<PAGE>

                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 June 30, 2002

                                       Or

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

                         Commission file number: 0-26190

                                US Oncology, Inc.

             (Exact name of registrant as specified in its charter)

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


                       16825 Northchase Drive, Suite 1300
                              Houston, Texas
                                     77060
                    (Address of principal executive offices)
                                   (Zip Code)

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

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

     As of August 6, 2002, 91,392,420 shares of the Registrant's Common Stock
were outstanding. In addition, as of August 6, 2002, the Registrant had agreed
to deliver 5,396,584 shares of its Common Stock on certain future dates for no
additional consideration.

<PAGE>


                                US ONCOLOGY, INC.
                                    FORM 10-Q
                                  JUNE 30, 2002

                                TABLE OF CONTENTS

                                                                       Page No.

PART I.           FINANCIAL INFORMATION

        Item 1.   Condensed Consolidated Financial Statements              3

                  Condensed Consolidated Balance Sheet                     3

                  Condensed Consolidated Statement of Operations and
                  Comprehensive Income                                     4

                  Condensed Consolidated Statement of Cash Flows           5

                  Notes to Condensed Consolidated Financial Statements     6

        Item 2.   Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                     15

        Item 3.   Quantitative and Qualitative Disclosures about
                  Market Risks-                                           30


PART II.          OTHER INFORMATION

        Item 1.   Legal Proceedings                                       30

        Item 4.   Submission of Matters to a Vote of Security Holders     31

        Item 6.   Exhibits and Reports on Form 8-K                        32

SIGNATURES                                                                33


                                       2

<PAGE>


PART I.  FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                US ONCOLOGY, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                        (in thousands, except par value)

<TABLE>
<CAPTION>
                                   ASSETS
                                                                                 June 30, 2002       December 31, 2001
                                                                                 -------------       -----------------
                                                                                  (unaudited)
<S>                                                                             <C>                    <C>
Current assets:
     Cash and equivalents....................................................   $     110,323          $      20,017
     Accounts receivable ....................................................         276,161                275,884
     Prepaid expenses and other current assets...............................          53,546                 35,334
     Due from affiliates.....................................................          47,753                 57,807
                                                                                -------------          -------------
                  Total current assets.......................................         487,783                389,042
Property and equipment, net..................................................         280,515                286,218
Management service agreements, net...........................................         331,054                379,249
Deferred income taxes........................................................          15,297                 18,085
Other assets.................................................................          26,077                 20,368
                                                                                -------------          -------------
                                                                                $   1,140,726          $   1,092,962
                                                                                =============          =============
                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current maturities of long-term indebtedness............................   $      23,268          $      44,040
     Accounts payable........................................................         150,918                135,570
     Due to affiliates.......................................................          12,348                 13,537
     Accrued compensation cost...............................................          16,478                 15,455
     Income taxes payable....................................................          15,121                 22,498
     Other accrued liabilities...............................................          45,056                 47,201
                                                                                -------------          -------------
                  Total current liabilities..................................         263,189                278,301
Long-term indebtedness.......................................................         212,443                128,826
                                                                                -------------          -------------
                  Total liabilities..........................................         475,632                407,127
Minority interest............................................................          10,111                  9,067

Stockholders' equity:
Preferred Stock, $.01 par value, 1,500 shares authorized, none issued and
  outstanding................................................................
Series A Preferred Stock, $.01 par value, 500 shares authorized and reserved,
  none issued and outstanding................................................

Common Stock, $.01 par value, 250,000 shares authorized, 95,301 and
  94,819 issued, 91,869 and 92,510 outstanding...............................             953                    948
Additional paid in capital...................................................         476,179                469,999
Common Stock to be issued, approximately 5,716 and 7,295 shares..............          47,924                 56,955
Treasury Stock, 3,432 and 2,309 shares.......................................         (25,882)               (11,235)
Retained earnings............................................................         155,809                160,101
                                                                                -------------          -------------
                  Total stockholders' equity ................................         654,983                676,768
                                                                                -------------          -------------
                                                                                $   1,140,726          $   1,092,962
                                                                                =============          =============
</TABLE>

         The accompanying notes are an integral part of this statement.


                                       3

<PAGE>

                                US ONCOLOGY, INC.
     CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
                      (in thousands, except per share data)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                        Three Months                  Six Months
                                                                        Ended June 30,               Ended June 30,
                                                                   2002          2001           2002           2001
                                                                 ---------    ----------     ----------     ----------
<S>                                                              <C>          <C>            <C>            <C>
Revenue.......................................................   $ 410,972    $  383,571     $  802,324     $  751,503
Operating expenses:
     Pharmaceuticals and supplies.............................     214,220       196,759        411,815        384,632
     Field compensation and benefits..........................      86,192        80,659        172,293        158,978
     Other field costs........................................      46,402        47,077         94,261         92,076
     General and administrative...............................      15,708        14,521         29,270         28,788
     Depreciation and amortization............................      18,347        17,400         36,218         34,553
     Impairment, restructuring and other charges..............      39,268             -         39,973          5,868
                                                                 ---------    ----------     ----------     ----------
                                                                   420,137       356,416        783,830        704,895
                                                                 ---------    ----------     ----------     ----------
Income (loss) from operations.................................      (9,165)       27,155         18,494         46,608
Interest expense, net.........................................      (6,274)       (6,641)       (11,783)       (13,380)
                                                                 ---------    ----------     ----------     ----------
Income (loss) before income taxes and extraordinary loss......     (15,439)       20,514          6,711         33,228
Income tax benefit (provision)................................       5,867        (7,796)        (2,551)       (12,627)
                                                                 ---------    ----------     ----------     ----------
Net income (loss) before extraordinary loss...................      (9,572)       12,718          4,160         20,601
Extraordinary loss on early extinguishment of debt, net of
  income taxes of $5,181......................................           -             -         (8,452)             -
                                                                 ---------    ----------     ----------     ----------
Net income (loss) and comprehensive income....................   $  (9,572)   $   12,718     $   (4,292)    $   20,601
                                                                 =========    ==========     ==========     ==========

Earnings per share - basic:
Net income (loss) before extraordinary loss per share.........   $   (0.10)   $     0.13     $     0.04     $     0.21
Extraordinary loss, net of income taxes, per share............           -             -          (0.08)             -
                                                                 ---------    ----------     ----------     ----------
Net income (loss) per share...................................   $   (0.10)   $     0.13     $    (0.04)    $     0.21
                                                                 =========    ==========     ==========     ==========
Shares used in per share calculations - basic.................      99,539       100,022         99,694         99,804
                                                                 =========    ==========     ==========     ==========

Earnings per share - diluted:
Net income (loss) before extraordinary loss per share.........   $   (0.10)   $     0.13     $     0.04     $     0.21
Extraordinary loss, net of income taxes, per share............           -             -          (0.08)             -
                                                                 ---------    ----------     ----------     ----------
Net income (loss) per share...................................   $   (0.10)   $     0.13     $    (0.04)    $     0.21
                                                                 =========    ==========     ==========     ==========
Shares used in per share calculations - diluted...............      99,539       100,306         99,694        100,177
                                                                 =========    ==========     ==========     ==========
</TABLE>

          The accompanying notes are an integral part of this statement


                                       4

<PAGE>

                                US ONCOLOGY, INC.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                     SIX MONTHS ENDED JUNE 30,

                                                                                       2002              2001
                                                                                    ---------          ---------
<S>                                                                                 <C>                <C>
Cash flows from operating activities:
Net income (loss) ............................................................      $  (4,292)         $  20,601
Non cash adjustments:
      Depreciation and amortization ..........................................         36,218             34,553
      Impairment, restructuring and other charges ............................         41,584                331
      Extraordinary loss on early extinguishment of debt, net of income taxes           8,452               --
      Gain on sale of assets .................................................         (3,917)              --
      Deferred income taxes ..................................................          2,788              8,911
      Undistributed earnings in joint ventures ...............................          1,211               --
      Changes in operating assets and liabilities: ...........................         (2,952)            43,267
                                                                                    ---------          ---------
           Net cash provided by operating activities .........................         79,092            107,663
                                                                                    ---------          ---------
Cash flows from investing activities:
      Acquisition of property and equipment ..................................        (27,995)           (30,512)
      Net payments in affiliation transactions ...............................             --               (565)
                                                                                    ---------          ---------
           Net cash used by investing activities .............................        (27,995)           (31,077)
                                                                                    ---------          ---------
Cash flows from financing activities:
      Proceeds from Credit Facility ..........................................         24,500             20,000
      Repayment of Credit Facility ...........................................        (24,500)           (80,000)
      Proceeds from Senior Subordinated Notes ................................        175,000                 --
      Repayment of Senior Secured Notes ......................................       (100,000)                --
      Repayment of other indebtedness ........................................        (11,913)           (10,926)
      Deferred financing costs ...............................................         (7,449)                --
      Proceeds from exercise of options ......................................          2,224              3,059
      Purchase of Treasury Stock .............................................         (6,922)                --
      Payment of premium upon early extinguishment of debt ...................        (11,731)                --
                                                                                    ---------          ---------
           Net cash provided (used) by financing activities ..................         39,209            (67,867)
                                                                                    ---------          ---------
Increase in cash and equivalents .............................................         90,306              8,719
Cash and equivalents:
      Beginning of period ....................................................         20,017              3,389
                                                                                    ---------          ---------
      End of period ..........................................................      $ 110,323          $  12,108
                                                                                    =========          =========
Interest paid ................................................................      $   6,250          $   7,887
Taxes paid ...................................................................      $   1,959          $      --
Non cash transactions:
      Value of Common Stock to be issued in affiliation transactions .........      $      --          $     337
      Delivery of Common Stock in affiliation transactions ...................          8,926              6,148
      Debt issued in affiliation transactions ................................             --              1,145
      Value of Common  Stock, received in exchange for assets ................          9,735                 --
      Value of forfeited Common Stock to be issued from contract separations .            105                326
      Debt forfeited from contract separations ...............................            867                 --

</TABLE>

          The accompanying notes are an integral part of this statement


                                       5

<PAGE>

                               US UNCOLOGY, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and in accordance with Form 10-Q and Rule 10.01 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 and considered necessary for
a fair presentation of the financial position and the results of operations for
the interim periods presented. The preparation of the Company's financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, as well as disclosures on 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 US Oncology, Inc.'s Form
10-K filed with the Securities and Exchange Commission on March 29, 2002.

NOTE 2 - REVENUE

The Company provides the following services to physician practices: oncology
pharmaceutical management, outpatient cancer center operations, cancer research
and development, and other practice management services. The Company currently
earns revenue from physician practices under two models, the physician practice
management (PPM) model and the service line model. Under the PPM model, the
Company enters into long term agreements with affiliated practices to provide
comprehensive services, including all those described above, and the practices
pay the Company a service fee and reimburse all expenses. Under the service line
model, the first three services described above are offered by the Company under
separate agreements for each service line.

Net operating revenue includes the two components - net patient revenue and the
Company's other revenue.

   o   Net patient revenue. The Company reports net patient revenue for those
       business lines under which the Company's revenue is derived from payments
       for medical services to patients and the Company is responsible for
       billing those patients. Currently, net patient revenue is comprised of
       patient revenue of affiliated practices under the PPM model. Net patient
       revenue also will include revenues of practices that enter into
       agreements under the outpatient cancer center operations service line.

   o   Other revenue. Other revenue is revenue derived from sources other than
       patient services of affiliated practices. Other revenue includes revenue
       from pharmaceutical research, informational services and activities as a
       group purchasing organization. Other revenue also includes revenues from
       pharmaceutical services rendered by the Company under our oncology
       pharmaceutical management service line agreement.

Net patient revenue is recorded when services are rendered to patients based on
established or negotiated charges reduced by contractual adjustments and
allowances for doubtful accounts. Differences between estimated contractual
adjustments and final settlements are reported in the period when final
settlements are determined.

