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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on February 11, 2014

No. 333-          

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



21ST CENTURY ONCOLOGY HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  5311
(Primary Standard Industrial
Classification Code Number)
  26-1747745
(I.R.S. Employer
Identification No.)

2270 Colonial Boulevard
Fort Myers, Florida 33907
(239) 931-7275

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)



Bryan J. Carey
President, Vice Chairman and Chief Financial Officer
2270 Colonial Boulevard
Fort Myers, Florida 33907
(239) 931-7275

(Name, address, including zip code, and telephone number, including area code, of agent for service)



With copies to:

Joshua N. Korff
Christopher A. Kitchen
Kirkland & Ellis LLP
601 Lexington Avenue
New York, New York 10022
(212) 446-4800

 

Luis R. Penalver
Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
(212) 701-3000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.



         If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:    o

         If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o

CALCULATION OF REGISTRATION FEE

       
 
Title of Each Class of Securities to be Registered
  Proposed Maximum
Aggregate Offering
Price(1)(2)

  Amount of
Registration Fee

 

Common Stock, $0.0001 par value per share

  $300,000,000   $38,640

 

(1)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)
Includes the offering price of any additional shares of common stock that the underwriters have the option to purchase.

         The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


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Subject to Completion, dated February 11, 2014
PROSPECTUS

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell these securities nor a solicitation of an offer to buy these securities in any jurisdiction where the offer and sale is not permitted.

              Shares

LOGO

21st Century Oncology Holdings, Inc.

Common Stock



This is an initial public offering of shares of common stock of 21st Century Oncology Holdings, Inc. We are offering                             shares of our common stock.

Prior to this offering, there has been no public market for our common stock. The initial public offering price per share of the common stock is expected to be between $               and $               . We intend to apply to list our common stock on                                             under the symbol "                             ." Upon completion of this offering, we may be a "controlled company" as defined under the corporate governance rules of                             .

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

We are an "emerging growth company," as that term is defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements. See "About this Prospectus."

Investing in our common stock involves risks. See "Risk Factors" beginning on page 20.



 
 
Per Share
 
Total

Price to public

  $                 $              

Underwriting discounts and commissions

  $                 $              

Proceeds, before expenses, to us

  $                 $              

The underwriters have an option to purchase up to                           additional shares from us at the initial public offering price, less the underwriting discount. The underwriters can exercise this option at any time and from time to time within 30 days from the date of this prospectus.

Delivery of the shares of common stock will be made on or about                           , 2014.



Joint Book-Running Managers

Morgan Stanley   J.P. Morgan   Wells Fargo Securities

Co-Managers

SunTrust Robinson Humphrey   KeyBanc Capital Markets   Avondale Partners   Piper Jaffray

   

The date of this prospectus is                                         , 2014.


Table of Contents


TABLE OF CONTENTS

 
  Page  

PROSPECTUS SUMMARY

    1  

RISK FACTORS

    20  

FORWARD-LOOKING STATEMENTS

    49  

USE OF PROCEEDS

    50  

DIVIDEND POLICY

    51  

CAPITALIZATION

    52  

DILUTION

    54  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

    56  

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL INFORMATION

    58  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    67  

BUSINESS

    122  

MANAGEMENT

    160  

EXECUTIVE COMPENSATION

    168  

PRINCIPAL STOCKHOLDERS

    184  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

    187  

DESCRIPTION OF CERTAIN INDEBTEDNESS

    194  

DESCRIPTION OF CAPITAL STOCK

    199  

SHARES ELIGIBLE FOR FUTURE SALE

    203  

CERTAIN U.S. FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

    205  

UNDERWRITING

    209  

LEGAL MATTERS

    215  

EXPERTS

    215  

WHERE YOU CAN FIND MORE INFORMATION

    215  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

    F-1  



        We have not and the underwriters have not authorized anyone to provide you with any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where such offers and sales are permitted. The information in this prospectus or any free writing prospectus is accurate only as of its date, regardless of its time of delivery or the time of any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

        Until                , 2014 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealers' obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.

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ABOUT THIS PROSPECTUS

        We are an "emerging growth company" as defined in Section 2(a)(19) of the Securities Act of 1933, as amended (the "Securities Act") and Section 3(a)(80) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and we are eligible to take advantage of certain exemptions from various reporting requirements under the Jumpstart Our Business Startups Act ("JOBS Act") that are not applicable to other public companies that are not "emerging growth companies." Pursuant to Section 102 of the JOBS Act, we have provided reduced executive compensation disclosure. We intend to "opt out" of the extended transition period with respect to new or revised accounting standards and, as a result, we will comply with any such new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies, and we chose not to provide the reduced financial information allowed under Section 102 of the JOBS Act, which requires only two years of audited financial statements and reduced selected financial data.

        We could remain an "emerging growth company" for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by nonaffiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three year period.


PRESENTATION OF FINANCIAL INFORMATION

        On February 21, 2008, we consummated the merger of a wholly owned subsidiary of 21st Century Oncology Holdings, Inc. (formerly known as Radiation Therapy Services Holdings, Inc.) with and into 21st Century Oncology, Inc. (formerly known as Radiation Therapy Services, Inc.) with 21st Century Oncology, Inc. as the surviving corporation and as a wholly owned subsidiary of 21st Century Oncology Holdings, Inc. (the "Merger"). The term "Predecessor" refers to our predecessor company, 21st Century Oncology, Inc. prior to the Merger. The term "Successor" refers to 21st Century Oncology Holdings, Inc. and its subsidiaries following the Merger.

        The Merger was accounted for under the purchase method of accounting in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805, "Business Combinations" ("ASC 805"). Under the purchase method of accounting, the Merger was treated as a purchase and the assets so acquired and liabilities assumed were valued on our books at our assessments of their fair market value. Therefore, the results of operations, other comprehensive income (loss), changes in equity and cash flow for the Predecessor and Successor periods are not comparable. Accordingly, our audited consolidated financial statements, included in this prospectus include the consolidated accounts of the Successor as of December 31, 2011 and 2012 and for each of the three years in the period ended December 31, 2012.


MARKET, RANKING AND OTHER INDUSTRY DATA

        In this prospectus, we rely on and refer to information and statistics regarding the radiation therapy services industry as well as the cancer treatment industry and, unless otherwise specified, our market share is based on our revenue rank among public and private radiation therapy services companies based on public filings with the Securities and Exchange Commission (the "SEC"), industry presentations and industry research reports. Where possible, we obtained this information and these statistics from third-party sources, such as independent industry publications, government publications or reports by market research firms, including company research, trade interviews, and public filings with the SEC. Additionally, we have supplemented third-party information where necessary with management estimates based on our review of internal surveys, information from our customers and vendors, trade and business organizations and other contacts in markets in which we operate, and our management's knowledge and experience.

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However, these estimates are subject to change and are uncertain due to limits on the availability and reliability of primary sources of information and the voluntary nature of the data gathering process. As a result, you should be aware that industry data included in this prospectus, and estimates and beliefs based on that data, may not be reliable. Neither we nor the initial purchasers make any representation as to the accuracy or completeness of such information.


OTHER DATA

        Numbers included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.


COPYRIGHTS

        We own the rights to a copyright that protects the content of our "Gamma Function" software technology. Solely for convenience, the copyright referred to in this prospectus is listed without the © symbol, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our right to this copyright.

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PROSPECTUS SUMMARY

        The following summary highlights information appearing elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully. In particular, you should read the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and the notes relating to those statements included elsewhere in this prospectus. Some of the statements in this prospectus constitute forward-looking statements. See "Forward-Looking Statements."

        In this prospectus, unless the context requires otherwise, references to "the Company," "we," "our," or "us" refer to 21st Century Oncology Holdings, Inc. (formerly known as Radiation Therapy Services Holdings, Inc.), the issuer of the common stock offered hereby, and its consolidated subsidiaries. "21CH" refers to 21st Century Oncology Holdings, Inc. alone and "21C" refers to 21st Century Oncology, Inc. (formerly known as Radiation Therapy Services, Inc.), 21CH's direct, wholly owned subsidiary. "RTI" refers to Radiation Therapy Investments, LLC, our sole stockholder.


Company Overview

        We are the leading global, physician-led provider of integrated cancer care ("ICC") services. Our physicians provide comprehensive, academic quality, cost-effective coordinated care for cancer patients in personal and convenient community settings (our "ICC model"). We believe we offer a powerful value proposition to patients, hospital systems, payers and risk-taking physician groups by delivering high quality care and first rate clinical outcomes at lower overall costs through outpatient settings, clinical excellence, physician coordination and scaled efficiency.

        We operate the largest integrated network of cancer treatment centers and affiliated physicians in the world which, as of November 1, 2013, was comprised of approximately 674 community-based physicians in the fields of radiation oncology, medical oncology, breast, gynecological and general surgery, urology and primary care. Our physicians provide medical services at approximately 298 locations, including our 166 radiation therapy centers, of which 41 operate in partnership with health systems. Our cancer treatment centers in the United States are operated predominantly under the 21st Century Oncology brand and are strategically clustered in 31 local markets in 16 states. Our 33 international treatment centers in six Latin American markets are operated under the 21st Century Oncology brand or a local brand and, in many cases, are operated with local minority partners, including hospitals. We hold market leading positions in the majority of our local markets.

        Our operating philosophy is to provide academic center level care to cancer patients in a community setting. To act on this philosophy, we employ or affiliate with leading physicians and provide them with the advanced medical technology necessary to achieve optimal clinical outcomes across a full spectrum of oncologic disease in each local market. In support of our physicians and technologies, we also develop and invest in medical management software, training programs for our staff and business enterprise systems to allow for rapid diffusion of clinical initiatives and continuous quality and performance improvement. In addition, we maintain strong clinical research relationships with multiple academic centers of excellence and cooperative research groups, gaining access to cutting edge treatments and making them available to our patients often years in advance of their commercial introduction to the marketplace. As a result, we attract and retain talented physician leaders by providing opportunities to work in a stimulating clinical environment offering superior end-to-end resources and designed to deliver high quality patient care.

        Our Company was founded in 1983 by a group of physicians that came together to deliver academic level quality radiation therapy at the community level. With significant investment in clinical programs, operating infrastructure and business systems, we expanded our delivery of sophisticated radiation therapy services domestically and then globally. Given the changing healthcare landscape, increased focus on lower cost, higher quality care and potential for value-based reimbursement, we built a more complete and

 

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integrated cancer care platform to better meet the needs of patients, physicians and payers. As a result, we proactively broadened our provision of care to include a full spectrum of cancer care services by employing and affiliating with physicians in the related specialties of medical oncology, breast, gynecological and general surgery, urology and primary care. This innovative approach to cancer care through our ICC model enables us to collaborate across our physician base, integrate services and payments for related medical needs and disseminate best practices. We believe this results in better cancer care to patients, a stronger presence in each market we serve and the ability to capitalize on changes and developments in the payment and delivery landscape.

        We have demonstrated an ability to grow our business through various environments, and we believe our business is poised for accelerated success given the current industry focus on delivering high quality care in a lower cost setting. The key components of our business model include:

    Differentiated Scale—We are approximately 3.3 times larger than our next largest competitor, based on average treatments per day, which differentiates us with key stakeholders. Domestically, we have over 21,000 cases and perform over 500,000 treatments on an annual basis. As a result of our scale, we believe we have a higher level of efficiency and clinical and operational sophistication that health systems seek in partners and payers seek for nationwide or innovative contracts. In addition, our scale makes us the destination of choice for acquisition candidates and physicians pursuing alignment with larger enterprises.

    Integrated Cancer Care Model—Developed to further penetrate existing markets and provide for enhanced clinical care, we believe our ICC model positions us as a key partner for payers, physicians and hospital systems today and to become an important part of any clinical enterprise of the future that seeks superior outcomes at predictable and affordable costs.

    Health System Partnerships—Capitalizes on the trend of health systems leveraging partners to improve their oncology service offering and help manage the strategic, operational and financial challenges stemming from healthcare reform. These challenges include the pressure to contain healthcare costs, align with key physician resources and manage competitive demands for capital.

    Collaborative Payment Arrangements—Proactively developed multiple coordinated and collaborative relationships with key payers and other industry participants to create alternative payment mechanisms to reduce cost and improve quality. For example, we developed and implemented the nation's first bundled payment radiation therapy program with a national private payer, and we are continually in discussions with payers to develop additional mutually beneficial payment arrangements. We also led the formation of an industry group to coordinate providers into a unified and collaborative relationship in order to work with both commercial and government payers on approaches to transition to bundled payments for an episode of care based on evidence-based pathways.

        In addition to our demonstrated success in varied environments, we have capitalized on the strength and breadth of our platform to develop new growth opportunities. Examples of such initiatives include our entry into and growth in international markets and our development and monetization of unique value-added services.

    Entry Into and Expansion in International Markets—In 2011, we acquired and partnered with the highly sophisticated management team of Medical Developers, LLC ("MDLLC") the largest company in Latin America dedicated to radiation therapy. This investment was very attractive due to the increasing demand in that market for cancer treatment services created by a significantly underserved patient population, increased detection, a growing middle-class and expanded insurance access. MDLLC provides us the opportunity for enhanced growth rates, diversified

 

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      payment sources, leveraging of best practices into a new global market and efficient equipment utilization.

    Value-Added Services—Developed new revenue sources by leveraging our internally developed capabilities and resources including technology, clinical protocols, physician breadth and expertise and care management services. This provides incremental high-margin diversifying revenue lines for us and often serves as an entry point for new geographies and customer relationships. For example, our CarePoint service line leverages our cancer care management capabilities to provide a range of solutions up to and including comprehensive oncology care management solutions to insurers or other entities that are financially responsible for the health of defined populations. This provides us a new source of revenue and CarePoint contracts may serve as an entry point for new markets for our cancer treatment services.

        We have grown through a combination of organic, internally developed ("de novo"), acquisition and joint venture opportunities and innovative payer and hospital system relationships. We believe these major avenues for growth will become increasingly attractive as our scale, sophistication and clinical capabilities continue to distinguish us from our competition. As a result, we will continue to employ or affiliate with quality physicians, acquire freestanding radiation oncology centers and partner with leading health systems and payers as a result of the superior value proposition we provide each of these constituents:

    Physicians—We believe physicians choose to join us because of our physician-focused culture, best-in-class clinical and research platform focused on oncology and affiliations with leading academic programs, as well as the ability to enhance income. Physician income is typically enhanced at the Company due to the breadth of our services, our focus on technology, the benefits of our ICC model and our scale, and our effective business office capabilities.

    Freestanding Centers—Independent radiation businesses choose to join us because mounting pressures on their businesses make affiliation with a scaled and sophisticated partner beneficial. After acquiring a center, we typically upgrade existing equipment and technologies, implement our proprietary treatment and delivery tools, leverage our effective business office capabilities, develop ICC relationships and enable access to our contracts, all of which should dramatically improve the financial performance of the acquired center.

