal amount of such
indebtedness was outstanding. Holdings has entered into an interest rate swap agreement with respect to such indebtedness, fixing the LIBOR base rate at 4.97% through maturity. Holdings Condensed Consolidated Balance Sheet as of
September 30, 2009 and December 31, 2008 includes a liability of $29.9 million and $30.5 million, respectively, to reflect the fair market value of the interest rate swap as of that date. Holdings relies on distributions from US Oncology
and its subsidiaries to make any payments on the interest rate swap. Furthermore, the interest rate swap is secured ratably with the senior secured revolving credit facility. To the extent market interest rates continue to decrease (or stay at the
current levels), Holdings may experience difficulty making scheduled payments on such obligations and funding its other fixed costs due to restrictions that limit the ability of US Oncology to make distributions to Holdings. The semiannual payment
obligations on the interest rate swap increase by $2.1 million for each 1.00% that the fixed interest rate of 4.97% paid to the counterparty exceeds the variable interest rate received from the counterparty. Similarly, the semiannual payment
obligations on the interest rate swap decrease by $2.1 million when the difference between the fixed interest rate paid to the counterparty and the variable interest rate received from the counterparty reduces by 1.00%.

Holdings is the sole obligor under the Holdings notes. Holdings subsidiaries, including US Oncology, do not guarantee
obligations under the Holdings notes and do not have any obligation with respect to the notes; the notes are effectively subordinated to Holdings existing and future secured indebtedness to the extent of the value of the assets securing that
indebtedness and are structurally subordinated to all indebtedness and other obligations of Holdings subsidiaries, including US Oncology. Holdings is a holding company and therefore depends on its subsidiaries to service its obligations under
the notes and its other indebtedness. Holdings ability to repay the notes depends upon the performance of its subsidiaries and their ability to make distributions.

Holdings has no operations of its own and derives all of its cash flow from its subsidiaries. None of Holdings
subsidiaries guarantee the Holdings notes. Holdings subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due under the Holdings notes, or to make any funds available
therefore, whether by dividend, distribution, loan or other payments, and the consequent rights of holders of notes to realize proceeds from the sale of any of those subsidiaries assets is structurally subordinated to the claims of any
subsidiarys creditors, including trade creditors and holders of debt of those securities. As a result, the Holdings notes are structurally subordinated to the prior payment of all of the debts (including trade payables) of Holdings
subsidiaries. Holdings subsidiaries have a significant amount of indebtedness. Our total unaudited Condensed Consolidated Balance Sheet liabilities, as of September 30, 2009, were $2,150.1 million, of which $1,580.9 million
constituted indebtedness, including $494.0 million of indebtedness represented by the Holdings notes, $759.3 million of the 91/8% senior secured notes of US Oncology, $3.0 million of the 95/8% senior subordinated notes of US Oncology, $275.0 million of
the 103/4% senior subordinated notes of US
Oncology, and other indebtedness described in Note 6  Indebtedness to the unaudited condensed consolidated financial statements for the nine months ended September 30, 2009. Holdings and its restricted subsidiaries may incur
additional debt in the future.

Holdings depends on its subsidiaries, who conduct the
operations of the business, for dividends and other payments to generate the funds necessary to meet its financial obligations, including payments of principal and interest on the Holdings notes. However, none of Holdings subsidiaries is
obligated to make funds available to it for payment on the Holdings notes. The terms of the senior secured revolving credit facility and the terms of the indentures governing US Oncologys 91/8% senior secured notes and 103/4% senior subordinated notes restrict US Oncology and certain of its
subsidiaries from, in each case, paying dividends or otherwise transferring its assets to Holdings. Such restrictions include, among others, financial covenants, prohibition of dividends in the event of default and limitations on the total amount of
dividends. In addition, legal and contractual restrictions in agreements governing other current and future indebtedness, as well as financial condition and operating requirements of Holdings subsidiaries, currently limit and may, in the
future, limit Holdings ability to obtain cash from its subsidiaries. The earnings from, or other available assets of Holdings subsidiaries, may not be sufficient to pay dividends or make distributions or loans to enable Holdings to make
cash payments of interest in respect of the Holdings notes



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when such payments are due. As previously discussed, US Oncologys senior secured notes and senior subordinated notes also limit its ability to make restricted payments from US Oncology,
including dividends paid by US Oncology to Holdings. We can not provide assurance that the agreements governing the current and future indebtedness of Holdings subsidiaries will permit such subsidiaries to provide Holdings with sufficient
dividends, distributions or loans to fund interest and principal payments on the Holdings notes when due.

A substantial
portion of our assets are held by, and a substantial portion of our income is derived from, our subsidiaries, and the debt of our subsidiary guarantors may restrict payment on our indebtedness.