Under the Company's PPM service agreements, amounts retained by the affiliated
physician groups for physician compensation are primarily derived under two
models. Under the first model (the net revenue model), amounts retained by
physician groups are based upon a specified amount (typically 23% of net
revenue) and, if certain financial criteria are satisfied, an incremental
performance-based amount. Under the second model (the earnings model), amounts
retained by practices are based upon a percentage (typically 65% - 75%) of the
difference between net patient revenues less direct expenses, excluding interest
expense and taxes.

The Company's revenue is equal to net operating revenue minus amounts retained
by the practices under the Company's PPM service agreements.


                                       6

<PAGE>

                            US UNCOLOGY, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued
                             (unaudited)


The following presents the amounts included in the determination of the
Company's revenue (in thousands):

<TABLE>
<CAPTION>
                                                  THREE MONTHS                   SIX MONTHS
                                                 ENDED JUNE 30,                ENDED JUNE 30,
                                              2002          2001            2002         2001
                                          -----------    -----------    -----------    -----------
<S>                                       <C>            <C>            <C>            <C>
    Net operating revenue ............... $   531,795    $   491,869    $ 1,032,744    $   965,735
    Amounts retained by practices .......    (120,823)      (108,298)      (230,420)      (214,232)
                                          -----------    -----------    -----------    -----------
    Revenue ............................. $   410,972    $   383,571    $   802,324    $   751,503
                                          ===========    ===========    ===========    ===========
</TABLE>

The Company's most significant service agreement, which is the only service
agreement that represents more than 10% of revenues to the Company, is with
Texas Oncology, P.A. (TOPA), which is managed under the earnings model. TOPA
accounted for approximately 23% and 24%, respectively, of the Company's total
revenue for the second quarter of 2002 and 2001, and for 23% and 24%, of the
Company's total revenue for the six month periods ended June 30, 2002 and 2001,
respectively.

NOTE 3 - IMPAIRMENT, RESTRUCTURING AND OTHER CHARGES

In the fourth quarter of 2000, the Company comprehensively analyzed its
operations and cost structure, focusing on non-core assets and activities of the
Company to determine whether they were still consistent with the Company's
strategic direction. As a result, the Company recorded a restructuring charge in
the fourth quarter of 2000. Details of restructuring charge activity relating to
that charge for the six months ended June 30, 2002 are as follows (in
thousands):

<TABLE>
<CAPTION>

                                              ACCRUAL AT                         ACCRUAL AT
                                           DECEMBER 31, 2001      PAYMENTS      JUNE 30, 2002
                                           -----------------      --------      -------------
<S>                                           <C>                <C>             <C>
  Severance of employment agreement........   $    215           $    (18)       $    197
  Site closures............................      1,081               (160)            921
                                              --------           ---------       --------
  Total....................................   $  1,296           $   (178)       $  1,118
                                              ========           =========       ========
</TABLE>

The Company has recognized a deferred income tax benefit for substantially all
of these charges as many of these items will be deductible for income tax
purposes in subsequent periods.

In the first quarter of 2001, the Company announced plans to further reduce
overhead costs and recognized additional pre-tax restructuring charges of $5.9
million, consisting of (i) a $3.1 million charge relating to the elimination of
approximately 50 personnel positions, (ii) a $2.5 million charge for remaining
lease obligations and related improvements at sites the Company determined to
close, and (iii) a $0.3 million charge relating to abandoning certain software
applications. All of the charges were recorded in the first quarter of 2001. The
Company has recognized and accounted for these costs in accordance with the
provisions of Emerging Issues Task Force Consensus No. 94-3 "Accounting for
Restructuring Costs". As a result, the Company recorded the following pre-tax
charges during the first quarter of 2001, with activity through June 30, 2002
(in thousands):

<TABLE>
<CAPTION>

                                RESTRUCTURING                   ASSET          ACCRUAL AT                    ACCRUAL AT
                                  EXPENSES       PAYMENTS    WRITE-DOWNS    DECEMBER 31, 2001   PAYMENTS   JUNE 30, 2002
                                  --------       --------    -----------    -----------------   --------   -------------
<S>                             <C>              <C>         <C>              <C>                <C>          <C>
Costs related to personnel
 reductions...................  $   3,113        $  (2,900)  $       -        $     213          $  (213)     $      -
Closure of facilities ........      2,455           (1,323)          -            1,132             (131)        1,001
Abandonment of software
 applications.................        300                -        (300)               -                -             -
                                ---------        ---------   ---------        ---------          -------      --------
Total.........................  $   5,868        $  (4,223)  $    (300)       $   1,345          $  (344)     $  1,001
                                =========        =========   =========        =========          =======      ========
</TABLE>


                                       7

<PAGE>

                               US UNCOLOGY, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued
                             (unaudited)

During the three months and six months ended June 30, 2002, the Company
recognized the following impairment, restructuring and other charges (in
thousands):

<TABLE>
<CAPTION>

                                                  Three Months Ended  Six Months Ended
                                                    June 30, 2002      June 30, 2002
                                                    -------------      -------------
<S>                                                 <C>                <C>
Service line conversions .........................  $       7,545      $       7,545
Impairment of service agreement ..................         33,821             33,821
Consulting costs for implementing service line ...          1,033              1,397
Personnel reduction costs ........................            568                909
Gain on sale of practice assets ..................         (3,917)            (3,917)
Impairment of working capital assets, net ........            218                218
                                                    -------------      -------------
                                                    $      39,268      $      39,973
                                                    =============      =============
</TABLE>

The service line conversions charge related to transitioning two PPM practices
to the service line model during the second quarter, and comprises (i) a $5.9
million write-off of the net intangible value of the PPM service agreements at
those practices since those agreements were terminated and new agreements were
executed to provide only oncology pharmaceutical management services, and a $2.1
million write-off of working capital at those practices, less (ii) $0.4 million
in consideration that would have been paid by the Company that was forfeited by
the physicians in those transactions.

The impairment of the service agreement was a non-cash, pretax charge of $33.8
million related to a revenue model service agreement that became impaired during
the second quarter based upon the Company's analysis of projected cash flows
under that agreement, taking into account developments in that market during the
quarter.

During the second quarter of 2002 the Company recognized $1.0 million in
professional fees in connection with the implementation of the service line
model and $0.6 million for personnel reductions. During the first quarter of
2002, the Company also recognized charges of $0.7 million consisting of: (i)
$0.3 million in costs related to personnel reductions, and (ii) $0.4 million in
consulting fees related to the Company's conversion to the service line model.

During the second quarter of 2002, the Company terminated a service agreement as
it related to certain radiology sites and sold the related assets, including the
right to future revenues attributable to radiology technical fee revenue at
those sites, in exchange for the delivery to the Company of 1.1 million shares
of the Company's Common Stock, which had a fair market value of $9.7 million at
the date of the termination based on the then trading price per share of $8.85.
In connection with that sale, the Company also recognized a write-off of a
receivable of $0.5 million due from the physicians and agreed to make during the
third quarter of 2002 a cash payment to the buyer of $0.6 million to reflect
purchase price adjustments. The transaction resulted in the Company recognizing
a $3.9 million gain.

The $0.2 million net impairment of working capital assets comprised (i) an
aggregate charge of $3.3 million for the reduction in the estimated recoverable
amount of working capital assets of four practices with which the Company
believes it will terminate its relationships, reduced by (ii) an increase in the
Company's estimates of the recoverable amount of working capital assets of a
practice with which the Company separated effective July 1, 2002 on terms that
included payment for working capital in excess of anticipated recovery and of
another practice which management had previously believed would terminate its
relationship with the Company, but no longer expect to do so.

NOTE 4 - EXTRAORDINARY LOSS

During the first quarter of 2002, the Company recorded an extraordinary loss of
$13.6 million, before income taxes of $5.2 million, in connection with the early
extinguishment of the $100 million Senior Secured Notes due 2006 and the
previously existing credit facility. The loss consists of payment of a
prepayment penalty of $11.7 million on the Senior Secured Notes and a write-off
of unamortized deferred financing costs of $1.9 million related to the
terminated debt agreements.


                                       8

<PAGE>

                               US UNCOLOGY, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued
                             (unaudited)

NOTE 5 - CAPITALIZATION

During 2000, the Company acquired 5,057,786 shares of Common Stock at an average
price of $4.72 per share, pursuant to a share repurchase authorized by the Board
of Directors in March 2000.

In March 2002, the Board of Directors of the Company authorized the repurchase
of up to $35 million in shares of its Common Stock in public or private
transactions and authorized the Company to accept up to $15 million in shares of
its Common Stock in connection with terminating service agreements with
physician groups.

The table below sets forth the Company's Treasury Stock activity for the six
months ended June 30, 2002 (shares in thousands):

<TABLE>
<CAPTION>

                                                                                          Average
                                                                           Shares     Purchase Price
                                                                          --------    --------------
<S>                                                                          <C>          <C>
Treasury Stock shares as of December 31, 2001 ..........................     2,309        $4.72
Treasury Stock purchases ...............................................     1,235         8.70
Treasury Stock received in connection with the sale of certain assets...     1,100
Treasury Stock issued in connection with affiliation transactions ......    (1,212)
                                                                          --------
Treasury Stock shares as of June 30, 2002 ..............................     3,432
                                                                          ========
</TABLE>


NOTE 6 - INDEBTEDNESS

As of June 30, 2002 and December 31, 2001, respectively, the Company's long-term
indebtedness consisted of the following (in thousands):

                                                     June 30,     December 31,
                                                       2002           2001
                                                    ---------     -----------
   8.42% Senior Secured Notes due 2006 ...........  $      --     $  100,000
   9.625% Senior Subordinated Notes due 2012 .....    175,000             --
   Notes Payable .................................      1,968          2,733
   Subordinated Notes ............................     56,490         67,438
   Capital lease obligations and other ...........      2,253          2,695
                                                    ---------     ----------
                                                      235,711        172,866
   Less: current maturities ......................    (23,268)       (44,040)
                                                    ---------     ----------
                                                    $ 212,443     $  128,826
                                                    =========     ==========

Credit Facility

In June 1999, the Company amended and restated its existing loan agreement and
revolving credit/term facility. Under the terms of that agreement, the amounts
available for borrowing were $275 million, including a $100 million facility
that expired in June 2000, leaving availability of $175 million expiring in June
2004.

On February 1, 2002, the Company terminated its $175 million revolving facility
and entered into a new $100 million five-year revolving credit facility (New
Credit Facility), which expires in February 2007. Proceeds from loans under the
New Credit Facility may be used to finance development of cancer centers and new
PET facilities, to provide working capital or for other general business uses.
Costs incurred in connection with the extinguishment of the Company's previous
credit facility were expensed during the first quarter of 2002 and recorded as
an extraordinary loss in the Company's condensed consolidated statement of
operations and comprehensive income. Costs incurred in connection with
establishing the New Credit Facility are being capitalized and amortized over
the term of the New Credit Facility.


                                       9

<PAGE>

                               US UNCOLOGY, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued
                             (unaudited)

Borrowings under the New Credit Facility are secured by substantially all of the
Company's assets. At the Company's option, funds may be borrowed at the Base
interest rate or the London Interbank Offered Rate (LIBOR), plus an amount
determined under a defined formula. The Base rate is selected by First Union
National Bank (First Union) and is defined as its prime rate or Federal Funds
Rate plus 1/2%. No amounts were borrowed or outstanding under this New Credit
Facility during the first six months of 2002.

Senior Secured Notes

In November 1999, the Company issued $100 million in senior secured notes
(Senior Secured Notes) to a group of institutional investors. The notes bore
interest at 8.42%, matured in equal annual installments of $20 million from 2002
through 2006 and ranked equally in right of payment with all current and future
senior indebtedness of the Company. The Senior Secured Notes contained
restrictive financial and operational covenants and were secured by the same
collateral as the Company's previous Credit Facility.

The Senior Secured Notes were repaid in full on February 1, 2002 with the
proceeds of the Company's Senior Subordinated Notes.