    Health Systems—We believe health systems choose to partner with us due to our shared operating philosophy, enhanced patient care and access, strong physician leadership and ICC approach, all of which lead to a superior ability to attract and retain key specialists. We provide a flexible approach to health system partnerships which can include joint ventures, management agreements, hospital-based and/or freestanding locations and fully outsourced relationships.

    Payers—We believe payers choose to partner with us as a result of our evidence-based clinical pathways, strong and integrated local market presence and ability to coordinate patient care in the most appropriate setting with lower cost and transparent pricing. We have leading market share in most of our local markets, and we seek to employ or affiliate with the highest quality physicians in all cancer related specialties. In addition, we track and measure clinical data to both evaluate treatment effectiveness and innovate new paradigms for payment methodologies.

        For the twelve months ended December 31, 2012, we generated net revenue of $694.0 million and Adjusted EBITDA of $104.8 million. During this time period, 88.3% of our net revenue was derived from our integrated operations in North America, and 11.7% of our net revenue was derived from our operations in Latin America. See "—Summary Historical Consolidated Financial and Other Data" for a reconciliation of EBITDA and Adjusted EBITDA to Net Loss attributable to 21st Century Oncology Holdings, Inc. shareholder.

        In October 2013, we closed on our acquisition of OnCure Holdings, Inc. ("OnCure"), which comprises $106 million of acquired revenue, 33 radiation therapy centers and 11 radiation oncology

 

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physician groups in Florida, California and Indiana. This level of revenue represents a 15% increase in our revenue for the year ended December 31, 2012. In addition, on February 10, 2014, we completed our investment in Florida-based SFRO Holdings, LLC ("SFRO"), acquiring 65% of the equity interests in SFRO, increasing the number of our radiation therapy treatment centers by 15 and adding 88 additional ICC and radiation oncology physicians (the "SFRO Joint Venture"). OnCure and SFRO are expected to add approximately 694 and 591 average treatments per day, respectively, increasing our total treatments per day to approximately 4,750.


Industry Trends

        Cancer treatment is an important, large and growing market globally. We operate in the $290 billion global cancer care market, of which the domestic market comprises approximately $125 billion, as of 2010. Cancer is the second leading cause of death in the United States and globally. According to the most recent data available from the World Health Organization, global cancer prevalence includes approximately 29 million cases with approximately 13 million new cases and approximately 8 million cancer-related deaths per year. In addition to the scale of the current addressable market, cancer incidence in the United States is estimated to grow at an approximately 2% rate annually through 2030, with an outsized proportion of treatments occurring in outpatient settings which are expected to grow at approximately 31% compared to approximately 3% for inpatient services, from 2013 to 2023. As the population ages, the number of U.S. cancer diagnoses is expected to continue to increase, as approximately 77% of all cancers diagnosed from 2006 to 2010 were in persons 55 years of age and older. Additionally, since 2006, the percentage of cancer cases addressed by radiation has grown from approximately 55% to nearly two-thirds.

        We believe we are well-positioned to benefit from other major trends currently affecting the healthcare services markets in which we compete, including:

Focus on Cost Containment in Healthcare

        Rising healthcare costs have continued to strain federal, state and local, as well as employer and patient budgets. In addition, domestic cancer costs are projected to grow from $125 billion in 2010 to $207 billion by 2020, and oncology is typically one of the top two largest cost categories for health plans. Efficient management of cancer care across the patient continuum through utilizing more efficient outpatient settings, which can cost approximately 17% less for commercial payers than other alternatives, and coordination across medical disciplines represents a significant opportunity to contain and reduce overall healthcare costs while improving quality and outcomes. In addition, newly developed health insurance exchanges may ultimately present a significant opportunity for us, as payers look to contract with high quality, low cost providers in local markets, like us. We believe we are well positioned to benefit from this trend as the largest provider of lower cost, convenient and high clinical quality cancer care service in outpatient settings. This will also be of increased importance as patients have an increased responsibility for their healthcare costs.

Shift Towards Coordinated Care

        Recent healthcare legislation, continued cost pressures on payers, and the increase in the number of patients with complex conditions will likely create significant opportunities for cost-effective, sophisticated providers that can offer coordinated, integrated care delivery. Private payers are increasingly moving toward narrow networks and directing patients to the most coordinated and cost-effective providers of care. Additionally, certain health reform initiatives promote the transition from traditional fee-for-service payment models to more "value-based" or "capitated" payment models where overall outcomes and census management are more important success factors than the number of procedures delivered. These trends require improved care coordination and communication throughout an episode of care to enable providers to analyze patient data and identify more effective treatment protocols that ultimately improve

 

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outcomes and reduce costs. To meet these goals, we have authored and maintain a set of best clinical practice guidelines for each of the major cancer diagnoses. The guidelines are based on widely recognized consensus expert group statements and supporting medical literature and serve as the foundation of our efforts to achieve a consistently high level of care throughout our Company. Our physicians interact with the guidelines in real-time and at the point of care through use of our online treatment prescription and medical record systems in order to help guide their clinical decisions toward the most appropriate and effective medical management for their patient.

        We have an established history of offering high quality, cost effective integrated services and developing the related infrastructure to ensure coordinated care across specialists. We believe we are well positioned for the changing delivery landscape where payers are searching for partners to help manage medical costs without sacrificing care.

Dynamics Impacting Health Systems

        Many hospitals and health systems recognize the strategic, operational and financial challenges stemming from healthcare reform, the burgeoning efforts to contain healthcare costs, and growing consumer preference for treatment in more comfortable community care settings. In response, many health systems are developing strategies to reduce operating costs, align with physicians, create additional service lines, expand their geographic footprint and service locations and prepare for new value-based payment models. A growing number of health systems are entering into strategic partnerships with select provider organizations in order to achieve these goals. Provider organizations, such as ours, can often provide a high degree of specialization, more efficient outpatient facilities, best practices learned from a nationwide network, scaled operating systems, and financial capital to help healthcare systems meet their goals. We currently have 41 radiation oncology centers in strategic operational partnerships with health systems where we provide a variety of services that leverage our capabilities to support their communities.

Continued Provider Consolidation Driven by Changing Environment

        Consolidation among healthcare providers, including facility operators and clinicians, is expected to continue due to increasing cost pressure and greater complexities as well as requirements imposed by new payment, reporting and delivery systems. Independent physicians are increasingly becoming employed by hospitals or affiliated with larger group practices like ours. For instance since 2010, we have expanded our physician base by 183%. In addition, recent reimbursement cuts in our industry, coupled with the high cost of technology and the necessity of coordination of care, have contributed to a more rapid pace of consolidation relative to prior years. As the largest global, physician-led provider of integrated cancer care, we believe we are well positioned to be an acquisition partner of choice due to our well developed business model, economies of scale and efficient technology utilization. We believe our ability to create value through accretive acquisitions at attractive valuations and increase physician efficiency in both the United States and globally creates a significant opportunity to leverage our core competencies while further expanding our global footprint. We expect that the current operating environment will continue to produce an attractive pipeline of accretive acquisitions and physician employment and affiliation opportunities in existing and adjacent markets.

        The radiation therapy and related physician specialist landscape is highly fragmented. In 2013, there were approximately 2,350 locations providing radiation therapy in the United States, of which approximately 1,100 were freestanding, or non-hospital based, treatment centers. Approximately 25% of freestanding treatment centers are affiliated with the largest three provider networks, with the Company holding approximately 13% of the freestanding market. It is estimated that there are approximately 793,000 physicians in the United States today, of which 36% remain independent as compared to well over 50% a decade ago. The Latin American radiation therapy market is similarly fragmented with most competition coming primarily from hospitals and some smaller local groups. In Argentina, we are the largest radiation therapy provider, with particularly strong market positions in Buenos Aires, Cordoba, La

 

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Plata and Mendoza. In the majority of other Latin American markets that we serve, we are the number one or number two provider.


Competitive Strengths

        We believe that the underlying industry trends provide for attractive, long-term market growth, and that our leading market position created by our competitive strengths will enable us to grow at a faster rate than the overall radiation therapy market.

Multiple Sources for Self-Sustaining Long-Term Growth

        The radiation therapy market is growing organically due to increases in cancer incidence, increases in the types of cancer addressable with technology and a stable pricing environment. Cancer incidence in the United States is estimated to increase by an approximately 2% rate annually through 2030, with an outsized proportion of treatments occurring in outpatient settings, which are expected to grow at approximately 31% compared to approximately 3% for inpatient services from 2013 to 2023. More precise delivery of radiation treatment has enabled radiation therapy to be utilized for additional types and sites of cancer, which has increased the addressable market for our services. In addition to this addressable market growth, commercial pricing changes have generally been positive as we continue to be relatively attractively priced and Medicare pricing is more stabilized due to the Center for Medicare & Medicaid Services ("CMS") approaching its goal of site neutrality and the industry's development of a meaningful collaborative relationship with CMS. International markets are growing faster than U.S. markets due to a significantly underserved patient population, increased detection, a growing middle-class, expanded insurance access and a stable pricing environment. In addition to underlying positive organic industry growth, we have implemented the following initiatives to accelerate our growth profile which are funded out of internally generated cash flow and selective borrowings:

    Organic growth enhancements;

    Acquisitions;

    Health system partnerships and de novo centers; and

    Strategic relationships with payers.

Leading Player in Large and Fragmented Market

        We have 674 community-based physicians and provided approximately 4,150 radiation therapy treatments on average per day in the twelve months ended November 1, 2013 in our 166 treatment centers. We believe this scale makes us the largest provider of cancer care services in the world, substantially larger than our next largest competitor. In addition to our national scale, we maintain a leading market position in the majority of our local markets.

        Our national scale affords us the opportunity to develop systems and processes efficiently and access technology that empowers our physicians to deliver best-in-class care. It also enables us to share and benefit from new approaches and recently developed findings across our network. Furthermore, our scale allows us to recognize benefits in areas such as revenue cycle management, purchasing, recruiting, compliance and quality assurance. Our leading local market shares, coupled with our national scale, strengthen our managed care contracting, our relationships with health systems and our ability to deploy innovative payment models, all of which enable us to capture greater patient census.

        Despite our scale, we estimate that our operations only comprise approximately 6% of the market for radiation therapy services in the United States, and a lower amount internationally, representing a robust opportunity to continue our acquisition growth strategies.

 

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Industry Leading Technology and Clinical Platform

        We have developed what we believe to be a superior clinical, technological and training infrastructure. Our scaled and sophisticated infrastructure allows us to aggregate data for the benefit of research and alternative payment models, rapidly deploy advanced protocols to optimize patient care, recruit and retain best-in-class physicians and access differentiated opportunities. The backbone of our capabilities is our internally-developed Oncology Wide-Area Network ("OWAN") system which provides real-time clinical treatment information and serves as a repository for all of our clinical and patient data. Access to this data provides clinical information to measure quality outcomes while also enabling us to lead the change in industry payment methodologies as demonstrated in our development of the only national bundled payment arrangement for radiation therapy with a national private payer. OWAN also allows us to deploy our internally developed, proprietary software tool, Gamma Function, that we use to measure the effectiveness of radiation therapy delivery to our patients.

        Additionally, we run the only fully-accredited, privately-owned radiation therapy and dosimetry schools in the country and have an affiliated physics program with the University of Pennsylvania, which provide us a consistent source of high quality support clinicians. Proprietary technology and high quality support clinicians aid in our recruiting and retaining of best-in-class physicians. Due to our leading technological, clinical and operating capabilities, we have been selected to serve as the Managing and Development Partner of The New York Proton Center being developed in partnership with Memorial Sloan-Kettering Cancer Center, the Mount Sinai Health System (which includes six hospitals in the New York metropolitan area) and Montefiore Medical Center.

Innovative Integrated Approach to Markets

        We hold market leading positions in most of our local markets and have increased our market share by broadening our suite of cancer care services through employing and affiliating with scarce and valuable physicians in the highly specialized fields of medical oncology, breast, gynecological and general surgery, urology and primary care. Our ICC model enables us to manage an entire episode of care for cancer patients, optimize the quality of care, drive patient census and adapt to anticipated changes in payment methodology. The result of this is that, in our domestic markets where we have implemented our ICC model, we have experienced treatments per day growth at a 6% compound annual growth rate, which is in excess of national cancer incidence growth. A specific example of ICC's potential is in Asheville, North Carolina, where we entered into a value added services agreement with a hospital through a de novo deployment. We transitioned Asheville from a pure freestanding radiation oncology model to our ICC model and built a growing and resilient market presence. This has allowed us to achieve an approximately 65% increase in the revenue contribution of that business.

        In addition, our ICC model and local market strength enable us to be a key partner for health systems and payers. We have been able to transition select relationships with local health systems, ranging from fully outsourced cancer care programs to managed service lines, to become a more differentiated cancer care partner. For example, in Broward County, Florida we worked with the hospital to construct a complete outsourcing of their cancer care services. By recruiting physicians, streamlining operations and improving service levels at the hospital based sites we grew average treatments per day by 33% in 12 months and have converted the business from loss making service to stable, predictable and positive cash flow. Furthermore, managed care plans have increasingly directed patients to our coordinated model, and we believe we are well positioned to accept further bundled payment or other capitated arrangements for an episode of cancer care which may develop.

Proven Acquisition Methodology and Track Record

        We have invested heavily in corporate development and infrastructure to take advantage of a fragmented and rapidly consolidating market. Over the past three years ended November 1, 2013, we have

 

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acquired 12 companies representing 71 treatment centers. We have an experienced corporate development team that leverages the extensive market knowledge of our capable regional management to proactively identify and prioritize acquisition targets, as well as cost and synergy potential, based on demographics, payer landscape, ICC opportunity and competitive dynamics. As a result of our ability to acquire companies at attractive multiples and realize synergies, we have been able to effectively reduce our acquisition multiples on acquired companies since 2010 by 2.5x to approximately 3.6x for our last twelve months Adjusted EBITDA.

        Since 2011, we have invested over $10 million to augment our internal operations team to ensure quick and seamless integration of acquired targets. Our integration teams map clinical and operating systems to our platforms to capture identified synergy opportunities quickly. For example, in Myrtle Beach, we acquired a freestanding radiation oncology business in May 2010 for $33 million. Within seven months, we had upgraded the medical equipment, recruited highly qualified clinicians, improved revenue cycle and implemented our ICC model. This has allowed us to achieve an approximately 95% increase in the Adjusted EBITDA contribution of that business.

        Our pipeline of potential targets is robust and acquisitions will remain a significant part of our core growth strategy. We believe we have become a preferred acquisition partner in light of the breadth of services and benefits we can offer.

Strong and Experienced Management Team with Demonstrated Track Record of Performance

        Our senior management team, several of whom are practicing physicians, has extensive public and private sector experience in healthcare. Eleven members of our senior management team have been with us for an average of 16 years and average approximately 19 years in the cancer care industry. These members have been the chief architects behind the Company's growth in revenue from $56.4 million in 1999 to $701.9 million for the last twelve months ended September 30, 2013. In order to capitalize on the opportunities in a consolidating, changing market and leverage our ICC model, we have bolstered our management team with senior level talent in key functional areas such as enterprise management, practice administration, managed care contracting, legal, information technology, acquisition integration and marketing. Management has more than $125 million currently invested in the Company.