We hold a substantial portion of assets through our subsidiaries and derive a substantial portion of our operating income from our
subsidiaries. We are dependent on the earnings and cash flow of our subsidiaries to meet our obligations on our indebtedness. We cannot assure you that our subsidiaries will be able to, or be permitted to, pay to us amounts necessary to service our
debt. In certain circumstances, the credit agreement governing the senior secured revolving credit facility and the indentures governing our other indebtedness will permit our subsidiary guarantors to enter into agreements that can limit our ability
to receive distributions from our subsidiaries. In the event we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.

We may not be able to fulfill our repurchase obligations in the event of a change of control.

Upon the occurrence of any change of control, we will be required to make a change of control offer to repurchase a substantial portion of
our indebtedness. Any change of control also would constitute a default under the senior secured notes and the senior secured revolving credit facility. Therefore, upon the occurrence of a change of control, the lenders under the senior secured
notes and the senior secured revolving credit facility would have the right to accelerate their loans and require US Oncology to prepay all of the outstanding obligations under those agreements. Also, the senior secured notes and the senior secured
revolving credit facility prohibit US Oncology from making dividend payments to Holdings to enable Holdings to repurchase the Holdings notes upon a change in control, unless US Oncology first repays all borrowings under the senior secured notes and
the senior secured revolving credit facility or obtains the consent of the lenders under those agreements.

If a change of
control occurs, there can be no assurance that US Oncology will have available funds sufficient to satisfy our obligations under the senior secured revolving credit facility and the indentures governing our other indebtedness and to pay the change
of control purchase price for any or all of the notes issued by us that might be delivered by holders of the notes seeking to accept the change of control offer. Accordingly, none of the holders of our outstanding notes may receive the change of
control purchase price for their notes. Our failure to make the change of control offer or pay the change of control purchase price when due would result in a default under the indentures of our notes.

Our principal stockholders interests may conflict with the interests of our other stakeholders.

As of September 30, 2009, an investor group led by Welsh Carson IX owned approximately 60.9% of Holdings outstanding common stock
and approximately 81.3% of its outstanding participating preferred stock and controls a substantial portion of the voting power of such outstanding equity securities. Welsh Carson IXs interests in exercising control over our business may
conflict with the interests of other holders of our debt and equity securities.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

During the third quarter, security holders of the Company approved the following matters by written consent.

On September 9, 2009, Todd Vannucci was elected to serve as a director of each of Holdings and US Oncology and on September 16, 2009, Yon Yoon Jorden was elected to serve as a director of
Holdings and US Oncology, each, with 90,448,211 shares of Holdings common stock and 12,911,173 shares of Holdings preferred stock voting in favor and none voting against, and with 100% of US Oncology, Inc. stock voting in favor and none voting
against. These matters are described in the Companys Current Reports on Form 8-K dated September 9, 2009 and September 16, 2009.



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.



|Item 6. | Exhibits
|------- | --------



|            |  |                                                                                                                                                                                                                               
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                   
|3.14        |  | Second Amended and Restated Certificate of Incorporation of US Oncology Holdings, Inc.                                                                                                                                        
|            | 
|3.25        |  | Bylaws of US Oncology Holdings, Inc.                                                                                                                                                                                          
|            | 
|3.32        |  | Certificate of Incorporation of US Oncology, Inc.                                                                                                                                                                             
|            | 
|3.42        |  | Bylaws of US Oncology, Inc.                                                                                                                                                                                                   
|            | 
|4.11        |  | Indenture, dated as of February 1, 2002, among US Oncology, Inc., the Guarantors named therein and JP Morgan Chase Bank as Trustee                                                                                            
|            | 
|4.23        |  | Registration Rights Agreement, dated as of August 4, 2004, among Oiler Acquisition Corp. and Citigroup Global Markets Inc., as representative for the Initial Purchasers                                                      
|            | 
|4.33        |  | Indenture, dated as of August 20, 2004, among Oiler Acquisition Corp. and LaSalle Bank National Association, as Trustee                                                                                                       
|            | 
|4.43        |  | First Supplemental Indenture, dated as of August 20, 2004, among US Oncology, Inc., the Guarantors named therein and JP Morgan Chase Bank as Trustee                                                                          
|            | 
|4.53        |  | First Supplemental Indenture, dated as of August 20, 2004, among US Oncology, Inc., the Guarantors named therein and LaSalle Bank National Association, as
Trustee                                                            
|            | 
|4.63        |  | Accession Agreement, dated as of August 20, 2004, among the Guarantors listed therein                                                                                                                                         
|            | 
|4.73        |  | Form of 95/8% Senior Subordinated Note due 2012 (included in Exhibit 3.15)                                                                                                                                                    
|            | 
|4.83        |  | Form of 9% Senior Note due 2012 (included in Exhibit 3.16)                                                                                                                                                                    
|            | 
|4.93        |  | Form of 103/4% Senior Note due 2014 (included in Exhibit 3.5)                                                                                                                                                                 
|            | 
|4.104       |  | Amended and Restated Stockholders Agreement, dated as of December 21, 2006                                                                                                                                                    
|            | 
|4.114       |  | Amended and Restated Registration Rights Agreement, dated as of December 21, 2006                                                                                                                                             
|            | 
|4.125       |  | Indenture, dated as of March 13, 2007, between US Oncology Holdings, Inc. and LaSalle Bank National Association as Trustee                                                                                                    
|            | 
|4.135       |  | Form of Senior Floating Rate PIK Toggle Note due 2012 (included in Exhibit 3.28)                                                                                                                                              
|            | 
|4.146       |  | Form of 9.125% Senior Secured Notes due 2017                                                                                                                                                                                  
|            | 
|4.156       |  | Indenture dated June 18, 2009 between the Company, the subsidiary guarantors named therein and Wilmington Trust FSB, as trustee                                                                                               
|            | 
|4.166       |  | Registration Rights Agreement dated June 4, 2009 between the Company, the subsidiary guarantors named therein and Morgan Stanley & Co. Incorporated, as representative of the
initial purchasers                              
|            | 
|10.17       |  | Credit Agreement dated as of August 26, 2009 among Holdings, US Oncology, Inc., as borrower, Deutsche Bank Trust Company Americas, Morgan Stanley Senior Funding, Inc., Wells Fargo
Bank, N.A., and JP Morgan Chase Bank, N.A.
|            | 
|10.27       |  | Guarantee and Collateral Agreement dated as of August 26, 2009 by and among Holdings, US Oncology, Inc., the Subsidiaries of US Oncology, Inc. identified therein and, Deutsche Bank
Trust Company Americas.                  