Senior Subordinated Notes

On February 1, 2002, the Company issued $175 million in 9.625% senior
subordinated notes (Senior Subordinated Notes) to various institutional
investors in a private offering pursuant to Rule 144A. The notes were
subsequently exchanged for substantially identical notes in an offering
registered under the Securities Act of 1933. The notes are unsecured, bear
interest at 9.625% annually and mature in February 2012. Payments under the
Senior Subordinated Notes are subordinated, in substantially all respects, to
the Company's New Credit Facility and other "Senior Indebtedness," as defined in
the indenture governing the Senior Subordinated Notes.

Proceeds from the Senior Subordinated Notes were used to pay off the $100
million in borrowings under the existing Senior Secured Notes, an $11.7 million
prepayment penalty on the early termination of the Senior Secured Notes and
facility fees and related expenses associated with establishing the Senior
Subordinated Notes and New Credit Facility of $4.8 million and $2.7 million,
respectively. Costs incurred in connection with extinguishment of the Company's
previous Senior Secured Notes, including the prepayment penalty were expensed in
the first quarter of 2002 and reflected as an extraordinary loss in the
Company's condensed consolidated statement of operations and comprehensive
income. Costs incurred in connection with establishing the Senior Subordinated
Notes, including facility fees are being capitalized and amortized over the term
of those notes.

Notes payable

The notes payable bear interest, which is payable annually, at rates ranging
from 5.3% to 10% and mature between 2002 to 2005. The notes are payable to
physicians with whom the Company entered into long-term service agreements and
relate to affiliation transactions. The notes payable are unsecured.

Subordinated notes

The subordinated notes are issued in substantially the same form in different
series and are payable to the physicians with whom the Company entered into
service agreements. Substantially all of the notes outstanding at June 30, 2002
bear interest at 7%, are due in installments through 2007 and are subordinated
to senior bank and certain other debt (including the Senior Subordinated Notes).
If the Company fails to make payments under any of the notes, the respective
practice can terminate the related service agreement.

Capital lease obligations and other indebtedness

Leases for medical and office equipment are capitalized using effective interest
rates between 6.5% and 11.5% with original lease terms between two and seven
years. Other indebtedness consists principally of installment notes and bank
debt, with varying interest rates, assumed in affiliation transactions.

Master Leasing Facility

The Company has entered into an operating lease arrangement, known as a
"synthetic lease", under which a special purpose entity has acquired title to
properties, paid for the construction costs and leased to the Company the real
estate and equipment at some of the Company's cancer centers. The synthetic
lease facility was funded by a syndicate of financial institutions.


                                       10

<PAGE>

                               US UNCOLOGY, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued
                             (unaudited)

The synthetic lease was entered into in December 1997 and matures in June 2004.
As of June 30, 2002, the Company had $72.0 million outstanding under the
synthetic lease facility, and no further amounts are available under that
facility. The annual lease cost of the synthetic lease is approximately $3.6
million, based on interest rates in effect as of June 30, 2002. At June 30,
2002, the lessor under the synthetic lease held real estate assets (based on
original acquisition and construction costs) of approximately $59.2 million and
equipment of approximately $12.8 million (based on original acquisition cost) at
nineteen locations. On February 1, 2002, the Company amended and restated the
synthetic lease agreement primarily to replace certain lenders.

The lease is renewable in one-year increments, but only with consent of the
financial institutions that are parties thereto. In the event the lease is not
renewed at maturity, or is otherwise terminated, the Company must either
purchase the properties under the lease for the total amount outstanding or
market the properties to third parties. Defaults under the lease, which include
cross-defaults to other material debt, could result in such a termination and
require the Company to purchase or remarket the properties. If the Company sells
the properties to third parties, it has guarantees on the residual value up to
85% of the total amount outstanding for the properties. The guarantee
obligations are secured by substantially all of the Company's assets. The
primary lease obligations are secured by the lease properties.

The synthetic lease includes customary covenants, representations, and events of
default, including cross-defaults to material indebtedness, including the New
Credit Facility and Senior Subordinated Notes. If the properties were sold to a
third party at a price such that the Company would be required to make a
residual value guarantee payment, such amount would be recognized as an expense
in the Company's statement of operations.

The synthetic lease is an operating lease under generally accepted accounting
principles "GAAP" and therefore the obligations are not recorded as debt and the
underlying properties and equipment are not recorded as assets on the Company's
balance sheet. The Company's rental payments (which approximate interest amounts
under the synthetic lease financing) are treated as operating rent commitments,
and are excluded from the Company's aggregate debt maturities.

The FASB determined that synthetic lease properties meeting certain criteria
would be required to be recognized as assets with a corresponding liability
effective April 1, 2003. The Company's synthetic lease meets these criteria. The
determination is not final and is subject to additional rule-making procedures,
but assuming the determination becomes a formal accounting pronouncement and
assuming the Company does not alter the arrangement to maintain off-balance
sheet treatment under the new rules, the Company would expect to recognize $72.0
million in additional property and equipment with a corresponding liability on
the Company's balance sheet as of April 1, 2003.

NOTE 7 - EARNINGS PER SHARE

The Company computes earnings per share and discloses basic and diluted earnings
per share (EPS). The computation of basic EPS is based on a weighted average
number of outstanding shares of Common Stock and Common Stock to be issued
during the periods. The Company includes Common Stock to be issued in both basic
and diluted EPS as there are no foreseeable circumstances that would relieve the
Company of its obligation to issue these shares. The computation of the diluted
EPS is based on a weighted average number of outstanding shares of Common Stock
and Common Stock to be issued during the periods as well as all dilutive
potential Common Stock calculated under the treasury stock method.


                                       11

<PAGE>

                               US UNCOLOGY, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued
                             (unaudited)

The table below summarizes the determination of shares used in per share
calculations (in thousands):

<TABLE>
<CAPTION>
                                                                                Three Months           Six Months
                                                                               Ended June 30,         Ended June 30,
                                                                             -------------------    -------------------
                                                                               2002       2001        2002        2001
                                                                             --------   --------    --------   --------
<S>                                                                            <C>        <C>         <C>        <C>
Outstanding at end of period:
    Common Stock .........................................................     91,869     90,835      91,869     90,835
    Common Stock to be issued ............................................      5,716      9,440      5,716       9,440
                                                                             --------   --------    --------   --------
                                                                               97,585    100,275      97,585    100,275

    Effect of weighting and Treasury Stock ...............................      1,954       (253)      2,109       (471)
                                                                             --------   --------    --------   --------
Shares used in per share calculations-basic ..............................     99,539    100,022      99,694     99,804
Effect of weighting and assumed share equivalents for grants
  of stock options at less than the weighted average price ...............          -        284           -        373
                                                                             --------   --------    --------   --------
Shares used in per share calculations-diluted ............................     99,539    100,306      99,694    100,177
                                                                             ========   ========    ========   ========
Anti-dilutive stock options not included  above ..........................     16,005      4,648      16,005      4,648
                                                                             ========   ========    ========   ========
</TABLE>

NOTE 8 - SEGMENT FINANCIAL INFORMATION

The Company has adopted the provisions of FASB Statement of Financial Accounting
Standards No. 131 (FAS 131), "Disclosure About Segments of an Enterprise and
Related Information". FAS 131 requires the utilization of a "management
approach" to define and report the financial results of operating segments. The
management approach defines operating segments along the lines used by
management to assess performance and make operating and resource allocation
decisions.

Beginning in the first quarter of 2002, the Company has determined that its
reportable segments are those that are based on the Company's method of internal
reporting, which disaggregates its business by service line, and that sufficient
information is now available to permit such reporting. The Company's reportable
segments are oncology pharmaceutical management, other practice management
services, outpatient cancer center operations, and cancer research and
development. The oncology pharmaceutical management segment purchases and
manages specialty oncology pharmaceuticals for our affiliated practices.
Management of the administrative aspects of affiliated medical oncology
practices is included in the other practice management services segment. The
outpatient cancer center operations segment develops and manages comprehensive,
community-based cancer centers, which integrate all aspects of outpatient cancer
care, from laboratory and radiology diagnostic capabilities to chemotherapy and
radiation therapy. The cancer research and development services segment
contracts with pharmaceutical and biotechnology firms to provide a comprehensive
range of services relating to clinical trials. The operating results of this
segment are reflected in the "other" category. The Company's business is
conducted entirely in the United States.

The financial results of the Company's segments are presented on the accrual
basis. For the first six months of 2002, 98.5% of the Company's oncology
pharmaceutical management revenue and outpatient cancer center revenue was
derived from the PPM model with the remainder derived under service line model
agreements to provide oncology pharmaceutical management services. To determine
results of the oncology pharmaceutical management segment with respect to
practices managed under the Company's PPM model, we have assumed that the
pharmaceuticals purchased and pharmacy management services under this segment
are provided at rates consistent with the rates at which we are offering those
services outside of the PPM model. Therefore, the financial results of that
segment include inter-segment revenues with other practice management services
reflecting PPM results after the effect of removing the oncology pharmaceutical
management results and outpatient cancer center operations results (which are
actual results of that service line within the PPM model) disclosed below. As
such, the combined operating results of the oncology pharmaceutical management
segment and other practice management segments for the six months ended June 30,
2002 represent the operating results under the Company's PPM activities relative
to the management of the non-medical aspects of affiliated medical oncology
practices plus the results under oncology pharmaceutical management services for
practices under service line model agreements.


                                       12

<PAGE>

                               US UNCOLOGY, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued
                             (unaudited)

The Company evaluates the performance of its segments based on, among other
things, earnings before interest, taxes, depreciation, amortization, impairment,
restructuring and other charges and extraordinary loss (EBITDA).

The Company has not disclosed prior year's segment data on a comparative basis
because management could not obtain comparative data for prior years due to
financial systems limitations. Asset information by reportable segment is not
reported since the Company does not produce such information internally.

The table below presents information about reported segments for the three and
six months ended June 30, 2002 (in thousands):

                                                     THREE MONTHS   SIX MONTHS
                                                        ENDED         ENDED
                                                    JUNE 30, 2002  JUNE 30, 2002
                                                   --------------  -------------
   Net operating revenue:
       Oncology pharmaceutical management .......  $      224,952  $    430,584
       Other practice management services .......         213,335       414,636
                                                   --------------  ------------
       Medical oncology .........................         438,287       845,220
       Outpatient cancer center operations ......          78,509       156,244
       Other ....................................          14,999        31,280
                                                   --------------  ------------
                                                   $      531,795  $  1,032,744
                                                   ==============  ============
   Revenue:
       Oncology pharmaceutical management .......  $      225,439  $    431,692
       Other practice management services .......         117,753       234,751
                                                   --------------  ------------
       Medical oncology .........................         343,192       666,443
       Outpatient cancer center operations ......          54,076       107,134
       Other ....................................          13,704        28,747
                                                   --------------  ------------
                                                   $      410,972  $    802,324
                                                   ==============  ============
   EBITDA:

       Oncology pharmaceutical management .......  $       20,761  $     39,035
       Other practice management services .......          23,613        47,100
                                                   --------------  ------------
       Medical oncology .........................          44,374        86,135
       Outpatient cancer center operations ......          17,938        33,921
       Other ....................................           1,846         3,899
                                                   --------------  ------------
                                                           64,158       123,955
       General and administrative expenses ......         (15,708)      (29,270)
                                                   --------------  ------------
                                                   $       48,450  $     94,685
                                                   ==============  ============

The following is a reconciliation of net operating revenue to consolidated
revenue (in thousands):

                                                    THREE MONTHS   SIX MONTHS
                                                       ENDED          ENDED
                                                    JUNE 30, 2002  JUNE 30, 2002
                                                   --------------  -------------
       Net operating revenue.....................  $      531,795  $  1,032,744
       Less: amounts retained by the practices...        (120,823)     (230,420)
                                                   --------------  -------------
       Revenue...................................  $      410,972  $    802,324
                                                   ==============  =============


                                       13

<PAGE>

                               US UNCOLOGY, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued
                             (unaudited)

The following is a reconciliation of EBITDA to consolidated income (loss) from
operations (in thousands):

                                                    Three Months     Six Months
                                                      Ended            Ended
                                                  June 30, 2002   June 30, 2002
                                                  --------------  -------------
  EBITDA........................................  $       48,450  $      94,685
  Depreciation and amortization.................         (18,347)       (36,218)
  Impairment, restructuring and other charges...         (39,268)       (39,973)
                                                  --------------  -------------
  Income (loss) from operations.................  $       (9,165) $      18,494
                                                  ==============  =============


NOTE 9 - COMMITMENTS AND CONTINGENCIES

As disclosed in Part II, Item 1, under the heading "Legal Proceedings," the
Company is aware that it and certain of its subsidiaries and affiliated
practices are the subject of allegations that their billing practices may
violate the Federal False Claims Act. These allegations are contained in qui tam
lawsuits filed under seal. The Department of Justice has informed the Company
that it does not intend to pursue these lawsuits, but individual plaintiffs may
still do so. Because qui tam actions are filed under seal, there is a
possibility that the Company could be the subject of other qui tam actions of
which it is unaware.