Growth Strategy

        Our growth strategy leverages our competitive strengths to provide for long-term enhanced growth.

Capitalize on Organic Growth Opportunities

        The U.S. market for cancer treatment is growing due to the increasing incidence of the disease and a stable reimbursement environment. Over the past 10 years there has been a cumulative Medicare rate change of (18.9%) for freestanding centers in an effort to achieve site-neutral payments between hospital outpatient and freestanding centers. Today, freestanding centers are reimbursed approximately 11% less than hospital outpatient sites for certain treatments, which suggests that the trend of consistent price declines should end, and we should operate in a more constructive pricing environment in the future. Managed care pricing has been stable to positive for the Company as a result of our proactive contracting strategy whereby we emphasize both our integrated local presence and density while demonstrating our services are 17% less on average than hospital services. In addition, we have been successful in reducing volatility by decoupling our managed care contracts tied to Medicare from 22% in 2010 to 7% in 2013. The international market for cancer treatment is growing at a faster rate due to a lower level of treatment penetration relative to the United States, an increasing diagnosis rate, a growing middle class and expanded insurance access. In addition to this market growth, initiatives contributing to our revenue growth include: technology utilization, expansion of our ICC model, physician recruiting and increased patient flow from managed care plans. We continue to invest capital and resources behind these initiatives

 

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at our existing centers to drive long-term, sustainable growth. Evidence of this is our ability to grow at rates above cancer incidence growth in our ICC markets, which are currently only fully established in 17% of our markets. Our year-over-year domestic same market growth, which excludes new market acquisitions, and despite some volatility in the industry related to prostate treatment protocols, has been 1.4%, 1.0%, 2.0%, and 4.3% in each of the last four years ended December 31, 2013, respectively, for average treatments per day. In addition, international treatments per day has grown approximately 8% from 2010 to 2013. As a result, total global treatments per day have grown from approximately 2,992 in 2010 to approximately 4,150 for the twelve months ended November 1, 2013.

Opportunity Resulting from Recently Completed Acquisitions

        Over the 12 months ended November 1, 2013, we completed three material acquisitions resulting in $164 million of acquired revenue which represents 24% of our revenue for the year ended December 31, 2012. We anticipate achieving additional revenue and EBITDA from incremental cost and other synergies from these acquisitions. We expect the recent acquisition of OnCure and investment in SFRO to contribute significantly to our growth. For OnCure, our largest acquisition to date, which closed on October 25, 2013, we have already implemented cost reductions expected to total approximately $15 million on an annual basis as a result of closing OnCure's headquarters and back office functions and transitioning certain centers from the OnCure management model to our provider model. We expect to achieve incremental cost savings, in addition to realizing substantial revenue synergies from improvements in managed care contracting and revenue cycle management, upgrade of technology and equipment at the legacy OnCure centers, implementation of our ICC model and deployment of our Gamma Function in the near future. For example, we expect to deploy our Gamma Function at all existing OnCure centers by the end of 2014, which will likely provide incremental revenue to our business.

        We believe our newest investment in SFRO, which closed on February 10, 2014, is highly synergistic as a result of the contiguous nature of our markets. SFRO is a leading provider of cancer care services, with 15 radiation therapy treatment facilities and 88 physicians, in the Southeast Florida region. We believe that over $7 million of annual synergies will result from optimization of our combined footprint, the rapid deployment of Gamma Function across their very sophisticated technology platform, business office efficiencies and best practices across a clinically strong base of combined physician and management talent. Furthermore, the enhanced market density should provide for increased opportunity for innovation with health systems and payers.

Continue to Pursue Our Acquisition Strategy

        Acquisitions and joint ventures are important parts of our expansion plans, and we have invested in the tools and infrastructure to capitalize on these opportunities to realize low-risk synergies over 12-24 months. We expect to have up to a $250 million undrawn revolving credit facility in place at the time of the offering, providing a substantial capacity to finance acquisitions. The landscape of radiation therapy and related physician specialists is highly fragmented. In 2013, there were approximately 2,350 locations providing radiation therapy in the United States, of which approximately 1,100 were freestanding, or non-hospital based, treatment centers. Only approximately 25% of freestanding treatment centers are affiliated with the largest three provider networks, with the Company holding approximately 13% of the freestanding market. In a broader trend, it is estimated that there are approximately 793,000 physicians in the United States today, of which 36% remain independent as compared to over 50% a decade ago. The Latin American radiation therapy market is similarly fragmented with most competition coming primarily from hospitals and some smaller local groups.

        For acquisitions, we target centers in our existing markets and new markets that have certificates of need, provide significant market share opportunities and where we can expand our ICC model. The foundation of our acquisition strategy is the implementation of our proven operating model at each of our newly acquired treatment centers. This includes the immediate realization of the benefits of scale and

 

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market density we provide, but also includes longer-term growth through our focus on technology and implementation of our ICC model. Our focus includes upgrading existing equipment and technologies, developing ICC relationships, introducing advanced therapies and services, providing clinical expertise and enabling our new physicians and patients to access our broad network of centers, contracts and resources. As a result, since 2010, we have acquired businesses with an aggregate Adjusted EBITDA of approximately $55 million for the trailing twelve months as of the time of acquisition. These acquired businesses now contribute approximately $94 million to our current annual Adjusted EBITDA.

Pursue Additional Hospital Partnership Opportunities

        We are focused on expanding our relationships with health systems partners. We believe our investments in the ICC model, new systems and data have uniquely positioned us as a partner of choice to health systems. We believe our current footprint only represents a small portion of this market and, as we gain greater local market scale and penetration of the ICC model, we expect our health system partnership discussions to accelerate. The structure of relationships with heath systems includes: joint ventures, management agreements, professional services agreements and full outsourcing of oncology service lines.

Expand in New and Existing International Markets

        Organic and acquisition growth opportunities for radiation therapy services outside of the United States are driven largely by higher volume growth from strong underlying demographic and healthcare industry trends, an underserved and fragmented market and increased access to and payment for technology in the treatment of cancer. In 2011, we acquired MDLLC, the oldest and largest company in Latin America dedicated to radiation therapy, which has served as a platform for our growth in the region. Since our initial investment in MDLLC in 2009, we acquired seven treatment centers and completed two de novo treatment centers in our international markets. We believe that our international operations provide a faster growth opportunity than in the United States, with MDLLC generating $89 million of revenues and approximately $23 million of Adjusted EBITDA for the twelve months ended September 30, 2013, representing a compound annual growth rate for Adjusted EBITDA of approximately 16% since 2009. We continue to pursue de novo centers, acquisitions, joint ventures and hospital partnerships to facilitate expansion in existing and new Latin American markets. Physicians in Latin America frequently use older generation equipment and technologies, such as cobalt machines. There are significant opportunities to transfer modern equipment that is not being utilized in the United States to our Latin American centers, thereby increasing our overall equipment utilization while raising the local market standard of care. This enables us to grow in this market through the deployment of advanced technologies such as intensity-modulated radiation therapy ("IMRT") and image guided radiation therapy ("IGRT"), resulting in higher average revenue per treatment, increased profitability and improved patient care.

        In addition to our strategy in Latin America, we will selectively evaluate and pursue expansion in other international markets to further enhance our growth profile and diversify our revenue.

Generate Additional Sources of Revenue from Value Added Services

        Capitalizing on our network, our long history and the breadth of our products and services, we have developed new value added services that we expect to generate additional sources of high-margin revenue outside the third-party reimbursement system. Examples of these value added services include management of the proton beam therapy project in New York, management of the oncology service line at multiple hospital systems, participation in clinical trials, monetization of our historical data and potential licensing of proprietary technology and clinical pathways. Additionally, we have recently launched CarePoint, a global cancer management solution that leverages our core competencies to provide third-party administrative management services for payers using our proprietary clinical pathways, data analytical capabilities and established provider network.

 

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Recent Developments

OnCure Acquisition

        On October 25, 2013, we completed the acquisition of OnCure for approximately $125.0 million, including $42.5 million in cash and up to $82.5 million in assumed debt ($7.5 million of additional debt will be assumed if certain OnCure centers achieve a minimum level of EBITDA in 2015) (the "OnCure Acquisition"). OnCure operates 33 radiation therapy centers in partnership with 11 radiation oncology physician groups in Florida, California and Indiana.

        The acquisition of OnCure increased our number of radiation therapy centers by 25% and is expected to add approximately 694 average treatments per day. We believe that OnCure will provide over $30 million of Adjusted EBITDA.

SFRO Joint Venture

        On February 10, 2014, we completed our investment in SFRO increasing the number of our radiation therapy centers by 15 and adding 88 additional radiation oncology and ICC physicians. In connection with our purchase of a 65% interest in SFRO, we entered into a new credit agreement providing for a $60 million term loan facility and $7.9 million of term loans to refinance existing SFRO debt (the "SFRO Credit Agreement"). In addition, subject to certain terms and conditions, the owners of the remaining 35% of SFRO will have the right to exchange their ownership interest in SFRO for common stock of 21CH.

        The SFRO Joint Venture increases the number of our treatment centers by approximately 10% and is expected to add approximately 591 average treatments per day. We believe that SFRO will provide over $25 million of Adjusted EBITDA.

        We believe that both the OnCure Acquisition and SFRO Joint Venture provide us an opportunity to further leverage our infrastructure, contracting, technology and footprint to achieve significant operating synergies, broaden and deepen our ability to offer advanced cancer care to patients throughout the United States and offer expansion opportunities for our ICC model across the Company.

        As a result of our recently completed transactions, we now operate 179 treatment centers, including 145 centers located in 16 U.S. states.

 

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Risk Factors

        An investment in our common stock involves a high degree of risk. Any of the factors set forth under "Risk Factors" may limit our ability to successfully execute our business strategy. You should carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under "Risk Factors" in deciding whether to invest in our common stock. Among these important risks are the following:

    We depend on payments from government Medicare and, to a lesser extent, Medicaid programs for a significant amount of our revenue. Our business could be materially harmed by any changes that result in reimbursement reductions.

    Reforms to the U.S. healthcare system may adversely affect our business.

    If payments by managed care organizations and other commercial payers decrease, our revenue and profitability could be adversely affected.

    Our success is dependent upon our continuing ability to recruit, train and retain or affiliate with radiation oncologists, ICC physicians, physicists, dosimetrists and radiation therapists.

    Changes in medical treatment guidelines or recommendations may adversely affect our business.

    We may encounter numerous business risks in acquiring and developing additional treatment centers, and may have difficulty operating and integrating those treatment centers.

    Our substantial debt could adversely affect our financial condition.

    Our equity sponsor may have the ability to control significant corporate activities after completion of this offering and our equity sponsor's interests may not coincide with yours.


Our Corporate Information

        We were incorporated on October 9, 2007 under the name Radiation Therapy Services Holdings, Inc. and currently exist as a Delaware Corporation. On December 5, 2013, we changed our name to 21st Century Oncology Holdings, Inc. Our business was originally formed in 1983. We were acquired in 2008 pursuant to the Merger by affiliates of Vestar Capital Partners ("Vestar"). Our principal executive office is located at 2270 Colonial Boulevard, Fort Myers, Florida 33907 and our telephone number is (239) 931-7275. The address of our main website is www.rtsx.com. The information contained on our website does not constitute a part of this prospectus.

        If more than 50% of our voting power is held by investment funds and entities affiliated with Vestar, including RTI, upon completion of this offering, we will be a "controlled company" as defined under the corporate governance rules of              .


Equity Sponsor

        Founded in 1988, Vestar is a leading U.S. middle-market private equity firm specializing in management buyouts and growth capital investments. Since its founding, Vestar has completed 70 investments in companies with total value of over $40 billion. These companies have varied in size and geography and span a broad range of industries including healthcare, consumer products, diversified industries and financial services. The healthcare industry is an area in which Vestar's principals have had meaningful experience, and during its history Vestar has invested approximately $1.7 billion in 11 healthcare companies. The firm's strategy is to invest and collaborate with incumbent management teams and private owners in a creative, flexible and entrepreneurial way to build long-term investment value. Vestar currently manages funds with approximately $5 billion of assets and has offices in New York, Denver and Boston.

        Vestar's investment in the Company was funded by Vestar Capital Partners V, L.P., a $3.7 billion fund, and affiliates.

 

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The Offering

Issuer

  21st Century Oncology Holdings, Inc.

Common stock offered by us

 

                    shares.

Underwriters' option to purchase additional shares

 

We have granted the underwriters a 30-day option to purchase up to an additional            shares at the public offering price less underwriting discounts and commissions.

Common stock to be outstanding immediately after completion of this offering

 

Immediately following the consummation of this offering, we will have            shares of common stock outstanding, or            shares, if the underwriters' option to purchase additional shares is exercised in full, in each case after giving effect to the            -for-            stock split to take place immediately prior to this offering.

Use of proceeds

 

We estimate that the proceeds to us from this offering, after deducting estimated underwriting discounts and commissions and offering expenses payable by us, will be approximately $        million, assuming the shares offered by us are sold for $        per share, the midpoint of the price range set forth on the cover of this prospectus.

 

We intend to use the net proceeds from the sale of common stock by us in this offering to repay all outstanding amounts under our $90 million term loan facility (the "Term Facility"), repay certain of our other outstanding indebtedness, pay related fees and expenses and for general corporate purposes.

Principal stockholders

 

Upon completion of this offering, our parent company, RTI, which is controlled by affiliates of Vestar, may continue to beneficially own a controlling interest in us. As such, we may avail ourselves of certain controlled company exemptions under the corporate governance rules of            .

Dividend policy

 

We currently expect to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness; therefore, we do not anticipate paying any cash dividends in the foreseeable future. For additional information, see "Dividend Policy."

Proposed symbol for trading on            

 

"            ."

Risk factors

 

For a discussion of risks relating to the Company, our business and an investment in our common stock, see "Risk Factors" and all other information set forth in this prospectus before investing in our common stock.

 

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        Unless otherwise indicated, all information in this prospectus relating to the number of shares of common stock to be outstanding immediately after this offering:

    assumes the effectiveness of our amended and restated certificate of incorporation and amended and restated bylaws, which we will adopt prior to the completion of this offering;

    is based on the number of shares outstanding after giving effect to a            -for-            stock split, which we will complete immediately prior to the consummation of this offering (assuming an offering price of $        per share (the mid-point of the price range set forth on the cover of this prospectus));

    excludes                shares of common stock issuable upon the exercise of outstanding stock options at a weighted average exercise price of $        per share; and

    assumes (1) no exercise by the underwriters of their option to purchase up to                additional shares from us and (2) an initial public offering price of $        per share, the midpoint of the price range set forth on the cover of this prospectus.