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|            |  |                                             
|----------- |  | --------------------------------------------
|Exhibit No. |  | Description                                 
|            | 
|31.1       |  | Certification of Chief Executive Officer    
|            | 
|31.2       |  | Certification of Principal Financial Officer
|            | 
|32.1       |  | Certification of Chief Executive Officer    
|            | 
|32.2       |  | Certification of Principal Financial Officer



|1 | Filed as Exhibit 3 to the 8-K filed by US Oncology, Inc. on February 5, 2002 and incorporated herein by reference
|- | -----------------------------------------------------------------------------------------------------------------



|2 | Filed as an exhibit to the 10-K filed by US Oncology, Inc. on March 21, 2003 and incorporated herein by reference
|- | -----------------------------------------------------------------------------------------------------------------



|3 | Filed as an exhibit to the registration statement on Form S-4 of US Oncology, Inc. on December 17, 2004 and incorporated herein by
reference
|- | --------------------------------------------------------------------------------------------------------------------------------------------



|4 | Filed as an Exhibit to the 8-K filed by US Oncology Holdings, Inc. on December 27, 2006, and incorporated herein by reference
|- | -----------------------------------------------------------------------------------------------------------------------------



|5 | Filed as an Exhibit to the 8-K filed by US Oncology Holdings, Inc. on March 16, 2007, and incorporated herein by reference
|- | --------------------------------------------------------------------------------------------------------------------------



|6 | Filed as an Exhibit to the 8-K filed by US Oncology Holdings, Inc. on June 18, 2009, and incorporated herein by reference
|- | -------------------------------------------------------------------------------------------------------------------------



|7 | Filed as an Exhibit to the 8-K filed by US Oncology Holdings, Inc. on August 28, 2009, and incorporated herein by reference
|- | ---------------------------------------------------------------------------------------------------------------------------



| | Filed herewith.
|- | ---------------



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US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.



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.



| |  |                        |  |                                                  |  |     |  |                                                                                                                                    
| |  | ---------------------- |  | ------------------------------------------------ |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------
| |  |                        |  | US ONCOLOGY HOLDINGS, INC. AND US ONCOLOGY, INC.
| |  |                        |  |                                                 
| |  | Date: November 6, 2009 |  |                                                  |  | By: |  | /s/ Michael A. Sicuro                                                                                                              
| |  |                        |  |                                                  |  |     |  | Michael A. Sicuro, Executive Vice President and Chief Financial Officer (duly authorized signatory and principal financial officer)



| |  |                        |  |  |  |     |  |                                                                          
| |  | ---------------------- |  |  |  | --- |  | -------------------------------------------------------------------------
| |  |                        |  | 
| |  | Date: November 6, 2009 |  |  |  | By: |  | /s/ Kevin F. Krenzke                                                     
| |  |                        |  |  |  |     |  | Kevin F. Krenzke, Chief
Accounting Officer (principal accounting officer)



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