NOTE 10 - RECENT PRONOUNCEMENTS

In June 2001, the FASB issued Statement of Financial Accounting Standards No.
143, "Accounting for Asset Retirement Obligations" (FAS 143), which addresses
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. FAS 143 is
effective for fiscal years beginning after June 15, 2002. The Company is
currently assessing the impact of this new standard.

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
144, "Impairment or Disposal of Long-Lived Assets" (FAS 144), which is effective
for fiscal years beginning after December 15, 2001. The provisions of FAS 144
provide a single accounting model for impairment of long-lived assets. The
Company's adoption of FAS 144 has not had a material effect on the Company's
financial position or operating results.

In April 2002, the FASB issued Statement of Financial Accounting Standards No.
145, "Rescission of FASB Statements No.4, 44, and 62, Amendment of FASB
Statement No. 13, and Technical Corrections" (FAS 145). In general, FAS 145 will
require gains and losses on extinguishments of debt to be classified as income
or loss from continuing operations rather than as extraordinary items as
previously required under Statement of Financial Accounting Standards No. 4.
Gains or losses from extinguishments of debt for fiscal years beginning after
May 15, 2002 shall not be reported as extraordinary items unless the
extinguishment qualifies as an extraordinary item under the provisions of APB
Opinion No. 30, Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions. The Company is currently assessing the impact
of this new standard.

NOTE 11 - SUBSEQUENT EVENT

Effective July 1, 2002, the Company terminated its PPM service agreement with a
physician practice, consisting of sixteen physicians, under the net revenue
model. This practice represented 2.5% of the Company's revenue for the first six
months of 2002. The Company received $3.7 million in cash from the practice as
consideration for the termination and for practice assets, including working
capital, sold back to the practice and expects to record a $3.4 million gain in
the third quarter of 2002.


                                       14

<PAGE>

                               US UNCOLOGY, INC.

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

INTRODUCTION

The following discussion should be read in conjunction with the financial
statements, related notes, and other financial information appearing elsewhere
in this report. In addition, see "Forward-Looking Statements and Risk Factors"
included in our Annual Report on Form 10-K filed with the Securities and
Exchange Commission (SEC).

GENERAL

We provide comprehensive services to our network of affiliated practices, made
up of more than 850 affiliated physicians in over 450 sites, with the mission of
expanding access to and improving the quality of cancer care in local
communities and advancing the delivery of care. The services we offer include:

o    Oncology Pharmaceutical Management. We purchase and manage specialty
     oncology pharmaceuticals for our affiliated practices. Annually, we are
     responsible for purchasing, delivering and managing more than $700 million
     of pharmaceuticals through a network of more than 400 admixture sites, 31
     licensed pharmacies, 51 pharmacists and 180 pharmacy technicians.

o    Outpatient Cancer Center Operations. We develop and manage comprehensive,
     community-based cancer centers which integrate all aspects of outpatient
     cancer care, from laboratory and radiology diagnostic capabilities to
     chemotherapy and radiation therapy. We have developed and operate 77
     integrated community-based cancer centers and manage over one million
     square feet of medical office space. We have installed and manage 13
     Positron Emission Tomography (PET) units, as well as 59 Computerized Axial
     Tomography (CT) units.

o    Cancer Research and Development Services. We facilitate a broad range of
     cancer research and development activities through our network. We contract
     with pharmaceutical and biotechnology firms to provide a comprehensive
     range of services relating to clinical trials. We currently manage 98
     clinical trials, supported by our network of over 650 participating
     physicians in more than 330 research locations. During the first six months
     of 2002, we enrolled over 1,600 new patients in research studies.

o    Other Practice Management Services. Under our physician practice management
     arrangements, we act as the exclusive manager and administrator of all
     day-to-day non-medical business functions connected with our affiliated
     practices. As such, we are responsible for billing and collecting for
     medical oncology services, physician recruiting, data management,
     accounting, systems, and capital allocation to facilitate growth in
     practice operations.

Historically, we have contracted with physician groups to provide all of the
above services under the PPM model. Under the PPM model, we enter into long-term
agreements with affiliated practices to provide comprehensive management
services, including all of the above service lines, to our affiliated practices,
and the practices pay us a service fee and reimburse us for all expenses. Under
some agreements, the fees are based on practice earnings before taxes - known as
the "earnings model". In others, the fee consists of a fixed fee, a percentage
of the practice's revenues (in most states) and, if certain performance criteria
are met, a performance fee - known as the "net revenue model". Under the net
revenue model, the practice is entitled to retain a fixed portion of its net
revenue before any service fee is paid, provided that all operating expenses
have been reimbursed.

We believe that the earnings model properly aligns practice priorities with
respect to appropriate business operations and cost control, with us and the
practice sharing proportionately in practice profitability, while the net
revenue model results in us disproportionately bearing the impact of increases
or declines in operating margins. For this reason, we have, since 2001, been
negotiating with practices under the net revenue model to convert to the
earnings model. Since the beginning of 2001 and through June 30, 2002, fourteen
practices accounting for 22.3% of our net operating revenue in the first six
months of 2002 have converted to the earnings model. 62.4% of net operating
revenue in the second quarter of 2002 is attributable to practices on the
earnings model as of June 30, 2002. Currently, 66% of the net operating revenue
is attributable to practices that are either on the earnings model or the
service line model.


                                       15

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

In October 2001, we commenced a strategy to focus our operations on three core
service lines: oncology pharmaceutical management, outpatient cancer center
operations, and cancer research and development services and began marketing
these core services through a non-PPM model. Under the new model, which we refer
to as the "service line model", each of those core service lines is offered to
physician groups under a separate contract, and we do not necessarily provide
the other practice management services described above.

To implement this service line strategy, we have organized the company in three
divisions, and manage and operate our business under distinct service lines.
This report includes segment financial information (See Note 8 to Condensed
Consolidated Financial Statements), which reflects a division of our existing
PPM operations into the various service line offerings in the PPM relationship.
As we enter into new service line model agreements, we will report revenue from
those agreements in the appropriate segment.

Under the service line model, we are offering physician groups three service
lines, each with a separate agreement. Those agreements are structured as
follows:

o    Oncology Pharmaceutical Management. We are responsible for providing
     comprehensive pharmaceutical management and will be paid on a per-dose
     basis for the pharmaceutical agent and on a per-dose basis for admixture
     services. Affiliated practices are required to purchase substantially all
     of their drugs through us. We also act as a group purchasing organization
     and will receive a fee from pharmaceutical manufacturers for this service,
     as well as providing data and informational services to pharmaceutical
     companies.

o    Outpatient Cancer Center Operations. We agree to develop outpatient cancer
     centers under development agreements and leases with physician groups.
     Under the leases, we expect to receive our economic costs of the property
     plus an amount sufficient to give us a predetermined rate of return on
     invested capital. In addition, we provide management services and expect to
     receive an additional fee of 30% of net earnings from radiation operations,
     subject to adjustments.

o    Cancer Research and Development. We contract with pharmaceutical companies
     and others needing research services on a per trial basis. Our contracts
     with physician groups outline the terms of access to clinical trials and
     provide for research related services. We will pay physicians for each
     trial based on economic considerations relating to that trial.

All of our PPM practices are being afforded the opportunity to terminate their
existing service agreements, repurchase certain of their operating assets, and
enter into new service line model agreements. We cannot assure you as to how
many practices will take this opportunity or the timing of transition, and we
currently expect that a large percentage of existing affiliated practices will
remain on the PPM model for the foreseeable future. During the second quarter of
2002, two of our PPM practices, comprised of nine physicians, terminated their
PPM agreements and entered into service line model agreements. As practices
transition to this service line model, we would expect the financial impact to
be receipt of cash payments, recognition of restructuring and reorganization
costs (which are mainly non-cash charges), and a reduction in our revenues and
earnings related to those practices. We cannot more accurately predict the
magnitude or timing of this financial impact until practices agree to change
structures. For those practices that remain on the PPM model, we will continue
to negotiate with "net revenue model" practices to move to the "earnings model",
and otherwise to manage those practices pursuant to existing agreements.

In addition to converting two PPM practices to the service line model, we have
entered into service line model agreements with two practices in new markets,
both of which were effective during the second quarter of 2002.

During 2001, we terminated service agreements with four oncology practices. For
purposes of the following discussion and analysis, same practice revenues
exclude the results of these disaffiliated practices.


                                       16

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

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 business or services and our development activities relating to the
service line model, cancer centers and PET installations; (iii) any statements
preceded by, followed by or that include the words "believes", "expects",
"anticipates", "intends", "estimates", "plans" or similar expressions; and (iv)
other statements contained herein regarding matters that are not historical
facts.

US Oncology's business and results of operations are subject to risks and
uncertainties, many of which are beyond the Company'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. Factors that could cause actual results
to differ materially include, but are not limited to, the degree to which
practices managed by us convert to the earnings model or service line model, our
ability to attract and retain additional physicians and practices under the
service line model, expansion into new markets, our ability to develop and
complete cancer centers and PET installations, our ability to maintain good
relationships with our affiliated practices, government regulation and
enforcement, proposed changes in accounting rules relating to our leasing
facility, reimbursement for healthcare services, particularly including
reimbursement for pharmaceuticals, changes in cancer therapy or the manner in
which cancer care is delivered, drug utilization, our ability to create and
maintain favorable relationships with pharmaceutical companies and other
suppliers, and the operations of the Company's affiliated physician groups.
Please refer to the Company's Annual Report on Form 10-K for the year ended
December 31, 2001, particularly the section entitled "Risk Factors," for a more
detailed discussion of certain of these risks and uncertainties.

The cautionary statements contained or referred to herein should be considered
in connection with any written or oral forward-looking statements that may be
issued by US Oncology or persons acting on its behalf. US Oncology does 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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United
States. 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 service agreements, accounts receivable, intangible assets,
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. The introduction of a new business model,
the service line structure, and the coincident stress it is placing on our
network, represent changes in our business and may make our historical
experiences less informative in making future estimates. 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 these estimates under different assumptions or conditions.

Our consolidated financial statements include the results of US Oncology, Inc.
and its wholly-owned subsidiaries. We do not include the results of our
affiliated practices (and the amounts they retain for physician compensation),
because we have determined that our relationships with the practices under our
service agreements do not warrant consolidation under the applicable accounting
rules.

Management believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
condensed financial statements. These critical accounting policies include our
policy of non-consolidation, revenue recognition, general estimates of accruals,
intangible asset amortization and impairment, and the treatment of synthetic
leases. Please refer to the notes to our condensed consolidated


                                       17

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

financial statements, particularly Note 1, and the "Critical Accounting
Policies" section of our Annual Report on Form 10-K for the year ended
December 31, 2001 for a more detailed discussion of such policies.