 

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Summary Historical Consolidated Financial and Other Data

        The following tables set forth our summary historical consolidated financial and other data as of and for the dates indicated. The consolidated financial and other data as of December 31, 2011 and 2012 and for the years ended December 31, 2010, 2011 and 2012 are derived from our audited consolidated financial statements, included elsewhere in this prospectus. The consolidated financial and other data presented below as of September 30, 2013 and for the nine months ended September 30, 2012 and 2013 have been derived from our historical unaudited condensed consolidated financial statements, which are included elsewhere in this prospectus. Operating results for the nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2013.

        Our historical results included below and elsewhere in this prospectus are not necessarily indicative of our future performance. The following summary historical consolidated financial and other data are qualified in their entirety by reference to, and should be read in conjunction with, our audited consolidated financial statements and the accompanying notes, included elsewhere in this prospectus, and the information under "Selected Historical Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Consolidated Combined Financial Information" and other financial information included in this prospectus.

        The summary unaudited pro forma statement of operations data for each of the periods presented gives effect to the OnCure Acquisition as if it had occurred on January 1 of such period. The unaudited pro forma balance sheet data gives effect to the OnCure Acquisition as if it had occurred on September 30, 2013. The summary unaudited pro forma financial data are for informational purposes only and do not purport to represent what our results of operations or financial position would have been if the OnCure Acquisition had occurred at any date, nor do such data purport to project the results of operations for any future period. See "Unaudited Pro Forma Condensed Consolidated Combined Financial Information" for a complete description of the adjustments and assumptions underlying these summary unaudited pro forma consolidated financial data. The unaudited pro forma statement of operations contained in the section entitled "Unaudited Pro Forma Condensed Consolidated Combined Financial Information" reflects pro forma results through income from continuing operations.

 
  Year Ended
December 31,
2010
  Year Ended
December 31,
2011
  Year Ended
December 31,
2012
  Nine Months
Ended
September 30,
2012
  Nine Months
Ended
September 30,
2013
  Pro Forma
Year Ended
December 31,
2012
  Pro Forma
Nine Months
Ended
September 30,
2013
 
 
   
   
  (dollars in thousands)
   
   
 

Statement of Operations Data:

                                           

Revenues:

                                           

Net patient service revenue

  $ 535,913   $ 638,690   $ 686,216   $ 519,432   $ 526,475              

Other revenue

    8,050     6,027     7,735     5,783     6,651              
                                   

Total revenues

    543,963     644,717     693,951     525,215     533,126   $ 800,073   $ 605,676  

 

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  Year Ended
December 31,
2010
  Year Ended
December 31,
2011
  Year Ended
December 31,
2012
  Nine Months
Ended
September 30,
2012
  Nine Months
Ended
September 30,
2013
  Pro Forma
Year Ended
December 31,
2012
  Pro Forma
Nine Months
Ended
September 30,
2013
 
 
  (in thousands, except share and per share data)
 

Expenses:

                                           

Salaries and benefits

    282,302     326,782     372,656     276,199     293,972     408,341     320,226  

Medical supplies

    43,027     51,838     61,589     47,785     46,166     62,943     47,303  

Facility rent expense

    27,885     33,375     39,802     29,634     32,285     47,461     38,322  

Other operating expenses

    27,103     33,992     38,988     28,663     33,155     48,524     40,835  

General and administrative expenses

    65,798     81,688     82,236     60,059     68,832     94,234     83,914  

Depreciation and amortization

    46,346     54,084     64,893     48,140     46,550     75,056     54,173  

Provision for doubtful accounts

    8,831     16,117     16,916     15,286     8,857     16,916     8,857  

Interest expense, net

    58,505     60,656     77,494     57,182     62,369     86,549     68,997  

Electronic health records incentive income

            (2,256 )           (2,256 )    

Fair value adjustment of earn-out liability and noncontrolling interests-redeemable

            1,219     1,261         1,219      

Equity interest in net earnings of joint ventures

                        (373 )   (138 )

Loss on sale of assets of a radiation treatment center

    1,903                          

Loss on investments

        250                      

Gain on fair value adjustment of previously held equity investment

        (234 )                    

Gain on the sale of an interest in a joint venture

                    (1,460 )       (1,460 )

Loss on foreign currency transactions

        106     339     234     1,166     339     1,166  

Loss on foreign currency derivative contracts

        672     1,165     1,006     309     1,165     309  

Early extinguishment of debt

    10,947         4,473     4,473         5,571      

Impairment loss

    97,916     360,639     81,021     69,946         188,519     59,686  
                               

Total expenses

    670,563     1,019,965     840,535     639,868     592,201     1,034,208     722,190  

Loss before income taxes

    (126,600 )   (375,248 )   (146,584 )   (114,653 )   (59,075 )   (234,135 )   (116,514 )

Income tax expense (benefit)

    (12,810 )   (25,365 )   4,545     3,254     4,849     (5,981 )   4,652  
                               

Net loss

    (113,790 )   (349,883 )   (151,129 )   (117,907 )   (63,924 )   (228,154 )   (121,166 )

Net income attributable to non-controlling interest

    (1,698 )   (3,558 )   (3,079 )   (3,231 )   (1,365 )   (3,322 )   (1,470 )
                               

Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder

  $ (115,488 ) $ (353,441 ) $ (154,208 ) $ (121,138 ) $ (65,289 ) $ (231,476 ) $ (122,636 )
                               

Net loss per common share:

                                           

Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder—basic

  $ (115,488.00 ) $ (346,171.40 ) $ (150,446.83 ) $ (118,183.41 ) $ (63,696.59 ) $ (225,830.24 ) $ (119,644.88 )
                               

Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder—diluted

  $ (115,488.00 ) $ (346,171.40 ) $ (150,446.83 ) $ (118,183.41 ) $ (63,696.59 ) $ (225,830.24 ) $ (119,644.88 )
                               

Weighted average shares outstanding:

                                           

Basic

    1,000     1,021     1,025     1,025     1,025     1,025     1,025  
                               

Diluted

    1,000     1,021     1,025     1,025     1,025     1,025     1,025  
                               

 

 
  Year Ended
December 31,
2010
  Year Ended
December 31,
2011
  Year Ended
December 31,
2012
  Nine Months
Ended
September 30,
2012
  Nine Months
Ended
September 30,
2013
  Pro Forma
Year Ended
December 31,
2012
  Pro Forma
Nine Months
Ended
September 30,
2013
 
 
   
   
  (Unaudited)
(dollars in thousands)

   
   
 

Other Financial Data:

                                           

EBITDA(1)

  $ (23,447 ) $ (264,066 ) $ (7,276 ) $ (12,562 ) $ 48,479   $ (75,852 ) $ 5,186  

Adjusted EBITDA(2)

    108,848     117,174     104,804     80,977     67,869     149,801     94,719  

 

 
  As of
December 31,
2010
  As of
December 31,
2011
  As of
December 31,
2012
  As of
September 30,
2013
  Pro Forma
As of
September 30,
2013
 
 
   
   
  (dollars in thousands)
   
 

Balance Sheet Data:

                               

Cash and cash equivalents

  $ 13,977   $ 10,177   $ 15,410   $ 32,469   $ 8,206  

Working capital(3)

    19,076     19,929     24,262     34,361     14,001  

Total assets

    1,236,330     998,592     922,301     968,563     1,102,412  

Total debt

    598,831     679,033     762,368     850,143     927,459  

Total equity (deficit)

    508,208     177,294     18,467     (59,749 )   (58,450 )

 

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  Year Ended
December 31,
2010
  Year Ended
December 31,
2011
  Year Ended
December 31,
2012
  Nine Months
Ended
September 30,
2012
  Nine Months
Ended
September 30,
2013
 
 
  (Unaudited)
(dollars in thousands)

 

Cash Flow Data:

                               

Cash flows provided by (used in):

                               

Operating activities

  $ 48,994   $ 44,764   $ 16,130   $ 23,116   $ 2,562  

Investing activities

    (92,511 )   (96,782 )   (57,310 )   (47,217 )   (56,572 )

Financing activities

    24,536     48,236     46,425     41,862     71,101  

Capital expenditures(4)

    43,781     41,313     37,957     29,797     25,188  

 

 
  Year Ended
December 31,
2010*
  Year Ended
December 31,
2011*
  Year Ended
December 31,
2012
  Nine Months
Ended
September 30,
2012
  Nine Months
Ended
September 30,
2013
  Pro Forma
Year Ended
December 31,
2012
  Pro Forma
Nine Months
Ended
September 30,
2013
 
 
  (Unaudited)
 

Other Data:

                                           

Treatment centers-freestanding, at period end

    89     118     121     121     127     152     158  

Treatment centers-professional/other, at period end

    6     9     5     5     5     8     8  
                               

    95     127     126     126     132     160     166  
                               

Number of treatment days

    254     255     255     191     191     255     191  

Total treatments-freestanding centers

    457,845     473,400     493,330     372,488     386,574     678,252     519,071  

Treatments per day-freestanding centers

    1,803     1,856     1,935     1,950     2,024     2,660     2,718  

*
Excludes the impact of the termination of a capitated contract in Las Vegas, Nevada.

(1)
EBITDA means earnings from continuing operations before net interest, income taxes, depreciation and amortization. Other companies may define EBITDA differently and, as a result, our measure of EBITDA may not be directly comparable to EBITDA of other companies. Management believes that the presentation of EBITDA and ratios using EBITDA included in this prospectus provides useful information to investors regarding our results of operations because they assist in analyzing and benchmarking the performance and value of our business. Although we use EBITDA as a financial measure to assess the performance of our business, the use of EBITDA is limited because it does not include certain material costs, such as interest and taxes, necessary to operate our business. EBITDA and the ratios using EBITDA included in this prospectus should be considered in addition to, and not as a substitute for, net income in accordance with GAAP as a measure of performance or cash flows from operating activities in accordance with GAAP as a measure of liquidity. The following table provides a reconciliation from net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder to EBITDA:

 
  Year Ended
December 31,
2010
  Year Ended
December 31,
2011
  Year Ended
December 31,
2012
  Nine Months
Ended
September 30,
2012
  Nine Months
Ended
September 30,
2013
  Pro Forma
Year Ended
December 31,
2012
  Pro Forma
Nine Months
Ended
September 30,
2013
 
 
  (Unaudited)
(dollars in thousands)

 

Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder

  $ (115,488 ) $ (353,441 ) $ (154,208 ) $ (121,138 ) $ (65,289 ) $ (231,476 ) $ (122,636 )

Income tax (benefit) expense

    (12,810 )   (25,365 )   4,545     3,254     4,849     (5,981 )   4,652  

Interest expense, net

    58,505     60,656     77,494     57,182     62,369     86,549     68,997  

Depreciation and amortization

    46,346     54,084     64,893     48,140     46,550     75,056     54,173  
                               

EBITDA

  $ (23,447 ) $ (264,066 ) $ (7,276 ) $ (12,562 ) $ 48,479   $ (75,852 ) $ 5,186  
(2)
Adjusted EBITDA means EBITDA (as defined above), adjusted to exclude items which are not considered by management to be indicative of our underlying results. Adjusted EBITDA is defined as income (loss) before interest expense (net of interest income), income taxes, depreciation and amortization, gain on the sale of an interest in a joint venture, early extinguishment of debt, fair value adjustment of earn-out liability, impairment loss, foreign currency derivative contract loss, management fees paid to our sponsor, non-cash expenses including costs relating to stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to repairs and maintenance, non-cash equipment rent, sale-lease back adjustments, acquisition-related costs, other expenses including loss on sale of assets, severance payments related to termination of employee staff reductions, tail premiums on termed physicians, franchise taxes, costs relating to consulting services on Medicare reimbursement, litigation settlements with physicians, expenses associated with the provision for income taxes, costs associated with tradename and branding initiatives, expenses associated with idle/closed radiation therapy treatment facilities, loss on sale of assets of a radiation treatment center, gain on fair value adjustment of previously held equity investment, loss on investments, costs associated with the restructuring of certain physician groups' compensation agreements, and debt restructuring costs.

We believe EBITDA and Adjusted EBITDA provide useful information about our financial performance to investors, lenders, financial analysts and rating agencies since these groups have historically used EBITDA-related measures in the healthcare industry, along with other measures, to estimate the value of a company, to make informed investment decisions, to evaluate a company's leverage capacity and its ability to meet its debt service requirements. EBITDA and Adjusted EBITDA eliminate the uneven effect of non-cash depreciation of tangibles assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting. EBITDA and Adjusted EBITDA are also used by us to measure individual performance for incentive compensation purposes and as an analytical indicator for purposes of allocating resources to our operating business and assessing their performance, both internally and relative to our peers, as well as to evaluate the performance of our operating management teams, and for purposes in the calculation of debt covenants and related disclosures.

 

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    EBITDA and Adjusted EBITDA are not intended as a substitute for net income (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder, operating cash flows or other cash flow data determined in accordance with accounting principles generally accepted in the United States. Due to varying methods of calculation, EBITDA and Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

    A reconciliation of EBITDA to Adjusted EBITDA is as follows:

 
  Year Ended
December 31,
2010
  Year Ended
December 31,
2011
  Year Ended
December 31,
2012
  Nine Months
Ended
September 30,
2012
  Nine Months
Ended
September 30,
2013
  Pro Forma
Year Ended
December 31,
2012
  Pro Forma
Nine Months
Ended
September 30,
2013
 
 
  (Unaudited)
(dollars in thousands)

 

EBITDA

  $ (23,447 ) $ (264,066 ) $ (7,276 ) $ (12,562 ) $ 48,479   $ (75,852 ) $ 5,186  

Adjustments:

                                           

Loss on sale of assets of a radiation treatment center(a)

    1,903                          

Early extinguishment of debt

    10,947         4,473     4,473         5,571      

Gain on fair value adjustment of previously held equity investment(b)

        (234 )                    

Loss on foreign currency derivative contracts(c)

        672     1,165     1,006     309     1,165     309  

Impairment loss(d)

    97,916     360,639     81,021     69,946         188,519     59,686  

Fair value adjustment of earn-out liability and noncontrolling interests-redeemable(e)

            1,219     1,261         1,219      

Loss on investments(f)

        250                      

Net income attributable to noncontrolling interests

    1,698     3,558     3,079     3,231     1,365     3,322     1,470  

Management fees(g)

    1,314     1,562     1,218     785     706     1,218     706  

Non-cash expenses(h)

    3,534     3,970     5,750     4,640     3,189     8,029     4,496  

Sale-lease back adjustments(i)

    (2,511 )   (925 )   (985 )   (737 )   (1,017 )   (985 )   (1,017 )

Acquisition-related costs(j)

    4,811     6,400     4,040     2,316     7,302     4,160     7,302  

Other expenses(k)

    2,031     2,120     3,810     1,538     4,297     4,200     4,726  

Litigation settlement(l)

    2,771     2,232     3,151     2,053     1,858     3,151     1,858  

Costs associated with the provision for income taxes(m)

    330     996     736     532         736      

Tradename/branding initiative(n)

            780     523     711     780     711  

Physician contracting expenses(o)

    7,551                     393      

Expenses associated with idle/closed treatment facilities(p)

            2,623     1,972     2,130     2,641     1,981  

Gain on the sale of an interest in a joint venture(q)

                    (1,460 )       (1,460 )

Debt restructuring costs(r)

                        1,534     8,765  
                               

Adjusted EBITDA

  $ 108,848   $ 117,174   $ 104,804   $ 80,977   $ 67,869   $ 149,801   $ 94,719  
                               

(a)
Loss on the sale of certain assets of our Gettysburg facility to one of our minority equityholders in April 2010.