Currently, there is a tentative conclusion regarding accounting treatment of
off-balance sheet financing vehicles. A change in accounting rules relating to
off-balance sheet financing might require us to change our accounting treatment
of our synthetic lease financing. On February 27, 2002, the Financial Standards
Accounting Board (FASB) determined that synthetic lease properties meeting
certain criteria would be required to be recognized as assets with a
corresponding liability effective April 1, 2003. Our synthetic lease meets these
criteria. The determination is not final and is subject to additional
rule-making procedures, but assuming the determination becomes a formal
accounting pronouncement and we do not alter the arrangement to maintain
off-balance sheet treatment under the new rules, we would expect to recognize
$72.0 million in additional property and equipment with a corresponding
liability on our balance sheet as of January 1, 2003. The possible impact of
such a change is discussed below in "Liquidity and Capital Resources."

RESULTS OF OPERATIONS

The Company was affiliated with the following number of physicians by specialty
as of June 30,:

                                                           2002     2001
                                                          ------   ------
        Medical oncologists ............................     676      654
        Radiation oncologists ..........................     126      122
        Diagnostic radiologists / other oncologists ....      69       68
                                                          ------   ------
                                                             871      844
                                                          ======   ======

The following table sets forth the sources for growth in the number of
physicians affiliated with the Company:

                                              THREE MONTHS       SIX MONTHS
                                                  ENDED            ENDED
                                                 JUNE 30,         JUNE 30,
                                              2002      2001    2002      2001
                                             ------    ------  ------    ------
Affiliated physicians, beginning of period .    867       860     868       869
Physician practice affiliations ............     11        --      11         6
Recruited physicians .......................     12        15      19        22
Physician practice separations .............     --       (18)     --       (18)
Retiring/Other .............................    (19)      (13)    (27)      (35)
                                             ------    ------  ------    ------
Affiliated physicians, end of period .......    871       844     871       844
                                             ======    ======  ======    ======

The following table sets forth the number of cancer centers and PET units
managed by the Company as of June 30,:

                                           2002         2001
                                          ------       ------

               Cancer centers...........    77            74

               PET units................    13             7


                                       18

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

The following table sets forth the key operating statistics as a measure of the
volume of services provided by the practices:

<TABLE>
<CAPTION>

                                               THREE MONTHS             SIX MONTHS
                                               ENDED JUNE 30,          ENDED JUNE 30,
                                              2002        2001        2002        2001
                                           ---------   ---------   ---------    ---------
<S>                                          <C>         <C>       <C>          <C>
Medical oncology visits .................    617,635     602,315   1,234,848    1,214,441
Radiation treatments ....................    162,259     163,175     325,270      327,025
PET scans ...............................      3,088       1,191       6,012        2,224
New patients enrolled in research studies        766         995       1,614        1,946
</TABLE>

The following table sets forth the percentages of revenue represented by certain
items reflected in the Company's Statement of Operations and Comprehensive
Income. The information that follows should be read in conjunction with the
Company's unaudited condensed consolidated financial statements and notes
thereto included elsewhere herein.

<TABLE>
<CAPTION>

                                                                 THREE MONTHS ENDED JUNE 30,   SIX MONTHS ENDED JUNE 30,
                                                                      2002           2001          2002          2001
                                                                   ---------      ---------     ---------     -------
<S>                                                                    <C>            <C>          <C>           <C>
   Revenue......................................................      100.0%         100.0%       100.0%        100.0%
   Operating expenses:
      Pharmaceuticals and supplies..............................       52.1           51.3         51.3          51.2
      Field compensation and benefits...........................       21.0           21.0         21.5          21.1
      Other field costs.........................................       11.3           12.3         11.8          12.3
      General and administrative................................        3.8            3.8          3.6           3.8
      Impairment, restructuring and other charges...............        9.5           --            5.0           0.8
      Depreciation and amortization.............................        4.5            4.5          4.5           4.6
                                                                  ---------      ---------     --------      --------
   Income (loss) from operations................................       (2.2)           7.1          2.3           6.2
   Net interest expense.........................................       (1.5)          (1.7)        (1.5)         (1.8)
                                                                  ---------      ---------     --------      --------
   Income (loss) before income taxes, and extraordinary loss....       (3.7)           5.4          0.8           4.4
   Income tax benefit (provision)...............................        1.4           (2.1)        (0.3)         (1.7)
                                                                  ---------      ---------     --------      --------
   Net income (loss) before extraordinary loss..................       (2.3)           3.3          0.5           2.7
   Extraordinary loss, net of income taxes......................         --             --         (1.0)           --
                                                                  ---------      ---------     --------      --------
   Net income (loss)............................................       (2.3)%          3.3%        (0.5)%         2.7%
                                                                  =========      =========     ========      ========
</TABLE>

Revenue. Our revenue is net operating revenue, less the amount of net operating
revenue retained by our affiliated physician practices under PPM service
agreements. The following presents the amounts included in determination of our
revenue (in thousands):

<TABLE>
<CAPTION>

                                               THREE MONTHS ENDED JUNE 30,  SIX MONTHS ENDED JUNE 30,
                                                   2002        2001          2002           2001
                                                 --------    --------        ----------    ----------
<S>                                             <C>         <C>             <C>             <C>
   Net operating revenue......................  $ 531,795   $ 491,869        $1,032,744     $ 965,735
   Amounts retained by the practices..........   (120,823)   (108,298)         (230,420)     (214,232)
                                                ---------   ---------        ----------     ---------
   Revenue....................................  $ 410,972   $ 383,571        $  802,324     $ 751,503
                                                =========   =========        ==========     =========
</TABLE>

Net operating revenue includes two components - net patient revenue and our
other revenue:

o    Net patient revenue. We report net patient revenue for those business lines
     under which our revenue is derived from payments for medical services to
     patients and we are responsible for billing those patients. Currently, net
     patient revenue is comprised of patient revenue of affiliated practices
     under the PPM model. Net patient


                                       19

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

     revenue also will include revenues of practices that enter into agreements
     under the outpatient cancer center operations service line.

o    Other revenue. Other revenue is revenue derived from sources other than
     patient services of affiliated practices. Other revenue includes revenue
     from pharmaceutical research, informational services and activities as a
     group purchasing organization. Other revenue also includes revenues from
     pharmaceutical services rendered by us under our Oncology Pharmaceutical
     Management service line agreement.

Net patient revenue for services to patients by the practices are recorded when
services are rendered based on established or negotiated charges reduced by
contractual adjustments and allowances for doubtful accounts. Difference between
estimated contractual adjustments and final settlements are reported in the
period when final settlements are determined. Net operating revenue is reduced
by amounts retained by the practices under our services agreement to arrive at
our revenue.

Amounts retained by practices increased from $214.2 million for the first six
months of 2001 to $230.4 million for the first six months of 2002, an increase
of $16.2 million, or 7.6%. Amounts retained by practices increased from $108.3
million in the second quarter of 2001 to $120.8 million in the second quarter of
2002, an increase of $12.5 million, or 11.6%. Such increase in amounts retained
by practices are directly attributable to the growth in net patient revenue
combined with the increase in profitability of affiliated practices. Amounts
retained by practices as a percentage of net operating revenue increased from
22.2% to 22.3% for the six months ended June 30, 2001 and 2002, respectively,
and from 22.0% to 22.7% for the second quarters of 2001 and 2002, respectively,
as a result of increased profitability of the practices.

Net operating revenue increased from $965.7 million in the first six months of
2001 to $1,032.7 million in the first six months of 2002, an increase of $67.0
million, or 6.9%. Same practice net operating revenue (which excludes the
results of practices with which we disaffiliated since June 30, 2001) increased
from $933.6 million for the first six months of 2001 to $1,032.7 million for the
first six months of 2002, an increase of $99.2 million, or 10.6%. Net operating
revenue increased from $491.9 million for the second quarter of 2001 to $531.8
million for the second quarter of 2002, an increase of $39.9 million, or 8.1%.
Same practice net operating revenue increased from $476.5 million for the second
quarter of 2001 to $531.8 million for the second quarter of 2002, an increase of
$55.3 million, or 11.6%. Revenue growth was caused by increases in revenues
attributable to pharmaceuticals and to cancer center operations. Revenue growth
from cancer center operations is attributable to the increase in diagnostic
services, primarily PET. PET scans increased from 2,224 in the first six months
of 2001 to 6,012 in the first six months of 2002, an increase of 3,788, or
170.3%. PET scans increased from 1,191 in the second quarter of 2001 to 3,088
for the second quarter of 2002, an increase of 1,897, or 159.3%. The increase in
the number of PET scans is attributable to our opening six PET units since June
30, 2001, as well as growth of 38.3% in the number of treatments on the three
PET units that were operational during the first six months of 2001. We
currently have 15 cancer centers and 12 PET installations in various stages of
development. We expect to open three cancer centers and six PET installations
during the remainder of 2002.

Operating Segments. The following table shows our net operating revenue by
segment for the three months ended June 30, 2002 and March 31, 2002 and the six
months ended June 30, 2002 (in thousands). Since this is the first year in which
we have reportable segments, and for which sufficient information is now
available to permit such reporting, no prior year comparable information is
available (see Note 8 to Condensed Consolidated Financial Statements):

<TABLE>
<CAPTION>

                                                Three Months Ended     Three Months Ended      Six Months Ended
                                                   June 30, 2002         March 31, 2002          June 30, 2002
                                                   -------------         --------------          -------------
<S>                                                 <C>                   <C>                   <C>
   Oncology pharmaceutical management ......        $  224,952            $  205,632            $  430,584
   Other practice management services ......           213,335               201,301               414,636
                                                    ----------            ----------            ----------
   Medical oncology ........................           438,287               406,933               845,220
   Outpatient cancer center operations .....            78,509                77,735               156,244
   Other                                                14,999                16,281                31,280
                                                    ----------            ----------            ----------
                                                    $  531,795            $  500,949            $1,032,744
                                                    ==========            ==========            ==========
</TABLE>


                                       20

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

Medical oncology net operating revenue increased from $406.9 million in the
first quarter of 2002 to $438.3 million for the second quarter of 2002, an
increase of $31.4 million or 7.7%. This increase was due to the increased
utilization of certain drugs.

Outpatient cancer center operations net operating revenue increased from $77.7
million in the first quarter of 2002 to $78.5 million for the second quarter of
2002, an increase of $0.8 million, or 1.0%. This growth is attributable to the
increase in PET scans.

Currently 98.5% of our operating revenue is derived under the PPM model. The
following table shows the amount of operating revenue we derived under each type
of service agreement for the three and six months ended June 30, 2002 (in
thousands):

<TABLE>
<CAPTION>

                                          THREE MONTHS ENDED JUNE 30,                   SIX MONTHS ENDED JUNE 30,
                                         2002                    2001                    2002                  2001
                                         ----                    ----                    ----                  ----
<S>                            <C>            <C>      <C>             <C>     <C>             <C>      <C>           <C>
   Earnings model ............ $  331,590     62.4%    $  265,463      54.0%   $  643,788      62.3%    $522,492     54.1%
   Net revenue model .........    192,048     36.1%       216,677      44.0%      370,775      35.9%     428,060     44.3%
   Service line model ........      1,556      0.3%             0       0.0%        1,556       0.2%           0      0.0%
   Other .....................      6,601      1.2%         9,729       2.0%       16,625       1.6%      15,183      1.6%
                               ----------   ------     ----------    ------    ----------    ------     --------    -----
                               $  531,795    100.0%    $  491,869     100.0%   $1,032,744     100.0%    $965,735    100.0%
                               ==========   ======     ==========    ======    ==========    ======     ========   ======
</TABLE>

62.4% of net operating revenue for the second quarter of 2002 was derived from
earnings model service agreements, and 36.1% was derived from net revenue model
service agreements, as compared to 54.0% and 44.0%, respectively, in 2001. 62.3%
of net operating revenue for the first six months of 2002 was derived from
earnings model service agreements, and 35.9% was derived from net revenue model
service agreements, as compared to 54.1% and 44.3%, respectively, in 2001.
During the first six months of 2002, three practices accounting for 3.3% of our
net operating revenue for the first six months of 2002 converted to the earnings
model. Effective since the beginning of 2001 and through June 30, 2002, fourteen
practices accounting for 22.3% of net operating revenue in the first six months
of 2002 have converted from the net revenue model to the earnings model. As of
June 30, 2002, twenty-three service agreements were on the earnings model and
fourteen service agreements were on the net revenue model. In addition during
the second quarter of 2002, we transitioned two PPM practices to the service
line model and commenced operations at two new practices under the service line
model. Effective July 1, 2002, the Company disaffiliated with a physician
practice, consisting of sixteen physicians, under the net revenue model. This
practice represented 2.5% of the Company's revenue for the first six months of
2002.

The following table shows our revenue by segment for the three months ended
June 30, 2002 and March 31, 2002 and the six months ended June 30, 2002 (in
thousands):

<TABLE>
<CAPTION>

                                              Three Months Ended      Three Months Ended       Six Months Ended
                                                June 30, 2002           March 31, 2002          June 30, 2002
                                                -------------           --------------          -------------
<S>                                           <C>                     <C>                      <C>
   Oncology pharmaceutical management ......      $225,439                $206,253                $431,692
   Other practice management services ......       117,753                 116,998                 234,751
                                                  --------                --------                --------
   Medical oncology ........................       343,192                 323,251                 666,443
   Outpatient cancer center operations .....        54,076                  53,058                 107,134
   Other ...................................        13,704                  15,043                  28,747
                                                  --------                --------                --------
                                                  $410,972                $391,352                $802,324
                                                  ========                ========                ========
</TABLE>


                                       21

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

Revenue increased from $391.4 million for the first quarter of 2002 to $411.0
million for the second quarter of 2002, an increase of $19.6 million, or 5.0%.
Revenue growth was caused by increases in revenues attributable to
pharmaceuticals and to a lesser extent cancer center operations.

Medicare and Medicaid are the practices' largest payors. During the first six
months of 2002, approximately 43% of the practices' net patient revenue was
derived from Medicare and Medicaid payments and 38% was so derived in the
comparable period last year. During the second quarter of 2002, approximately
43% of the practices' net patient revenue was derived from Medicare and Medicaid
payments and 39% was so derived in the comparable period last year. This
percentage varies among practices. No other single payor accounted for more than
10% of our revenues in the first six months of 2002 and 2001.

Pharmaceuticals and Supplies. Pharmaceuticals and supplies expense, which
includes drugs, medications and other supplies used by the practices, increased
from $384.6 million in the first six months of 2001 to $411.8 million in the
same period of 2002, an increase of $27.2 million, or 7.1%. Pharmaceuticals and
supplies expense increased from $196.8 million in the second quarter of 2001 to
$214.2 million in the second quarter of 2002, an increase of $17.5 million, or
8.9%. As a percentage of revenue, pharmaceuticals and supplies increased from
51.2% in the first six months of 2001 to 51.3% in the same period in 2002 and
increased from 51.3% in the second quarter of 2001 to 52.1% in the second
quarter of 2002. The increase was attributable to an increase in the percentage
of our revenue attributable to pharmaceuticals partially offset by more
favorable drug pricing with respect to some drugs.

We expect that third-party payors, particularly government payors, will continue
to negotiate or mandate the reimbursement rate for pharmaceuticals and supplies,
with the goal of lowering reimbursement rates, and that such lower reimbursement
rates as well as shifts in revenue mix may continue to adversely impact our
margins with respect to such items. Current governmental focus on average
wholesale price (AWP) as a basis for reimbursement could also lead to a
wide-ranging reduction in the way pharmaceuticals are reimbursed by payors. We
also continue to believe that single-source drugs, possibly including oral
drugs, will continue to be introduced at a rapid pace, thus further impacting
margins. In response to this decline in margin relating to certain
pharmaceutical agents, we have adopted several strategies. The successful
conversion of net revenue model practices to the earnings model will help reduce
the impact of the increasing cost of pharmaceuticals and supplies. Likewise, the
implementation of the service line model should have a similar effect, since our
revenues and earnings are not directly dependent on pharmaceutical margins under
that model. In addition, we have numerous efforts underway to reduce the cost of
pharmaceuticals by negotiating discounts for volume purchases and by
streamlining processes for efficient ordering and inventory control and are
assessing other strategies to address this trend. We also continue to expand our
business into areas that are less affected by lower pharmaceutical margins, such
as radiation oncology and diagnostic radiology. However, as long as
pharmaceuticals continue to become a larger part of our revenue mix as a result
of changing usage patterns (rather than growth), we believe that our overall
margins will continue to be adversely impacted.

Field Compensation and Benefits. Field compensation and benefits, which includes
salaries and wages of our field-level employees and the practices' employees
(other than physicians), increased from $159.0 million in the first six months
of 2001 to $172.3 million in the comparable 2002 period, an increase of $13.3
million or 8.4%. Field compensation and benefits increased from $80.7 million in
the second quarter of 2001 to $86.2 million in the second quarter of 2002, an
increase of $5.5 million, or 6.9%. As a percentage of revenue, field
compensation and benefits increased from 21.1% in the first six months of 2001
to 21.5% in the first six months of 2002 and remained at 21.0% for the second
quarters of 2001 and 2002. The increase is attributed to increases in employee
compensation rates to address shortages of certain key personnel such as
oncology nurses and radiation technicians. We continue to experience a severe
shortage of qualified radiation personnel, with a vacancy rate of up to 20%.
This scarcity of full-time employees requires us to hire more expensive
temporary employees, and to incur significant costs in our recruitment efforts.
We believe that this staff shortage will continue to adversely affect our
radiation business. The increase is partially offset by economies of scale
realized by increased revenues, particularly from pharmaceuticals.

Other Field Costs. Other field costs, which consist of rent, utilities, repairs
and maintenance, insurance and other direct field costs, increased from $92.1
million in the first six months of 2001 to $94.3 million in the first six months
of 2002, an increase of $2.2 million or 2.4%. Other field costs decreased from
$47.1 million in the second quarter of


                                       22

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

2001 to $46.4 million in the second quarter of 2002, a decrease of $0.7 million,
or 1.4%. As a percentage of revenue, other field costs decreased from 12.3% in
the first six months of 2001 to 11.8% in the first six months of 2002 and from
12.3% in the second quarter to 2001 to 11.3% in the second quarter of 2002. Such
decreases are attributable to reduced facilities expense as a result of practice
disaffiliations since June 30, 2001 and to a lesser extent the conversion of two
practices to the service line model, combined with the economies of scale gained
through increased revenue, particularly from pharmaceuticals.

General and Administrative. General and administrative expenses increased from
$28.8 million for the first six months of 2001 to $29.3 million for the first
six months of 2002, an increase of $0.5 million, or 1.7%. General and
administrative expenses increased from $14.5 million in the second quarter of
2001 to $15.7 million in the second quarter of 2002, an increase of $1.2
million, or 8.2%. In 2002, several new positions have been created to help
manage and support the Company's introduction of the service line model. We
anticipate incurring additional general and administrative costs during the
remainder of 2002, as we add additional resources in our sales and marketing
areas in connection with our introduction of the service line model. As a
percentage of revenue, general and administrative costs decreased from 3.8% in
the first six months of 2001 to 3.6% for the first six months of 2002 and was at
3.8% for the second quarters of 2001 and 2002.

Overall, the Company experienced an increase in operating margins from the first
six months of 2001 to the first six months of 2002, with earnings before taxes,
interest, depreciation and amortization, impairment, restructuring and other
charges and extraordinary loss (EBITDA), as a percentage of revenue, increasing
from 11.6% to 11.8%. A number of factors contributed to the increase in
operating margins, including a greater percentage of affiliated practices under
the earnings model and an increase in medical oncology and outpatient cancer
center operations. The increase in operating margin was partially offset by an
increase in field personnel costs.

The following is the EBITDA of our operations by operating segment for the three
months ended June 30, 2002 and March 31, 2002 and the six months ended June 30,
2002 (in thousands). Since this is the first year in which we have reportable
segments, and for which sufficient information is now available to permit such
reporting, no prior year comparable information is available (See Note 8 to
Condensed Consolidated Financial Statements):

<TABLE>
<CAPTION>

                                               THREE MONTHS ENDED     THREE MONTHS ENDED      SIX MONTHS ENDED
                                                  JUNE 30, 2002         MARCH 31, 2002          JUNE 30, 2002
                                                ---------------         --------------          -------------
<S>                                          <C>                     <C>                     <C>
   Oncology pharmaceutical management.........  $       20,761          $       18,274          $     39,035
   Other practice management services.........          23,613                  23,487                47,100
                                                --------------          --------------          ------------
   Medical oncology...........................          44,374                  41,761                86,135
   Outpatient cancer center operations........          17,938                  15,983                33,921
   Other......................................           1,846                   2,053                 3,899
                                                --------------          --------------          ------------
                                                        64,158                  59,797               123,955
   General and administrative expenses........         (15,708)                (13,562)              (29,270)
                                                --------------          --------------          ------------
                                                $       48,450          $       46,235          $     94,685
                                                ==============          ==============          ============
</TABLE>

Impairment, restructuring and other charges. In the fourth quarter of 2000, we
comprehensively analyzed our operations and cost structure, focusing on our
non-core assets and activities to determine whether they were still consistent
with our strategic direction. As a result, we recorded a restructuring charge
during the fourth quarter of 2000. Details of the restructuring charge activity
relating to that charge for the first six months of 2002 are as follows (in
thousands):

<TABLE>
<CAPTION>

                                                   ACCRUAL AT                                      ACCRUAL AT
                                               DECEMBER 31, 2001             PAYMENTS             JUNE 30, 2002
                                               -----------------             --------             -------------
<S>                                                <C>                       <C>                    <C>
   Severance of employment agreement.........      $     215                 $    (18)              $     197
   Site closures.............................          1,081                     (160)                    921
                                                   ---------                 --------               ---------
   Total.....................................      $   1,296                 $   (178)              $   1,118
                                                   =========                 ========               =========
</TABLE>



                                       23

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

During the first quarter of 2001, we announced plans to further reduce overhead
costs and recognized additional pre-tax restructuring charges of $5.9 million,
consisting of (i) a $3.1 million charge relating to the elimination of
approximately 50 personnel positions, (ii) a $2.5 million charge for remaining
lease obligations and related improvements at sites we determined to close and
(iii) a $0.3 million charge relating to software applications we decided to
abandon. The charges are summarized in the following table (in thousands):

<TABLE>
<CAPTION>

                                        RESTRUCTURING               ASSET        ACCRUAL AT                  ACCRUAL AT
                                          EXPENSES    PAYMENTS   WRITE-DOWNS  DECEMBER 31, 2001  PAYMENTS   JUNE 30, 2002
                                          --------    --------   -----------  -----------------  --------   -------------
<S>                                      <C>          <C>        <C>             <C>             <C>        <C>
Costs related to personnel reductions... $  3,113     $(2,900)   $      -        $     213       $  (213)   $       -
Closure of facilities...................    2,455      (1,323)          -            1,132          (131)       1,001
Abandonment of software applications....      300           -        (300)               -             -            -
                                         --------     -------    --------        ---------       -------    ---------
Total................................... $  5,868     $(4,223)   $   (300)       $   1,345       $  (344)   $   1,001
                                         ========     =======    ========        =========       ========   =========
</TABLE>

We recognized the following impairment, restructuring and other charges during
the three months and six months ending June 30, 2002 (in thousands):

                                                    THREE MONTHS   SIX MONTHS
                                                      ENDED          ENDED
                                                   JUNE 30, 2002   JUNE 30, 2002
                                                   -------------   -------------
 Service line conversions .........................   $  7,545       $  7,545
 Impairment of service agreement ..................     33,821         33,821
 Consulting costs for implementing service line ...      1,033          1,397
 Personnel reduction costs ........................        568            909
 Gain on sale of practice assets ..................     (3,917)        (3,917)
 Impairment of working capital assets, net ........        218            218
                                                      ---------      --------
                                                      $ 39,268       $ 39,973
                                                      ========       ========

The service line conversions charge related to our transitioning two PPM
practices to the service line model during the second quarter, and comprises (i)
a $5.9 million write-off net intangible value of the PPM service agreements at
those practices since those agreements were terminated and new agreements were
executed to provide only oncology pharmaceutical management services, and a $2.1
million write-off of working capital at those practices, less (ii) $0.4 million
in consideration that would have been paid by us that was forfeited by the
physicians in those transactions.