(b)
Gain on the fair value adjustment of previously held equity investment relating to the acquisition of MDLLC for the adjustment of our initial investment in the joint venture to fair value.

(c)
Loss of foreign currency derivative contracts relating to foreign exchange option contracts to convert a significant portion of our forecasted foreign currency denominated net income into U.S. dollars to limit the adverse impact of a weakening Argentine peso against the U.S. dollar.

(d)
Impairment loss incurred relating to the impairment of goodwill, trade name and other assets.

(e)
Fair value adjustment of earn-out liability and noncontrolling interests- redeemable relating to the earn-out for the acquisition of MDLLC.

(f)
Loss on investments relate to a planned withdrawal from an unconsolidated joint venture in a freestanding radiation facility in West Palm Beach, Florida. We incurred a loss of approximately $0.5 million offset by a gain on the sale of an investment in a primary care physician practice of approximately $0.3 million.

(g)
Management fees accrued to our sponsor, Vestar.

(h)
Non-cash expenses include stock compensation, amortization of straight-line rent and amortization of capital expenditures relating to warranty arrangements amortized to repairs and maintenance expense and non-cash equipment rent.

(i)
Sale-lease back adjustments relates to the adjustment of benefit derived from the classification of operating leases as finance obligations reflecting a reclassification of interest expense and depreciation and amortization expense as rent expense.

(j)
Acquisition related costs associated with ASC 805, Business Combinations, including professional fees, corporate development, integration and due diligence costs relating to the acquisition of medical practices.

(k)
Other expenses include loss on sale of assets, severance payments related to staff reductions, tail premiums paid on terminated physicians and other expenses.

 

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(l)
Litigation settlement associated with the termination of certain physicians.

(m)
Expenses associated with process improvements in the area of income taxes.

(n)
Expenses related to the costs associated with the Company's tradename and branding initiatives.

(o)
Physician contracting expenses associated with the restructuring of certain physician groups' compensation arrangements.

(p)
Expenses associated with idle/closed radiation therapy treatment facilities.

(q)
Gain on the sale of an interest in a joint venture which operated a radiation treatment center in Providence, Rhode Island.

(r)
Legal and financial advisory fees relating to negotiations with note holders.
(3)
Working capital is calculated as current assets minus current liabilities.

(4)
Capital expenditures include cash paid for purchases of property and equipment from our investing activities, and amounts financed through capital lease arrangements, exclusive of the purchase of radiation treatment centers and other medical practices.

 

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RISK FACTORS

        Investing in our common stock involves a number of risks. Before you purchase our common stock, you should carefully consider the risks described below and the other information contained in this prospectus, including our consolidated financial statements and accompanying notes. If any of the following risks actually occurs, our business, financial condition, results of operation or cash flows could be materially adversely affected. In any such case, the trading price of our common stock could decline, and you could lose all or part of your investment.

Risks Related to Our Business

We depend on payments from government Medicare and, to a lesser extent, Medicaid programs for a significant amount of our revenue. Our business could be materially harmed by any changes that result in reimbursement reductions.

        Our payer mix is concentrated with Medicare patients due to the high proportion of cancer patients over the age of 65. We estimate that approximately 48%, 48%, 45% and 45% of our U.S. net patient service revenue for the years ended December 31, 2010, 2011, 2012 and for the nine months ended September 30, 2013, respectively, consisted of payments from Medicare and Medicaid. Only a small percentage of that revenue resulted from Medicaid patients, equaling approximately 3.0%, 2.8%, 2.7% and 2.6% for the years ended December 31, 2010, 2011, 2012 and the nine months ended September 30, 2013, respectively. In addition, Medicare Advantage represents approximately 12% of our 2012 U.S. net patient service revenue. These government programs generally reimburse us on a fee-for-service basis based on predetermined government reimbursement rate schedules. As a result of these reimbursement schedules, we are limited in the amount we can record as revenue for our services from these government programs. Following a public comment period, the Centers for Medicare & Medicaid Services ("CMS") can change these schedules annually and therefore the prices that the agency pays for these services. In addition, if our operating costs increase, we will not be able to recover these costs from government payers. As a result, our financial condition and results of operations may be adversely affected by changes in reimbursement for Medicare reimbursement. Various state Medicaid programs also have recently reduced Medicaid payments to providers based on state budget reductions. Although Medicaid reimbursement encompasses only a small portion of our business, there can be no certainty as to whether Medicaid reimbursement will increase or decrease in the future and what affect, if any, this will have on our business.

        In the final Medicare 2013 Physician Fee Schedule, CMS reduced payments for radiation oncology by 7%. This reduction related to (1) the fourth year of the four-year transition to the utilization of new Physician Practice Information Survey ("PPIS") data, (2) a change in equipment interest rate assumptions, (3) budget neutrality effects of a proposal to create a new discharge care management code, (4) input changes for certain radiation therapy procedures, and (5) certain other revised radiation oncology codes. The largest of these changes (accounting for 4% of the gross reduction) reflected the transition of the final 25% of PPIS data used in the Practice Expense Relative Value Unit ("PERVU") methodology. The change in the CMS interest rate policy (accounting for 3% of the gross reduction) reduced interest rate assumptions in the CMS database from 11% to a sliding scale of 5.5% to 8%. CMS also finalized its proposal to create a HCPCS G-code to describe transition care management from a hospital or other institutional stay to a primary physician in the community (accounting for 1% of the gross reduction). While this policy benefited primary care, non-primary care physicians are negatively impacted due to the budget-neutrality of the Medicare 2013 Physician Fee Schedule. The rule also made adjustments (accounting for 1% of the gross reduction) due to the use of new time of care assumptions for IMRT and stereotactic body radiation therapy ("SBRT"). Although the proposed reductions in time of care assumptions alone would have resulted in a gross 7% reduction to radiation oncology, CMS in its final rule included updated cost data submitted by the radiation oncology community for code inputs which reversed the vast majority of the reduction resulting from the new time of care assumptions. Total gross reductions

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in the final rule were offset by a 2% increase due to certain other revised radiation oncology codes, which resulted in a total net reduction to radiation oncology of 7%.

        In the proposed Medicare 2014 Physician Fee Schedule, CMS proposed to reduce payments for radiation oncology by 5% overall. This reduction related to a cap on certain radiation oncology services at the hospital outpatient department and ambulatory surgical center's ("OPD/ASC") rate [-4%]; reductions to certain radiation oncology codes due to Medicare Economic Index ("MEI") revisions [-2%]; and offsetting minor increases due to other aspects of the fee schedule [+1%]. Because the cap and MEI policies only applied to freestanding settings, the cut to freestanding centers would likely have been closer to 8%, while hospital-based radiation oncologists would have received an increase in payment under the proposal. In the final Medicare 2014 Physician Fee Schedule, CMS did not finalize its proposal to cap certain radiation oncology services at the OPD/ASC rate. Although CMS did finalize its proposal to revise the MEI [-2% impact], CMS also incorporated updated relative value units ("RVUs") for new and existing codes [+3% impact] resulting in a net impact of +1% for radiation oncology overall. Because the MEI policy only applies to freestanding settings, the impact to freestanding centers is approximately flat, while hospital-based radiation oncologists would receive an increase in payment under the final rule. CMS notes in the final rule, due to budget neutrality requirements relating to the MEI policy, the 2014 conversion factor is estimated to be $35.6446 (assuming no sustainable growth rate ("SGR") cuts), rather than the current 2013 conversion factor of $34.023.

        Medicare reimbursement rates for all procedures under Medicare ultimately are determined by a formula which takes into account a conversion factor ("CF") which is updated on an annual basis based on the SGR. The CF was scheduled to decrease 24.9% as of January 1, 2011, but Congress delayed the scheduled cut until the end of 2011. The final Medicare 2012 Physician Fee Schedule, released by CMS on November 1, 2011, would have resulted in a reimbursement decrease of 27.4% as of January 1, 2012. However, Congress again delayed the implementation of this payment cut, first through February 29, 2012 under the Temporary Payroll Tax Cut Continuation Act of 2011, then through the end of 2012 under the Middle Class Tax Relief and Job Creation Act of 2012, and again through the end of 2013 under the American Taxpayer Relief Act. If future reductions are not suspended, and if a permanent "doc fix" is not signed into law, the currently scheduled SGR reimbursement decrease (estimated at approximately 20%) will take effect on January 1, 2014.

        In addition, the Joint Select Committee on Deficit Reduction ("JSC") was created under the Budget Control Act of 2011 and signed into law on August 2, 2011. Under the law, unless the JSC could achieve $1.2 trillion in savings, an across-the-board sequestration would occur on January 2, 2013, and each subsequent year through 2021, to achieve $1.2 trillion in savings. On November 21, 2011, the JSC released a statement indicating the committee would be unable to reach agreement, thereby clearing the way for the sequestration process. Unless Congress acts to reverse the cuts, Medicare providers will be cut under the sequestration process by 2% each year relative to baseline spending through 2021. On January 2, 2013, the President signed the American Taxpayer Relief Act, which extended the sequestration order required under the Budget Control Act until March 1, 2013. On March 1, 2013, President Obama issued the required sequestration order and, pursuant to 2 U.S.C. § 906, the 2% Medicare sequester began to take effect for services provided on or after April 1, 2013.

Reforms to the U.S. healthcare system may adversely affect our business.

        On March 21, 2010, the House of Representatives passed the Patient Protection and Affordable Care Act, and the corresponding reconciliation bill. President Obama signed the larger comprehensive bill into law on March 23, 2010 and the reconciliation bill on March 30, 2010 (collectively, the "Health Care Reform Act"). The comprehensive $940 billion dollar overhaul could extend coverage to approximately 32 million previously uninsured Americans.

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        A significant portion of our U.S. patient volume is derived from government programs, principally Medicare, which are highly regulated and subject to frequent and substantial changes. We anticipate the Health Care Reform Act will continue to significantly affect how the healthcare industry operates in relation to Medicare, Medicaid and the insurance industry. The Health Care Reform Act contains a number of provisions, including those governing fraud and abuse, enrollment in federal healthcare programs, and reimbursement changes, which impact existing government healthcare programs and will continue to result in the development of new programs, including Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program.

        On June 28, 2012, the U.S. Supreme Court upheld the constitutionality of the Health Care Reform Act's "individual mandate" that will require individuals as of 2014 to either purchase health insurance or pay a penalty. The Supreme Court also held, however, that the federal government cannot force states to expand their Medicaid programs by threatening to cut their existing Medicaid funds. As a result of this decision, states are left with a choice about whether to expand their Medicaid programs to cover low-income, non-disabled adults without children. Numerous states opted not to expand their Medicaid program in 2014, which may materially impact our Medicaid revenue in these states.

        The Health Care Reform Act provides for the creation of health insurance "Marketplaces" in each state where individuals can compare and enroll in Qualified Healthcare insurance Programs ("QHPs"). States were given the option to operate an insurance Marketplace themselves, to partner with the federal government in operating a Marketplace, or to opt for the federal government to operate their Marketplace. Individuals with an income less than 400% of the federal poverty level that purchase insurance on a Marketplace may be eligible for federal subsidies to cover a portion of their health insurance premium costs. In addition, they may be eligible for government cost sharing of co-insurance or co-pay obligations. An open question remains whether the availability of these federal subsidies classifies a QHP as a federal healthcare program. On October 30, 2013, Kathleen Sebelius, the Secretary of the U.S. Department of Health and Human Services ("DHHS"), indicated by letter that DHHS does not consider QHPs to be federal healthcare programs. However, this statement by Secretary Sebelius has not been tested in court, and a judge may not agree. If QHPs are classified as federal healthcare programs it could significantly increase the cost of compliance and could materially impact our operations.

        The Health Care Reform Act has experienced several setbacks that heighten the uncertainty about its implementation. On October 1, 2013, the DHHS launched the federally-run insurance Marketplaces through its www.healthcare.gov website. The website has experienced multiple problems throughout its launch, which has limited the ability of individuals to sign up for healthcare coverage and has exposed security concerns. In addition, during the Fall of 2013, millions of people with individual health insurance plans received cancellation letters from their insurance providers. These letters frequently expressed that plans were being cancelled because they failed to meet the new requirements of the Health Care Reform Act. In response, the White House announced that it would grant state insurance commissioners federal permission to allow consumers to keep existing health insurance policies through 2014. Several state insurance commissions have nonetheless continued to maintain that insurers cannot offer plans in 2014 unless they meet the requirements of the Health Care Reform Act. These implementation setbacks have called into question early predictions about the number of previously un-insured individuals who will obtain coverage through a Marketplace plan. In addition, certain members of Congress continue to introduce legislation that would repeal or significantly amend the Health Care Reform Act. Because of the continued uncertainty about the implementation of the Health Care Reform Act, we cannot predict the impact of the law or any future reforms on our business.

        We can give no assurance that the Health Care Reform Act will not adversely affect our business and financial results, and we cannot predict how future federal or state legislative or administrative changes relating to healthcare reform would affect our business.

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If payments by managed care organizations and other commercial payers decrease, our revenue and profitability could be adversely affected.

        We estimate that approximately 51%, 51% and 54% of our net patient service revenue for the years ended December 31, 2010, 2011 and 2012, respectively, was derived from commercial payers such as managed care organizations and private health insurance programs as well as individuals. As of September 30, 2013, we have over 900 contracts with commercial payers. These commercial payers generally reimburse us for services rendered to insured patients based upon predetermined rates. Rates for health maintenance organization ("HMO") benefit plans are typically lower than those for preferred provider organization ("PPO") or other benefit plans that offer broader provider access. While commercial payer rates are generally higher than government program reimbursement rates, approximately 7% of our non-Medicare Advantage commercial payer revenue is directly linked to Medicare reimbursement rates. When Medicare rates change, these commercial rates automatically change as well. Additionally, most commercial payers tend to negotiate their rates as a percentage of Medicare reimbursement. Even when our commercial rates are fixed and not tied directly to changes in Medicare, there is often pressure to renegotiate our reimbursement to align with these modified levels. If managed care organizations and other private insurers reduce their rates or we experience a significant shift in our revenue mix toward certain additional managed care payers or Medicare or Medicaid reimbursements, then our revenue and profitability may decline and our operating margins will be reduced. Non-government payers, including managed care payers, continue to demand discounted fee structures, and the trend toward consolidation among non-government payers tends to increase their bargaining power over fee structures. Our future success will depend, in part, on our ability to retain and renew our managed care contracts as well as enter into new managed care contracts on terms favorable to us. Any inability to maintain suitable financial arrangements with commercial payers could have a material adverse impact on our business.

        Increasingly, commercial payers are turning to third-party benefits managers to pre-certify radiation oncology services or develop payment-based treatment protocols. The failure to obtain such pre-certifications and adhere to such protocols can result in the payers' denial of payment in whole or in part. While we are working with such benefits managers to assure compliance with their policies or to obtain modification of what we believe to be inappropriate policies, there can be an assurance that they will not have a material adverse effect on our business.

Our overall business results may suffer from an economic downturn.

        The U.S. economy has weakened significantly following the 2008 financial crisis. Depressed consumer spending and higher unemployment rates continue to pressure many industries and geographic locations. During economic downturns, governmental entities often experience budget deficits as a result of increased costs and lower than expected tax collections. These budget deficits may force federal, state and local government entities to decrease spending for health and human service programs, including Medicare, Medicaid and similar programs, which represent significant payer sources for our treatment centers. Other risks we face from general economic weakness include potential declines in the population covered under managed care agreements, patient decisions to postpone or cancel elective procedures as well as routine diagnostic examinations, potential increases in the uninsured and underinsured populations and further difficulties in our collecting patient co-payment and deductible receivables.

Due to the rising costs of managed care premiums and co-pay amounts, coupled with the current economic environment, we may realize an increased exposure to bad debt due to patients' inability to pay for certain forms of cancer treatment.

        As more patients become uninsured as a result of job losses or receive reduced coverage as a result of cost-control measures by employers to offset the increased costs of managed care premiums, patients are becoming increasingly responsible for the rising costs of treatment, which is increasing our exposure to bad

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debt. This also relates to patient accounts for which the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and co-payments) remain outstanding. The shifting responsibility to pay for care has, in some instances, resulted in patients electing not to receive certain forms of cancer treatment.

        In response to this environment, we have improved our processes associated with verification of insurance eligibility and patient responsibility payment programs. In addition, we have improved our patient financial counseling efforts and developed tools to monitor our progress in this area. However, a continuation of the trends that have resulted in an increasing proportion of accounts receivable being comprised of uninsured accounts and a deterioration in the collectability of these accounts will adversely affect our cash flows and results of operations.

We depend on recruiting and retaining qualified healthcare professionals for our success.

        Our success is dependent upon our continuing ability to recruit, train and retain or affiliate with radiation oncologists, ICC physicians, physicists, dosimetrists and radiation therapists. While there is currently a national shortage of certain of these healthcare professionals, we have not experienced significant problems attracting and retaining key personnel and professionals in the recent past. We face competition for such personnel from other healthcare providers, research and academic institutions, government entities and other organizations. In the event we are unable to recruit and retain these professionals, such shortages could have a material adverse effect on our ability to grow. Additionally, many of our senior radiation oncologists, due to their reputations and experience, are very important in the recruitment and education of radiation oncologists. The loss of any such senior radiation oncologists could negatively impact us.

        Most of our radiation oncologists and other ICC physicians in the United States are employed under employment agreements which, among other things, provide that they will not compete with us (or the professional corporations contracting with us) for a period of time after their employment terminates. Such covenants not to compete are enforced to varying degrees from state to state. In most states, a covenant not to compete will be enforced only to the extent that it is necessary to protect the legitimate business interest of the party seeking enforcement, that it does not unreasonably restrain the party against whom enforcement is sought and that it is not contrary to the public interest. This determination is made based upon all the facts and circumstances of the specific case at the time enforcement is sought. It is unclear whether our interests under our administrative services agreements will be viewed by courts as the type of protected business interest that would permit us or the professional corporations to enforce a non-competition covenant against the radiation oncologists. Since our success depends in substantial part on our ability to preserve the business of our radiation oncologists and other ICC physicians, a determination that these provisions are unenforceable could have a material adverse effect on us.

        As a result of the OnCure Acquisition, in several markets we rely on physician practices to provide our services. Following our acquisition of OnCure, we assumed the Management Services Agreements ("MSAs") previously in place between OnCure and most of its managed practices, which excluded certain of the MSAs that were rejected in the OnCure bankruptcy proceeding, with all but five of the affected centers becoming either a direct Company provider or placed under a new MSA with a practice that was previously affiliated with us. Under the MSAs, OnCure provides the necessary medical and office equipment, clinical and operating staff (other than physicians) and office space and leasehold improvements, as well as general management and billing/collection services, in exchange for a management fee based on a percentage of the practice's revenues or EBITDA. The MSAs generally run for a term of ten years or longer with either party having the right to renew. Upon the termination or expiration of an MSA, OnCure retains the ownership of the office space and medical and office equipment, as well as the right to operate the center with a different medical provider. While there are certain reciprocal non-compete obligations, such obligations are generally relinquished upon the termination of the MSA.

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We depend on our senior management and we may be materially harmed if we lose any member of our senior management.

        We are dependent upon the services of our senior management, especially Daniel E. Dosoretz, M.D., our Chief Executive Officer, and a director on the Company's Board of Directors and Alejandro Dosoretz, President and Chief Executive Officer of Medical Developers Cooperatief U.A. B.V. We have entered into executive employment and non-competition agreements with certain members of our senior management. Because many members of our senior management team have been with us for over 10 years and have contributed greatly to our growth, their services would be very difficult, time consuming and costly to replace. We carry key-man life insurance on Dr. Daniel Dosoretz. The loss of key management personnel or our inability to attract and retain qualified management personnel could have a material adverse effect on us. A decision by any of these individuals to leave our employ, to compete with us or to reduce their involvement in our business, could have a material adverse effect on our business.

The oncology treatment market is highly competitive.

        The cancer treatment market is highly competitive in each market in which we operate. Our treatment centers face competition from hospitals, other medical practitioners and other operators of radiation treatment centers. There is a growing trend by hospitals to employ medical oncologists and other ICC physicians. We compete against hospitals and other providers to employee these individuals, which generally results in such physicians referring their patients to the hospitals' radiation facilities, rather than other free-standing facilities. There is also a growing trend of physicians in specialties other than radiation oncology, such as urology, entering the radiation treatment business. If these trends continue it could harm our referrals and our business. Certain of our competitors have longer operating histories and greater financial and other resources than us. In addition, in states that do not require a certificate of need for the purchase, construction or expansion of healthcare facilities or services, competition in the form of new services, facilities and capital spending is more prevalent. If our competitors are better able to attract patients, recruit physicians, expand services or obtain favorable managed care contracts at their facilities than our centers, we may experience an overall decline in patient volume. In the event that we are not able to compete successfully, our business may be adversely affected and competition may make it more difficult for us to affiliate with or employ additional radiation oncologists on terms that are favorable to us.

We could be the subject of governmental investigations, claims and litigation.

        Healthcare companies are subject to numerous types of investigations by various governmental agencies. Further, under the False Claims Act, private parties have the right to bring "qui tam," or "whistleblower," suits against companies that knowingly submit false claims for payments to, or improperly retain overpayments from, the government. The False Claims Act imposes penalties of not less than $5,500 and not more than $11,000, plus three times the amount of damages which the government sustains because of the submission of a false claim. In addition, if we are found to have violated the False Claims Act, we could be excluded from participation in Medicare, Medicaid and other federal healthcare programs. Some states have adopted similar state whistleblower and false claims provisions. Certain of our individual facilities have received, and other facilities may receive, inquiries from federal and state agencies related to potential False Claims Act liability. Depending on whether the underlying conduct in these or future inquiries or investigations could be considered systemic, their resolution could have a material adverse effect on our financial position, results of operations and liquidity.

        Governmental agencies and their agents, such as the Medicare Administrative Contractors, as well as the Office of Inspector General of the U.S. Department of Health and Human Services ("OIG"), CMS and state Medicaid programs, conduct audits of our healthcare operations. Private payers may conduct similar post-payment audits, and we also perform internal audits and monitoring. Depending on the nature of the conduct found in such audits and whether the underlying conduct could be considered systemic, the

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resolution of these audits could have a material adverse effect on our financial position, results of operations and liquidity.

        The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 established the Recovery Audit Contractor ("RAC") three-year demonstration program to conduct post-payment reviews to detect and correct improper payments in the fee-for-service Medicare program. The Tax Relief and Health Care Act of 2006 made the RAC program permanent and expanded the program nationwide as of 2010. Since the nationwide expansion of the RAC program, CMS has recouped more than $5 billion in overpayments from fee-for-service Medicare providers. In addition, the Health Care Reform Act mandated the expansion of the RAC program to Medicaid. In 2011 CMS issued a Final Rule on Medicaid RAC program, requiring every state Medicaid agency to implement its Medicaid RAC program by 2012. State Medicaid agencies have also increased their review activities. Should we be found out of compliance with any of these laws, regulations or programs, depending on the nature of the findings, our business, our financial position and our results of operations could be materially adversely affected.

We may be subject to actions for false claims, which could harm our business, if we do not comply with government coding and billing rules.

        If we fail to comply with federal and state documentation, coding and billing rules, we could be subject to criminal and/or civil penalties, loss of licenses and exclusion from the Medicare and Medicaid programs, which could harm us. We estimate that approximately 48%, 48% and 45% of our U.S. net patient service revenue for the years ended December 31 2010, 2011 and 2012, respectively, consisted of payments from Medicare and Medicaid programs. In addition, Medicare Advantage represents approximately 12% of our 2012 U.S. net patient service revenue. In billing for our services to third-party payers, we must follow complex documentation, coding and billing rules. These rules are based on federal and state laws, rules and regulations, various government pronouncements, and on industry practice. Failure to follow these rules could result in potential civil liability under the False Claims Act, under which extensive financial penalties can be imposed. It could further result in criminal liability under various federal and state criminal statutes. We submit thousands of claims for Medicare and other payments and there can be no assurance that there have not been errors. While we carefully and regularly review our documentation, coding and billing practices as part of our compliance program, the rules are frequently vague and confusing and we cannot assure that governmental investigators, private insurers or private whistleblowers will not challenge our practices. Such a challenge could result in a material adverse effect on our business.

If we fail to comply with the federal anti-kickback statute, we could be subject to criminal and civil penalties, loss of licenses and exclusion from the Medicare and Medicaid programs, which could materially harm us.

        A provision of the Social Security Act, commonly referred to as the federal anti-kickback statute, prohibits the offer, payment, solicitation or receipt of any form of remuneration in return for referring, ordering, leasing, purchasing or arranging for or recommending the ordering, purchasing or leasing of items or services payable by Medicare, Medicaid or any other federally funded healthcare program. The federal anti-kickback statute is very broad in scope, as remuneration includes the transfer of anything of value, in cash or in kind. Financial relationships covered by this statute can include any relationship where remuneration is provided for referrals including payments not commensurate with fair market value, whether in the form of space, equipment leases, professional or technical services or anything else of value. As it is an "intent-based" statute, as detailed in federal court precedent, one or both parties must intend the remuneration to be in exchange for or to induce referrals. Violations of the federal anti-kickback statute may result in substantial civil or criminal penalties, including criminal fines of up to $25,000, imprisonment of up to five years, civil penalties under the Civil Monetary Penalties Law of up to $50,000 for each violation, plus three times the remuneration involved, civil penalties under the federal False Claims Act of up to $11,000 for each claim submitted, plus three times the amounts paid for such claims and exclusion from participation in the Medicare and Medicaid programs. These penalties and the

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participation exclusion, if applied to us or one or more of our subsidiaries or affiliates, could result in significant reductions in our revenues and could have a material adverse effect on our business.

        In addition, most of the states in which we operate, including Florida, have also adopted laws, similar to the federal anti-kickback statute, that prohibit payments to physicians in exchange for referrals, some of which apply regardless of whether the source of payment is a government payer or a private payer. These statutes typically impose criminal and civil penalties as well as loss of licenses.

        Under a provision of the federal Civil Monetary Penalties Law, civil monetary penalties (and exclusion) may be imposed on any person who offers or transfers remuneration to any patient who is a Medicare or Medicaid beneficiary, when the person knows or should know that the remuneration is likely to induce the patient to receive medical services from a particular provider. This broad provision applies to many kinds of inducements or benefits provided to patients, including complimentary items, services or transportation that are of more than a nominal value. We have reviewed our practices of providing services to our patients, and have structured those services in a manner that we believe complies with the law and its interpretation by government authorities. We cannot provide assurances, however, that government authorities will not take a contrary view and impose civil monetary penalties and exclude us for past or present practices.

If we fail to comply with physician self-referral laws as they are currently interpreted or may be interpreted in the future, or if other legislative restrictions are issued, we could incur a significant loss of reimbursement revenue.

        We are subject to the federal Stark Law, as well as similar state statutes and regulations, which bans payments for designated health services ("DHS") rendered as a result of referrals by physicians to DHS entities with which the physicians (or immediate family members) have a financial relationship. DHS includes, but is not limited to, radiation therapy, radiology and laboratory services. A "financial relationship" includes investment and compensation arrangements, both direct and indirect. The regulatory framework of the Stark Law is to first prohibit all referrals from physicians to entities for Medicare DHS and then to except certain types of arrangements from that broad general prohibition.

        State self-referral laws and regulations vary significantly based on the state and, in many cases, have not been interpreted by courts or regulatory agencies. These state laws and regulations can encompass not only services reimbursed by Medicaid or government payers but also private payers. Violation of these federal and state laws and regulations may result in prohibition of payment for services rendered, loss of licenses, $15,000 civil monetary penalties for specified infractions, $100,000 for a circumvention scheme, criminal penalties, exclusion from Medicare and Medicaid programs, and potential false claims liability, including via "qui tam" action, of not less than $5,500 and not more than $11,000 per claim, plus three times the amount of damages that the government sustains because of an improperly submitted claim. The repayment provisions in the Stark Law are not dependent on the parties having an improper intent; rather, the Stark Law is a strict liability statute and any violation is subject to repayment of all "tainted" referrals.

        Our compensation and other financial arrangements with physicians are governed by the federal Stark Law. We rely on certain exceptions to the Stark Law, including those covering employees and in-office ancillary services, and the exclusion of certain requests by radiation oncologists for radiation therapy services from the definition of "referral." Under our ICC model, we have relationships with non-radiation oncology physicians such as medical oncologists, surgeons and urologists that are members of a group practice with our radiation oncologists and we rely on the Stark group practice definition and rules with respect to such relationships.

        The Health Care Reform Act also imposes new disclosure requirements, including one such requirement on referring physicians under the federal Stark Law to inform patients that they may obtain certain imaging services (e.g., magnetic resonance imaging ("MRI"), computed tomography ("CT") and positron emission tomography ("PET")) or other designated health services as specified by the Secretary of Health and Human Services in the future from a provider other than that physician, his or her group

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practice, or another physician in his or her group practice. To date, CMS has not applied these disclosure requirements to radiation therapy referrals but could do so in the future.

        While we believe that our financial relationships with physicians and referral practices are in compliance with applicable laws and regulations, we cannot guarantee that government authorities might take a different position. If we were found to be in violation of the Stark Law, we could be subject to significant civil and criminal penalties, including fines as specified above, exclusion from participation in government and private payer programs and requirements to refund amounts previously received from government and private payers.