The impairment of service agreement was a non-cash, pretax charge of $33.8
million related to a net revenue model service agreement that became impaired
during the second quarter based upon our analysis of projected cash flows under
that agreement, taking into account developments in that market during the
quarter

During the second quarter we recognized $1.0 million professional fees for
consultants advising us on the implementation of the service line and $0.6
million for personnel reductions. During the first quarter of 2002, we also
recognized charges of $0.7 million consisting of (i) $0.3 million in costs
related to personnel reductions, and (ii) $0.4 million in consulting fees
related to our introduction of the service line model.

During the second quarter, we terminated a service agreement as it related to
certain radiology sites and sold the related assets, including the right to
future revenues attributable to radiology technical fee revenue at those sites,
in exchange for delivery to us of 1.1 million shares of our common stock. In
connection with that sale, we also recognized a write-off of a receivable of
$0.5 million due from the physicians and agreed to make a cash payment to the
buyer of $0.6 million to reflect purchase price adjustments during the third
quarter. The transaction resulted in a $3.9 million gain based on the market
price as of the date of the termination.


                                       24

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

The $0.2 million net impairment of working capital assets comprised (i) an
aggregate charge of $3.3 million for the reduction in the estimated recoverable
amount of working capital assets of four practices with which we now believe we
will terminate our relationships, reduced by (ii) an increase in our estimates
of the recoverable amount of working capital assets of a practice with which we
separated effective July 1, 2002 on terms that included payment for working
capital in excess of our anticipated recovery and of another practice which we
had previously believed would disaffiliate, but no longer expect to do so. We
anticipate that a total of up to 10% of our affiliated physicians could depart
in connection with our transition process, including the departure of 38
physicians that have already occurred as part of our transition.

As discussed above, during the second quarter of 2002, we recorded a pre-tax,
non-cash charge of $33.8 million related to the impairment of a certain service
agreement. We evaluate our intangible assets for impairment, which involves an
analysis comparing the aggregate expected future cash flows under the agreement
to its carrying value as an intangible asset on our balance sheet. In estimating
future cash flows, we consider past performance as well as known trends that are
likely to affect future performance. In some cases we also take into account our
current activities with respect to that agreement that may be aimed at altering
performance or reversing trends. All of these factors used in our estimates are
subject to error and uncertainty.

Interest. Net interest expense decreased from $13.4 million in the first six
months of 2001 to $11.8 million for the first six months of 2002, a decrease of
$1.6 million or 11.9%. Net interest expense decreased from $6.6 million in the
second quarter of 2001 to $6.3 million in the second quarter of 2002, a decrease
of $0.4 million, or 5.5 %. As a percentage of revenue, net interest expense
decreased from 1.8% for the first six months of 2001 to 1.5% for the first six
months of 2002 and from 1.7% for the second quarter of 2001 to 1.5% for the
second quarter of 2002. Such decreases are due to lower borrowing levels during
the first six months of 2002. On February 1, 2002, we refinanced our
indebtedness by issuing $175 million in 9.625% Senior Subordinated Notes due
2012 and repaying in full our existing senior secured notes and terminating our
existing credit facility. Our previously existing $100 million senior secured
notes bore interest at a fixed rate of 8.42% and would have matured as to $20
million in each of 2002-2006. This increased rate of interest was offset by
lower levels of debt during the first six months of 2002, as compared to the
same period in 2001.

Income Taxes. For the first six months of 2002, we recognized tax expense of
$2.6 million, after extraordinary loss, resulting in an effective tax rate of
38.0%, which is consistent with the same prior year period. For the second
quarter of 2002, we recognized an income tax benefit of $5.9 million as a result
of the impairment and restructuring charges discussed above.

Extraordinary Loss. During the first quarter of 2002, we recorded an
extraordinary loss of $13.6 million, before income taxes of $5.2 million, in
connection with the early extinguishment of our $100 million Senior Secured
Notes due 2006 and our existing credit facility. The loss consisted of payment
of a prepayment penalty of $11.7 million on the Senior Secured Notes and a
write-off of unamortized deferred financing costs of $1.9 million related to the
terminated debt agreements.

In September 2001, in connection with introducing the service line model, we
announced in a press release that introduction of, and conversion to, the
service line will cause us to record unusual charges of up to approximately $480
million for impairment of service agreements and other assets arising from the
transition process and other expenses related to our implementation of the
service line model, depending on how many of our practices choose to adopt the
service line model or otherwise terminate their relationship with us. Since we
do not currently believe that all of our practices will choose to terminate
their PPM agreements, we do not anticipate recognizing the full $480 million in
charges. The impairment, restructuring and other charges recorded during 2002
are included in this amount. In addition, the extraordinary loss is part of that
aggregate amount since the refinancing was necessitated by our introduction of
the service line. Other charges are expected to consist primarily of write-offs
of assets relating to terminations of existing service agreements for practices
converting to the service line, as well as other restructuring and unusual
charges relating to the introduction of our service line model. (See Note 3 to
Condensed Consolidated Financial Statements). Through June 30, we had recorded
$14.0 million in unusual cash charges and $39.6 million in unusual non-cash
charges in connection with our transition process.


                                       25

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

Net Income. Net income decreased from $20.6 million, or $0.21 per share, in the
first six months of 2001 to a net loss of $(4.3) million, or $(0.4) per share,
in the first six months of 2002, a decrease of $24.9 million or 120.8%. Net
income as a percentage of revenue changed from 2.7% for the first six months of
2001 to (0.5)% for the first six months of 2002 and from 3.3% in the second
quarter of 2001 to (2.3)% in the second quarter of 2002. Included in net income
for the first six months of 2002 are impairment, restructuring and other charges
of $40.0 million and an extraordinary loss on early extinguishment of debt of
$8.5 million, net of income taxes. Excluding the extraordinary loss and
impairment, restructuring and other charges, net income for the six months ended
June 30, 2002 would have been $28.9 million, which represents earnings per share
of $0.29. Included in net income for the six months ended June 30, 2001 were
pre-tax restructuring charges of $5.9 million. Excluding the restructuring
charges, net income for the first six months of 2001 would have been $24.2
million, which represents earnings per share of $0.24.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2002, we had net working capital of $224.6 million, including
cash and cash equivalents of $110.3 million. We had current liabilities of
$263.2 million, including $23.3 million in current maturities of long-term debt,
and $212.4 million of long-term indebtedness. During the first six months of
2002, we provided $79.1 million in net operating cash flow, invested $28.0
million, and provided cash from financing activities in the amount of $39.2
million. As of August 6, 2002 we had cash and cash equivalents of $110.0
million.

Cash Flows From Operating Activities

During the first six months of 2002, we generated $79.1 million in cash flows
from operating activities as compared to $107.7 million in the comparable prior
year period. The decrease in cash flow is attributable to (i) advance purchases
of certain pharmaceutical products during the first six months of 2002 in order
to obtain favorable pricing and qualify for certain rebates, and (ii) less
reduction in number of accounts receivable days outstanding. Our accounts
receivable days outstanding as of June 30, 2002 decreased to 48 days from 50
days as of December 31, 2001, as compared to a decrease to 58 days as of June
30, 2001 from 67 days as of December 31, 2000.

Cash Flows from Investing Activities

During the first six months of 2002 and 2001, we expended $28.0 million and
$30.5 million in capital expenditures and financed an additional $3.3 million
and $15.5 million through various leasing facilities, respectively. During the
first six months of 2002, we expended $15.6 million on the development and
construction of cancer centers. In addition, we expended $3.9 million on
installation of PET centers, of which $3.3 million was financed through various
equipment operating leases. Maintenance capital expenditures were $11.8 million
and $18.8 million in the first six months of 2002 and 2001, respectively. For
all of 2002, we anticipate expending a total of approximately $30-$35 million on
maintenance capital expenditures and approximately $40-$45 million on
development of new cancer centers and PET installations. Expected capital
expenditures on cancer center and PET development are below prior period amounts
due to the Company's focus on transitional activity.

Cash Flows from Financing Activities

During the first six months of 2002, we provided cash from financing activities
of $39.2 million as compared to cash used of $67.9 million in the first six
months of 2001. Such increase in cash flow is primarily attributed to the
proceeds from the issuance of our Senior Subordinated Notes due 2012, net of the
cash payments for the retirement of our previously existing indebtedness,
including a prepayment premium paid as a result of early extinguishment of our
Senior Secured Notes due 2006. In addition, we expended $10.7 million to
repurchase 1.2 million shares of our Common Stock during the second quarter of
2002.

Historically, we satisfied our development and transaction needs through debt
and equity financings and borrowings under a $175 million syndicated revolving
credit facility with First Union National Bank (First Union), as a lender and as
an agent for various other lenders. We also used a $75 million synthetic leasing
facility in connection with developing integrated cancer centers. Availability
of new advances under the leasing facility terminated in June 2001. We discuss
this in more detail below.

On February 1, 2002, we entered into a five-year $100 million syndicated
revolving credit facility and terminated our existing syndicated revolving
credit facility. Proceeds under that credit facility may be used to finance the


                                       26

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

development of cancer centers and new PET facilities, to provide working capital
or for other general business purposes. No amounts have been borrowed under that
facility. Our credit facility bears interest at a variable rate that floats with
a referenced interest rate. Therefore, to the extent we have amounts outstanding
under the credit facility in the future, we would be exposed to interest rate
risk under our credit facility.

On February 1, 2002, we issued $175 million in 9.625% Senior Subordinated Notes
due 2012 to various institutional investors in a private offering under Rule
144A under the Securities Act of 1933. The notes were subsequently exchanged for
substantially identical notes in an offering registered under the Securities Act
of 1933. The notes are unsecured, bear interest at 9.625% annually and mature in
February 2012. Payments under those notes are subordinated in substantially all
respects to payments under our new credit facility and certain other debt.

We used the proceeds from the Senior Subordinated Notes to repay in full our
existing $100 million in Senior Secured Notes due 2006, including payment of a
prepayment penalty of $11.7 million due as a result of our repayment of the
notes before their scheduled maturity. We also used proceeds from the Senior
Subordinated Notes to pay fees and related expenses of $4.8 million associated
with issuing those notes and to pay fees and related expenses of $2.7 million in
connection with the new credit facility. During the first quarter of 2002, we
recognized the prepayment penalty of $11.7 million and a write-off of
unamortized deferred financing costs related to the terminated debt agreements
of $1.9 million, which were recorded as an extraordinary item during the first
quarter of 2002.

Our introduction of the service line structure, in particular our offering
existing affiliated practices the opportunity to terminate service agreements,
repurchase their assets and enter into service line agreements, required an
amendment or refinancing of our existing facilities. The new credit facility and
Senior Subordinated Notes give us flexibility in this regard. In addition, we
believe that the longer maturity of the Senior Subordinated Notes adds stability
to our capital structure.

We have entered into an operating lease arrangement known as a "synthetic
lease", under which a special purpose entity has acquired title to properties,
paid construction costs and leased to us the real estate and equipment at some
of our cancer centers. The synthetic lease facility was funded by a syndicate of
financial institutions. A synthetic lease is preferable to a conventional real
estate lease since the lessee benefits from attractive interest rates, the
ability to claim depreciation under tax laws and the ability to participate in
the development process.