        In addition, expansion of our operations to new jurisdictions, or new interpretations of laws in our existing jurisdictions, could require structural and organizational modifications of our relationships with physicians to comply with that jurisdiction's laws. Such structural and organizational modifications could result in lower profitability and failure to achieve our growth objectives.

        Certain states have proposed statutory or regulatory enactments that would prohibit the use of the Stark Law "in-office ancillary services" ("IOAS") exception for ICC physicians to obtain any financial benefit from radiation oncology and other DHS services even if they are part of a group practice. To date, only the state of Maryland has enacted such prohibition. Similarly, the American Society for Radiation Oncology ("ASTRO") supports recent proposed federal legislation, the Promoting Integrity in Medicare Act of 2013 ("PIMA"), which, if passed, would eliminate certain specified ancillary services from the IOAS exception to the Stark Law, including radiation therapy services and advanced diagnostic imaging studies, and increase enforcement and penalties for improper referrals. If any of these state or federal proposed enactments are promulgated, this could have a material adverse impact on our ICC model and our business.

If a federal or state agency asserts a different position or enacts new laws or regulations regarding illegal payments under the Medicare, Medicaid or other governmental programs, we may be subject to civil and criminal penalties, experience a significant reduction in our revenue or be excluded from participation in the Medicare, Medicaid or other governmental programs.

        Any change in interpretations or enforcement of existing or new laws and regulations could subject our current business practices to allegations of impropriety or illegality, or could require us to make changes in our treatment centers, equipment, personnel, services, pricing or capital expenditure programs, which could increase our operating expenses and have a material adverse effect on our operations or reduce the demand for or profitability of our services.

        Additionally, new federal or state laws may be enacted that would cause our relationships with our radiation oncologists or other physicians to become illegal or result in the imposition of penalties against us or our treatment centers. If any of our business arrangements with our radiation oncologists or other physicians in a position to make referrals of radiation therapy services were deemed to violate the federal anti-kickback statute or similar laws, or if new federal or state laws were enacted rendering these arrangements illegal, our business would be adversely affected.

We may encounter numerous business risks in identifying, acquiring and developing additional treatment centers, and may have difficulty operating and integrating those treatment centers.

        Over the past three years ended November 1, 2013, we have acquired 71 treatment centers, acquired 3 professional/other centers, developed 5 treatment centers, developed 1 professional/other center and transitioned 2 professional/other centers to freestanding treatment centers, all of which includes our acquisition of OnCure which we completed on October 25, 2013. As part of our growth strategy, we expect to continue to add additional treatment centers in our existing and new local and international markets. When we acquire or develop additional treatment centers, we may:

    be unable to make acquisitions on terms favorable to us or at all;

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    have difficulty identifying desirable targets or locations for treatment centers in suitable markets;

    be unable to obtain adequate financing to fund our growth strategy;

    be unable to successfully operate the treatment centers;

    have difficulty integrating their operations and personnel;

    be unable to retain physicians or key management personnel;

    acquire treatment centers with unknown or contingent liabilities, including liabilities for failure to comply with healthcare laws and regulations;

    experience difficulties with transitioning or integrating the information systems of acquired treatment centers;

    be unable to contract with third-party payers or attract patients to our treatment centers; and/or

    experience losses and lower gross revenues and operating margins during the initial periods of operating our newly-developed treatment centers.

        Larger acquisitions could increase our potential exposure to business risks. Furthermore, integrating a new treatment center could be expensive and time consuming, and could disrupt our ongoing business and distract our management and other key personnel. In addition, we may incur significant transaction fees and expenses, including for potential transactions that are not consummated.

        We may continue to explore acquisition opportunities outside of the United States when favorable opportunities are available to us. In addition to the risks set forth herein, foreign acquisitions involve unique risks including the particular economic, political and regulatory risks associated with the specific country, currency risks, the relative uncertainty regarding laws and regulations and the potential difficulty of integrating operations across different cultures and languages.

        We currently plan to continue to develop new treatment centers in existing and new local markets, including international markets. We may not be able to structure economically beneficial arrangements in new markets as a result of healthcare laws applicable to such market or otherwise. If these plans change for any reason or the anticipated schedules for opening and costs of development are revised by us, we may be negatively impacted. There can be no assurance that these planned treatment centers will be completed or that, if developed, will achieve sufficient patient volume to generate positive operating margins. If we are unable to timely and efficiently integrate a newly-developed treatment center, our business could suffer.

        In the case of OnCure, the business operates through a structure dependent on management services agreements. If we are unable to manage these management services agreements and the associated relationships, the business may suffer and the expected results of the acquisition may not be realized.

        We cannot assure you that we will achieve the revenue and benefits identified in this prospectus from completed acquisitions, including with respect to OnCure, or that we will achieve synergies and cost savings or benefits in connection with future acquisitions. In addition, many of the businesses that we have acquired and will acquire have unaudited financial statements that have been prepared by the management of such companies and have not been independently reviewed and audited. We cannot assure you that the financial statements of companies we have acquired or will acquire would not be materially different if such statements were audited. Finally, we cannot assure you that we will continue to acquire businesses at valuations consistent with our prior acquisitions or that we will complete acquisitions at all.

Any failure to comply with regulations relating to privacy and security of patient information could subject us to significant penalties.

        There are numerous federal and state laws and regulations addressing patient information privacy and security concerns, including state laws related to identity theft. In particular, the federal regulations issued under the Health Insurance Portability and Accountability Act of 1996, as modified by Title XIII, subtitle

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D of the Health Information Technology for Economic and Clinical Health Act (collectively, "HIPAA") contain provisions that:

    protect individual privacy by limiting the uses and disclosures of patient information;

    require notifications to individuals, and in certain cases to government agencies and the media, in the event of a breach of unsecured protected health information;

    require the implementation of security safeguards to ensure the confidentiality, integrity and availability of individually identifiable health information in electronic form; and

    prescribe specific transaction formats and data code sets for certain electronic healthcare transactions.

        Furthermore, the Omnibus HIPAA Rule, published on January 25, 2013 and now effective, makes business associates directly obligated to adhere to the HIPAA Security Rule and certain provisions of the HIPAA Privacy and Breach Notification Rules, such that violations of these rules can be enforced by the government directly against the business associate.

        Compliance with these regulations requires us to spend money and substantial time and resources. We believe that we are in material compliance with the HIPAA regulations with which we are currently required to comply. If we fail to comply with the HIPAA regulations, we could suffer civil penalties up to $50,000 per violation, not to exceed $1.5 million per calendar year for non-compliance of identical provisions, and criminal penalties with fines up to $250,000 per violation and possible imprisonment. Our facilities could be subject to a periodic audit by the federal government, and enforcement of HIPAA violations may occur by either federal agencies or state attorneys general. In 2011, the government launched a HIPAA audit initiative to assess covered entities' controls and processes implemented to comply with the HIPAA Privacy, Security, and Breach notification Rules, and the Office of Civil Rights is expected to implement a permanent HIPAA audit program beginning in 2014, which will expand compliance audits to business associates.

State law limitations and prohibitions on the corporate practice of medicine may materially harm our business and limit how we can operate.

        State governmental authorities regulate the medical industry and medical practices extensively. Many states have corporate practice of medicine laws which prohibit us from:

    employing physicians;

    practicing medicine, which, in some states, includes managing or operating a radiation treatment center;

    certain types of fee arrangements with physicians;

    owning or controlling equipment used in a medical practice;

    setting fees charged for physician services;

    controlling the content of physician advertisements and marketing;

    billing and coding for services;

    pursuing relationships with physicians and other referral sources; or

    adding facilities and services.

        In addition, many states impose limits on the tasks a physician may delegate to other staff members. We have administrative services agreements in states that prohibit the corporate practice of medicine such as California, Massachusetts, Michigan, Nevada, New York and North Carolina. Corporate practice of medicine laws and their interpretation vary from state to state, and regulatory authorities enforce them

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with broad discretion. We have structured our agreements and services in those states in a manner that we believe complied with the law and its interpretation by government authorities. If, however, we are deemed to be in violation of these laws, we could be required to restructure or terminate our agreements which could materially harm our business and limit how we operate. In the event the corporate practice of medicine laws of other states would adversely limit our ability to operate, it could prevent us from expanding into the particular state and impact our growth strategy.

In certain states we depend on administrative services agreements with professional corporations, including related party professional corporations, and if we are unable to continue to enter into them or they are terminated, we could be materially harmed.

        Certain states, including California, Massachusetts, Michigan, Nevada, New York and North Carolina, have laws prohibiting business corporations from employing physicians. Our treatment centers in California, Massachusetts, Michigan, Nevada, New York and North Carolina operate through administrative services agreements with professional corporations that employ the radiation oncologists who provide professional services at the treatment centers in those states. In 2010, 2011 and 2012, $118.4 million, $114.7 million and $132.8 million, respectively, of our net patient service revenue was derived from administrative services agreements, as opposed to $417.5 million, $524.0 million and $553.4 million, respectively, from all of our other centers. The professional corporations in these states are currently owned by certain of our directors, executive officers and equityholders, who are licensed to practice medicine in those states. As we enter into new states that will require an administrative services agreement, there can be no assurance that a related party professional corporation, or any professional corporation, will be willing or able to enter into an administrative services agreement. Furthermore, if we enter into an administrative services agreement with an unrelated party there could be an increased risk of differences arising or future termination. We cannot assure you that a professional corporation will not seek to terminate an agreement with us on any basis, including on the basis of state laws prohibiting the corporate practice of medicine, nor can we assure you that governmental authorities in those states will not seek termination of these arrangements on the same basis. While we have not been subject to such proceedings in the past, we could be materially harmed if any state governmental authorities or the professional corporations with which we have an administrative services agreement were to succeed in such a termination.

        As compared to our approach, the OnCure model involves MSA arrangements (as more fully described elsewhere in this prospectus) with medical practices whose shareholders and partners are not otherwise affiliated with OnCure. Such medical practices serve as the provider of clinical services with all revenues being billed to patients and/or third party payers in the name or tax identification number or provider number of the practice. As compared to our general model, OnCure has less involvement in the clinical aspects of the center, focusing instead on the provision of space and equipment, as well as day-to-day management. While in connection with the integration of OnCure, it is our plan to introduce our proprietary technology and systems, as well as our ICC model, to these managed practices, there is no assurance that the shareholders and partners in the practices will adopt these systems and model. Moreover, while the terms of the MSAs generally run for ten years or longer, the non-compete obligations of the managed practices and their shareholders and partners generally cease upon the expiration or termination of the MSAs. Finally, whereas our financial arrangements with our affiliated physicians and practices generally involve an employment or compensation arrangement, the financial model under the OnCure MSAs involves a sharing of revenues or EBITDA. In short, the practices that are affiliated with OnCure under the MSA model generally have greater autonomy in their operations than the model we generally deploy.

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Our business could be materially harmed by future interpretation or implementation of state laws regarding prohibitions on fee-splitting.

        Many states prohibit the splitting or sharing of fees between physicians and non-physicians, as well as between treating physicians and referral sources. These laws vary from state to state and are enforced by courts and regulatory agencies, each with broad discretion. Some states have interpreted certain types of fee arrangements in practice management agreements between entities and physicians as unlawful fee-splitting. We believe our arrangements with physicians comply in all material respects with the fee-splitting laws of the states in which we operate. Nevertheless, if government regulatory authorities were to disagree, we and our radiation oncologists could be subject to civil and criminal penalties, and we could be required to restructure or terminate our contractual and other arrangements, which would result in a loss of revenue and could result in less input by us into the business decisions of such practices. In addition, expansion of our operations to other states with certain types of fee-splitting prohibitions may require structural and organizational modification to the form of relationships that we currently have with physicians, professional corporations and hospitals, which could have a material adverse effect on our business, financial condition and results of operation.

If we fail to comply with the laws and regulations applicable to our treatment center operations, we could suffer penalties or be required to make significant changes to our operations.

        Our treatment center operations are subject to many laws and regulations at the federal, state and local government levels. These laws and regulations require that our treatment centers meet various licensing, certification and other requirements, including those relating to:

    qualification of medical and support persons;

    pricing of services by healthcare providers;

    the adequacy of medical care, equipment, personnel, operating policies and procedures;

    clinic licensure and certificates of need;

    maintenance and protection of records; and

    environmental protection, health and safety, including the handling and disposal of medical waste.

        While we have structured our operations in a manner that we believe complies in all material respects with all applicable laws and regulations, we cannot assure you that government regulators will agree, given the breadth and complexity of such laws. If a government agency were to find that we are not in compliance with these laws, we could suffer civil or criminal penalties, including becoming the subject of cease and desist orders, rejection of the payment of our claims, the loss of our licenses to operate and our ability to participate in government or private healthcare programs, any of which could have a material adverse effect on our business, financial condition and results of operation.

Our failure to comply with laws related to hazardous materials could materially harm us.

        Our treatment centers provide specialized treatment involving the use of radioactive material in the treatment of the lungs, prostate, breasts, cervix and other organs. The materials are obtained from, and, if not permanently placed in a patient or consumed, returned to, a third-party provider of supplies to hospitals and other radiation therapy practices, which has the ultimate responsibility for its proper disposal. We, however, remain subject to state and federal laws regulating the protection of employees who may be exposed to hazardous material and regulating the proper handling, storage and disposal of that material. Although we believe we are in compliance in all material respects with all applicable laws, a violation of such laws, or the future enactment of more stringent laws or regulations, could subject us to liability, or require us to incur costs that could have a material adverse effect on us.

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Our business may be harmed by technological and therapeutic changes.

        The treatment of cancer patients is subject to potential significant technological and therapeutic changes. Future technological developments could render our equipment obsolete. We may incur significant costs in replacing or modifying equipment in which we have already made a substantial investment prior to the end of its anticipated useful life. In addition, there may be significant advances in other cancer treatment methods, such as chemotherapy, surgery, biological therapy or in cancer prevention techniques, which could reduce demand or even eliminate the need for the radiation therapy services we provide.

Changes in medical treatment guidelines or recommendations may adversely affect our business.

        There are numerous options that a cancer patient can undergo for treatment. There are also a number of regulatory bodies, research panels and formal guidelines that can influence or even dictate patients, payers and physicians in the course of action that a patient determines to take for his or her particular form of cancer. For instance, in May 2012, the U.S. Preventative Task Force finalized its recommendation against prostate-specific antigen ("PSA") screening and the National Cancer Institute suggested changes in treatment patterns for prostate cancer away from definitive treatment and towards "watchful waiting" or "active surveillance." Both of these bodies' proclamations negatively impacted the volume of prostate cancer treatments nationally. On a same practice basis, in 2012, our prostate cancer treatment volumes declined by over 9.6% over 2011. Although our prostate volumes have stabilized, there can be no assurance that further recommendations or changes in treatment guidelines for prostate cancer or other cancer types will not result in a decrease in diagnosis and treatment of cancer which could have a materially adverse effect on our business.