We entered into the synthetic lease in December 1997. It matures in June 2004.
As of June 30, 2001, we had $72.0 million outstanding under the synthetic lease
facility, and no further amounts are available under that facility. The annual
lease cost of the synthetic lease is approximately $3.6 million, based on
interest rates in effect as of June 30, 2002. The lessor under the synthetic
lease holds real estate assets (based on original acquisition and construction
costs) of approximately $59.2 million and equipment of approximately $12.8
million (based on original acquisition cost) at nineteen locations.

The lease is renewable in one-year increments, but only with consent of the
financial institutions that are parties thereto. If the lease is not renewed at
maturity or otherwise terminates, we must either purchase the properties under
the lease for the total amount outstanding or market the properties to third
parties. Defaults under the lease, which includes cross-defaults to other
material debt, could result in such a termination, and require us to purchase or
remarket the properties. If we sell the properties to third parties, we have
guaranteed a residual value of at least 85% of the total amount outstanding for
the properties. The guarantees are secured by substantially all of our assets.
If the properties were sold to a third party at a price such that we were
required to make a residual value guarantee payment, such amount would be
recognized as an expense in our statement of operations.

                                       27

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

A synthetic lease is an operating lease according accounting principles
generally accepted in the United States "GAAP". Thus, our obligations under the
synthetic lease are not recorded as debt and the underlying properties and
equipment are not recorded as assets on our balance sheet. Our rental payments
(which approximate interest amounts under the synthetic lease financing) are
treated as operating rent commitments, and are excluded from our aggregate debt
maturities.

On February 27, 2002, the FASB determined that synthetic lease properties
meeting certain criteria would be required to be recognized as assets with a
corresponding liability effective January 1, 2003. Our synthetic lease meets
these criteria. The determination is not final and is subject to additional
rule-making procedures, but assuming the determination becomes a formal
accounting pronouncement and assuming that we do not alter the arrangement to
maintain off-balance sheet treatment under the new rules, we would expect to
recognize $72.0 million in additional property and equipment with a
corresponding liability on our balance sheet as of January 1, 2003.

If we were to purchase all of the properties currently covered by the synthetic
lease or if changes in accounting rules or treatment of the lease were to
require us to reflect the properties on our balance sheet, the impact to the
consolidated financial statements would be as follows:

o  Property and equipment would increase by $72.0 million (the purchase price
   for the assets subject to the lease);

o  Assuming the purchase of the properties were financed through borrowing, or
   in the event the existing arrangement were required to be characterized as
   debt, indebtedness would increase by $72.0 million; and

o  Depreciation would increase by approximately $3.6 million per year as a
   result of the assets being owned by us.

Acquiring the properties may require us to borrow additional funds. We may not
be able to do so, particularly if we are required to purchase the properties as
the result of an event of default. Any borrowing would also likely reduce the
amount we could borrow for other purposes. In addition, changes in future
operating decisions or changes in the fair market values of underlying leased
properties or the associated rentals could result in significant charges or
acceleration of charges in our statement of operations for leasehold
abandonments or residual value guarantees. Because the synthetic lease payment
floats with a referenced interest rate, we are also exposed to interest rate
risk under the synthetic lease. A 1% increase in the referenced rate would
result in an increase in lease payments of $0.7 million annually.

Borrowings under the revolving credit facility and advances under the synthetic
leasing facility bear interest at a rate equal to a rate based on prime rate or
the London Interbank Offered Rate, based on a defined formula. The credit
facility, synthetic leasing facility and Senior Subordinated Notes 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 and prohibitions on the payment of
dividends. Events of default under our credit facility, synthetic leasing
facility and Senior Subordinated 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 under the
credit facility and synthetic leasing facility.


                                       28

<PAGE>

                               US UNCOLOGY, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - continued
                             (unaudited)

We are currently in compliance with covenants under our synthetic leasing
facility, revolving credit facility and Senior Subordinated Notes, with no
borrowings currently outstanding under the revolving credit facility. We have
relied primarily on cash flows from our operations to fund working capital.

We currently expect that our principal use of funds in the near future will be
in connection with the purchase of medical equipment, investment in information
systems and the acquisition or lease of real estate for the development of
integrated cancer centers and PET centers, as well as implementation of the
service line structure, with less emphasis than in past years on transactions
with medical oncology practices. It is likely that our capital needs in the next
several years will exceed the cash generated from operations. Thus, we may incur
additional debt or issue additional debt or equity securities from time to time.
Capital available for health care companies, whether raised through the issuance
of debt or equity securities, is quite limited. As a result, we may be unable to
obtain sufficient financing on terms satisfactory to management or at all.


                                       29

<PAGE>

                               US Oncology, Inc.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

In the normal course of business, our financial position is routinely subjected
to a variety of risks. Among these risks is the market risk associated with
interest rate movements on outstanding debt. We regularly assess these risks and
have established policies and business practices to protect against the adverse
effects of these and other potential exposures.

Our borrowings under our synthetic leasing facility and revolving credit
facility contain an element of market risk from changes in interest rates. We
have, in the past managed this risk, in part, through the use of interest rate
swaps; however, no such agreements have been entered into in the first six
months of 2002, and we were not obligated under any interest rate swap
agreements during the first quarter period ended June 30, 2002. We do not enter
into interest rate swaps or hold other derivative financial instruments for
speculative purposes. No amounts are currently outstanding under the revolving
credit facility, nor were any amounts outstanding under the revolving credit
facility during the first six months of 2002. $72.0 million is outstanding under
the synthetic leasing facility. Our Senior Subordinated Notes due 2012 bear
interest at a fixed rate of 9.625%.

For purposes of specific risk analysis, we use sensitivity analysis to determine
the impact that market risk exposures may have on us. The financial instruments
included in the sensitivity analysis consist of all of our cash and equivalents,
long-term and short-term debt and all derivative financial instruments.

To perform sensitivity analysis, we assess the risk of loss in fair values from
the impact of hypothetical changes in interest rates on market sensitive
instruments. The market values for interest rate risk are computed based on the
present value of future cash flows as impacted by the changes in the rates
attributable to the market risk being measured. The discount rates used for the
present value computations were selected based on market interest rates in
effect at June 30, 2002. The market values that result from these computations
are compared with the market values of these financial instruments at June 30,
2002. The differences in this comparison are the hypothetical gains or losses
associated with each type of risk. A one percent increase or decrease in the
levels of interest rates on variable rate debt with all other variables held
constant would not result in a material change to our results of operations or
financial position or the fair value of its financial instruments.

PART II.   OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

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

We have become aware and previously disclosed that we and certain of our
subsidiaries and affiliated practices are the subject of qui tam lawsuits
commonly referred to as "whistle-blower" lawsuits that remain under seal,
meaning that they were filed on a confidential basis with a U.S. federal court
and are not publicly available or disclosable. The U.S. Department of Justice
has determined that it will not intervene in any of those qui tam suits of which
we are aware. In these suits, the individual who filed the complaint may choose
to continue to pursue litigation in the absence of government intervention, but
has not yet indicated an intent to do so. Because qui tam actions are filed
under seal, there is a possibility that we could be the subject of other qui tam
actions of which we are unaware. We intend to continue to investigate and
vigorously defend ourselves against any and all such claims, and we continue to
believe that we conduct our operations in compliance with law.

Qui tam suits are brought by private individuals, and there is no minimum
evidentiary or legal threshold for bringing such a suit. However, the Department
of Justice is legally required to investigate the allegations in these suits.
The


                                       30

<PAGE>

                                US Oncology, Inc.
                          Legal Proceedings--continued

subject matter of many such claims may relate both to our alleged actions and
alleged actions of an affiliated practice. Because the affiliated practices are
separate legal entities not controlled by us, such claims necessarily involve a
more complicated, higher cost defense, and may adversely impact the relationship
between us and the practices. If the individuals who file complaints and/or the
United States were to prevail in these claims against us, and the magnitude of
the alleged wrongdoing were determined to be significant, the resulting judgment
could have a material adverse financial and operational effect on us including
potential limitations in future participation in governmental reimbursement
programs. In addition, addressing complaints and government investigations
requires us to devote significant financial and other resources to the process,
regardless of the ultimate outcome of the claims.

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

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)  The Company held its Annual Meeting of Stockholders on May 9, 2002.
(b)  No disclosure required.
(c)  The following matters were voted upon at the Annual Meeting:

     (i)  Election of Class III Directors

<TABLE>
<CAPTION>

                                                                                            Broker
          Nominee                  Votes For         Votes Against    Votes Abstained      Non-Votes
          -------                  ---------         -------------    ---------------      ---------
<S>                                   <C>               <C>                  <C>               <C>
          Russell L. Carson           85,674,776        2,016,493            0                 0
          Richard B. Mayor            85,671,676        2,019,593            0                 0
          Boone Powell, Jr.           85,675,176        2,016,093            0                 0
          R. Dale Ross                82,462,978        5,228,291            0                 0
</TABLE>

    (ii)  Approval of US Oncology, Inc. 2002 Key Executive Performance Stock
          Option Plan

<TABLE>
<CAPTION>

                Votes For           Votes Against        Votes Abstained          Broker Non-Votes
                ---------           -------------        ---------------          ----------------
<S>                                   <C>               <C>                  <C>               <C>
               40,466,694             26,779,996             191,176                 20,253,403
</TABLE>

    (iii) Ratification of the Appointment of PricewaterhouseCoopers LLP as US
          Oncology's independent accountants for 2002.

<TABLE>
<CAPTION>

                Votes For           Votes Against        Votes Abstained          Broker Non-Votes
                ---------           -------------        ---------------          ----------------
<S>                                   <C>               <C>                  <C>               <C>
               85,958,074             1,667,004              66,191                      0
</TABLE>


(d)      No disclosure required.


                                       31

<PAGE>


                                US Oncology, Inc.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits
    Exhibit

    Number       Description
    ------       -----------

       3.1      Amended and Restated  Certificate  of  Incorporation  (filed as
                Exhibit 3.1 to the Company's  Form 8-K/A filed June 17,
                1999 and incorporated herein by reference)

       3.2      Amended and Restated  By-Laws  (filed as Exhibit 3.2 to the
                Company's  Form 8-K/A filed June 17, 1999 and  incorporated
                herein by reference)

       4.1      Rights  Agreement  between the Company and American  Stock
                Transfer & Trust Company  (incorporated  by reference from
                Form 8-A filed June 2, 1997).

       4.2      Indenture dated February 1, 2002 among US Oncology, Inc., the
                Guarantors named therein, and JP Morgan Chase Bank as Trustee
                (filed as Exhibit 3 to, and incorporated by reference from, the
                Company's Form 8-K filed February 5, 2002).

       4.3      Registration  Rights  Agreement dated as of February 1, 2002 by
                and among US Oncology,  Inc., the Guarantors named therein and
                UBS Warburg LLC,  Deutsche  Banc Alex.  Brown Inc. and First
                Union  Securities,  Inc. as Initial  Purchasers  (filed as
                Exhibit 4 to, and incorporated by reference from, the Form 8-K
                filed February 5, 2002).

      10.1*     2002 Key Executive Performance Stock Option Plan

      99.1      Certification of Chief Executive Officer

      99.2      Certification of Chief Financial Officer

(b)  Reports on Form 8-K

       None.



------------------------------------------------------------------------------
         * Denotes exhibit pertaining to executive compensation


                                       32

<PAGE>

                               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, INC.



Date: August 13, 2002       By:   /s/ R. Dale Ross
                                  --------------------------------------------
                                  R. Dale Ross, Chief Executive Officer
                                  (duly authorized signatory)



Date: August 13, 2002       By:   /s/ Bruce D. Broussard
                                  --------------------------------------------
                                  Bruce D. Broussard, Chief Financial Officer
                                  (principal financial and accounting officer)


                                       33