Efforts to regulate the construction, acquisition or expansion of healthcare treatment centers could prevent us from developing or acquiring additional treatment centers or other facilities or renovating our existing treatment centers.

        Many states have enacted certificate of need laws which require prior approval for the construction, acquisition or expansion of healthcare treatment centers. In giving approval, these states consider the need for additional or expanded healthcare treatment centers or services. In the states of Kentucky, Massachusetts, Michigan, North Carolina, Rhode Island, South Carolina and West Virginia in which we currently operate, certificates of need must be obtained for capital expenditures exceeding a prescribed amount, changes in capacity or services offered and various other matters. Other states in which we now or may in the future operate may also require certificates of need under certain circumstances not currently applicable to us. We may not be able to obtain the certificates of need or other required approvals for ongoing, additional or expanded treatment centers or services in the future. In addition, at the time we acquire a treatment center, we may agree to replace equipment or expand the acquired treatment center. If we are unable to obtain required approvals, we may not be able to acquire additional treatment centers or other facilities or expand acquired treatment centers, expand the healthcare services we provide at these treatment centers or replace equipment.

        Certain states are reconsidering their participation in certificate of need programs, and these decisions could significantly impact the approval process for future projects. For example, on June 25, 2013, the governor of South Carolina vetoed the appropriation of funds for the state's certificate of need program. This veto was upheld by the South Carolina House of Representatives the next day. As a result of the veto, the South Carolina Department of Health and Environmental Control ("SCDEHC") suspended the operation of the certificate of need program for the fiscal year beginning July 1, 2013. The SCDEHC is not reviewing any new or existing applications while the certificate of need program is suspended. A petition is currently pending in front of the South Carolina Supreme Court seeking a declaratory ruling on the ability of providers to engage in activities covered by the state's certificate of need law without approval by the SCDEHC. The outcome of this ruling and other potential future efforts in other states could materially affect our ability to develop new projects in various states.

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We are exposed to local business risks in different countries, which could have a material adverse effect on our financial condition or results of operations.

        We have significant operations in foreign countries. Currently, we operate through 24 legal entities in Argentina, Costa Rica, The Dominican Republic, El Salvador, Guatemala and Mexico, in addition to our operations in the United States. Our offshore operations are subject to risks inherent in doing business in foreign countries, including, but not necessarily limited to:

    new and different legal and regulatory requirements in local jurisdictions, which may conflict with U.S. laws;

    local economic conditions;

    potential staffing difficulties and labor disputes;

    increased costs of transportation or shipping;

    credit risk and financial conditions of government, commercial and patient payers;

    risk of nationalization of private enterprises by foreign governments;

    potential imposition of restrictions on investments;

    potential restrictions on repatriation of funds, payments of dividends and other financial options integral to our investments and operations;

    potential declines in government and/or private payer reimbursement amounts for our services;

    potentially adverse tax consequences, including imposition or increase of withholding and other taxes on remittances and other payments by subsidiaries;

    foreign currency exchange restrictions and fluctuations; and

    local political and social conditions, including the possibility of hyperinflationary conditions and political or social instability in certain countries.

        We may not be successful in developing and implementing policies and strategies to address the foregoing factors in a timely and effective manner at each location where we do business. Consequently, the occurrence of one or more of the foregoing factors could have a material adverse effect on our international operations or upon our financial condition and results of operations.

        Further, our international operations require us to comply with a number of U.S. and international regulations. For example, we must comply with U.S. economic sanctions and export control laws in connection with exports of products and services, and we must comply with the Foreign Corrupt Practices Act ("FCPA"), which prohibits U.S. companies or their agents and employees from providing anything of value to a foreign official or agent thereof for the purposes of influencing any act or decision of these individuals in their official capacity to help obtain or retain business, direct business to any person or corporate entity or obtain any unfair advantage. Any failure by us to ensure that our employees and agents comply with the FCPA, economic sanctions and export controls, and applicable laws and regulations in foreign jurisdictions could result in substantial penalties or restrictions on our ability to conduct business in certain foreign jurisdictions, and our results of operations and financial condition could be materially and adversely affected.

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        In addition, local governments may take actions that are adverse to our interests and our business. For example, in 2012 Argentina's government nationalized the country's largest oil and gas company via taking a 51% stake. While no such proposal has been made or threatened with respect to any businesses in the Argentine healthcare sector, we have significant operations in Argentina and any such development could have a material adverse effect on our international operations or upon our financial condition and results of operations.

        Our international subsidiaries accounted for $61.1 million and $67.7 million or 11.6% and 12.7%, of our revenues for the nine months ended September 30, 2012 and 2013, respectively. Our international subsidiaries accounted for $60.5 million and $81.2 million or 9.4% and 11.7%, of our revenues for the years ended December 31, 2011 and 2012, respectively.

Fluctuations in currency exchange rates may significantly impact our results of operations and may significantly affect the comparability of our results between financial periods.

        Some of our operations are conducted by subsidiaries in foreign countries. The results of the operations and the financial position of these subsidiaries are reported in the relevant foreign currencies and then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements. The main currency to which we are exposed, besides the U.S. dollar, is the Argentine peso. The exchange rate between the Argentine peso and the U.S. dollar in recent years has fluctuated significantly and may continue to do so in the future. A depreciation of this currency against the U.S. dollar will decrease the U.S. dollar equivalent of the amounts derived from these operations reported in our consolidated financial statements and an appreciation of this currency will result in a corresponding increase in such amounts. In addition, currency fluctuations may affect the comparability of our results of operations between financial periods.

        We incur currency exchange risk whenever we enter into a transaction using a currency other than the local currency of the transacting entity. Given the volatility of exchange rates, there can be no assurance that we will be able to effectively manage our currency exchange risks or that any volatility in currency exchange rates will not have a material adverse effect on our financial condition or results of operations.

Exchange controls implemented by the Argentine Government on the acquisition of U.S. dollars and other foreign currencies could have a material impact in our operations, business, financial condition and results of operations.

        The Argentine government has implemented certain measures that control and restrict the ability of companies and individuals to exchange Argentine Pesos for foreign currencies. Those measures include, among other things, the requirement to obtain the prior approval from the Argentine Tax Authority of the foreign currency transaction (for example and without limitation, for the payment of non-Argentine goods and services, payment of principal and interest on non-Argentine debt and also payment of dividends to parties outside of the country), which approval process could delay, and eventually restrict, the ability to exchange Argentine pesos for other currencies, such as U.S. dollars. Those approvals are administered by the Argentine Central Bank through the Mercado Unico y Libre de Cambio, which is the only market where exchange transactions may be lawfully made. Further, restrictions also currently apply to the acquisition of any foreign currency for holding as cash within Argentina. There can be no assurance that the Central Bank of Argentina or other government agencies will not increase such controls or restrictions or make modifications to these regulations or establish more severe restrictions on currency exchange, making payments to foreign creditors or providers, dividend payments to foreign shareholders or require its prior authorization for such purposes. As a result, these exchange controls and restrictions could materially affect the business, financial condition and results of operations of our Argentine subsidiaries and could significantly impact our ability to comply with our foreign currency obligations, each of which could have a material adverse effect on our financial condition and results of operation.

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Our information systems are critical to our business and a failure of those systems could materially harm us.

        We depend on our ability to store, retrieve, process and manage a significant amount of information, and to provide our treatment centers with efficient and effective accounting and scheduling systems. Our information systems require maintenance and upgrading to meet our needs, which could significantly increase our administrative expenses. We are currently upgrading multiple systems and migrating to other systems within our organization.

        Furthermore, any system failure that causes an interruption in service or availability of our systems could adversely affect operations or delay the collection of revenues. Even though we have implemented network security measures, our servers are vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering. The occurrence of any of these events could result in interruptions, delays, the loss or corruption of data, or cessations in the availability of systems, all of which could have a material adverse effect on our financial position and results of operations and harm our business reputation.

        The performance of our information technology and systems is critical to our business operations. Our information systems are essential to a number of critical areas of our operations, including:

    accounting and financial reporting;

    billing and collecting accounts;

    coding and compliance;

    clinical systems;

    medical records and document storage;

    inventory management;

    negotiating, pricing and administering managed care contracts and supply contracts; and

    monitoring quality of care and collecting data on quality measures necessary for full Medicare payment updates.

        Any failure of our information technology and systems could disrupt these operations, which could lead to a material adverse effect on our financial position and results of operations.

If we fail to effectively and timely implement electronic health record systems, our operations could be adversely affected.

        As required by the American Recovery and Reinvestment Act of 2009, the DHHS has developed and is implementing an incentive payment program for eligible healthcare professionals that adopt and meaningfully use certified electronic health record ("EHR") technology. If our future treatment centers are unable to meet the requirements for participation in the incentive payment program, we will not be eligible to receive incentive payments that could offset some of the costs of implementing EHR systems. Further, beginning in 2015, eligible healthcare professionals that fail to demonstrate meaningful use of certified EHR technology will be subject to reduced payments from Medicare. While we have qualified at our existing facilities, failure to implement EHR systems effectively and in a timely manner at our recently acquired facilities or any future facilities would impact our eligibility to participate in these incentive programs and could have a material adverse effect on our financial position and results of operations.

Our financial results may suffer if we have to write-off goodwill or other intangible assets.

        A significant portion of our total assets consist of goodwill and other intangible assets. Goodwill and other intangible assets, net of accumulated amortization, accounted for approximately 55.2% and 56.4% of the total assets on our balance sheet as of September 30, 2013 and December 31, 2012, respectively. We

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may not realize the value of our goodwill or other intangible assets. We expect to engage in additional transactions that will result in our recognition of additional goodwill or other intangible assets. We evaluate on a regular basis whether events and circumstances have occurred that indicate that all or a portion of the carrying amount of goodwill or other intangible assets may no longer be recoverable, and is therefore impaired. Under current accounting rules, any determination that impairment has occurred would require us to write-off the impaired portion of our goodwill or the unamortized portion of our intangible assets, resulting in a charge to our earnings. We have written off significant amounts of goodwill and intangible assets in the past, and any future write-off could have a material adverse effect on our financial condition and results of operations. For the year ended December 31, 2010, we wrote-off approximately $91.2 million in goodwill as a result of our annual impairment test and an additional $2.5 million as a result of closing certain radiation treatment centers. For the year ended December 31, 2011, we wrote-off approximately $360.6 million in goodwill, trade name, leasehold improvements and other investments as a result of our annual impairment testing of our goodwill and indefinite-lived intangible assets and branding initiatives relating to our trade name. For the year ended December 31, 2012, we wrote-off approximately $81.0 million in goodwill and leasehold improvements as a result of our interim impairment testing of our goodwill and indefinite-lived intangible assets.

We are addressing a previous material weakness with respect to our internal controls.

        In connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2012, we identified a material weakness in internal controls relating to the valuation of goodwill. We have taken steps since then to remediate the internal control weakness, including a review of the underlying assumptions and inputs to the valuation specialists, as well as a review of the underlying schedules related to the output of the calculation of the impairment values. As we further optimize and refine our goodwill valuation processes, we will review the related controls and may take additional steps to ensure that they remain effective and are integrated appropriately. While we have implemented the procedures described above and will continue to take steps in the near future to strengthen further our internal controls, there can be no assurance that we will not identify control deficiencies in the future or that such deficiencies will not have a material impact on our operating results or financial statements.

A significant number of our treatment centers are concentrated in certain states, particularly Florida, which makes us sensitive to regulatory, economic and other conditions in those states.

        Our Florida treatment centers accounted for approximately 45%, 40% and 39% of our freestanding radiation revenues during the years ended December 31 2010, 2011 and 2012, respectively. Our treatment centers are also concentrated in the states of Michigan and North Carolina, which accounted for approximately 5% and 8%, respectively, of our freestanding radiation revenues for the year ended December 31, 2012. This concentration makes us particularly sensitive to regulatory requirements in those locations, including those related to false and improper claims, anti-kickback laws, self-referral laws, fee-splitting, corporate practice of medicine, antitrust, licensing and certificates of need, as well as economic and other conditions which could impact us. If our treatment centers in these states are adversely affected by changes in regulatory, economic or other conditions, our revenue and profitability may decline.

Our operations in Florida and other areas could be disrupted or damaged by hurricanes and other natural disasters.

        Florida is susceptible to hurricanes, and as of November 1, 2013, we have 48 radiation treatment centers located in Florida. Our Florida centers accounted for approximately 45%, 40% and 39% of our freestanding radiation revenues during the years ended December 31 2010, 2011 and 2012, respectively. Our California centers are located in areas that are known to experience earthquakes from time to time, some of which have been severe. In 2005, 21 of our treatment centers in South Florida were disrupted by Hurricane Wilma which required us to close all of these centers for one business day. Although none of

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these treatment centers suffered structural damage as a result of the hurricane, their utility services were disrupted. While Hurricane Wilma did not have any long-term impact on our business, our Florida treatment centers, our California treatment centers and any of our other treatment centers located in other areas that may be affected by a hurricane, earthquake or other natural disaster could be subject to significant disruptions and/or damage in the future and could have an adverse effect on our business and financial results. We carry property damage and business interruption insurance on our facilities, but there can be no assurance that it would be adequate to cover all such losses.

We have potential conflicts of interest relating to our related party transactions which could harm our business.

        We have potential conflicts of interest relating to existing agreements we have with certain of our directors, executive officers and equityholders. In 2010, 2011 and 2012, we paid an aggregate of $19.9 million, $21.5 million and $21.6 million, respectively, under certain of our related party agreements, including leases, and we received $85.6 million, $82.7 million and $62.5 million, respectively, pursuant to our other services agreements with related parties. Potential conflicts of interest can exist if a related party has to make a decision that has different implications for us and the related party. If a dispute arises in connection with any of these agreements, if not resolved satisfactorily to us, our business could be harmed. These agreements include

    administrative services agreements with professional corporations that are owned by certain of our directors, executive officers and equityholders;

    leases we have entered into with entities owned by certain of our directors, executive officers and equityholders; and

    medical malpractice insurance which we acquire from an entity owned by certain of our directors, executive officers and equityholders.

        In California, Maryland, Massachusetts, Michigan, Nevada, New York and North Carolina, we have administrative services agreements with professional corporations that are owned by certain of our directors, executive officers and equityholders who own interests in these professional corporations. While we have stock transfer agreements corresponding to our administrative services agreements in place in all states except New York that provide us with the ability to designate qualified successor physician owners of the shares held by the physician owners of these professional corporations upon the occurrence of certain events, there can be no assurance that we will be able to enforce them under the laws of the respective states or that they will not be challenged by regulatory agencies. Such stock transfer agreements do not exist with the practices located in California, Florida and Indiana that are affiliated with OnCure. Potential conflicts of interest may arise in connection with the administrative services agreements that may have materially different implications for us and the professional corporations and there can be no assurance that it will not harm us. For example, we bill for such services either on a fixed basis, percentage of net collections basis, or on a per treatment basis, depending on the particular state requirements and certain of these arrangements are subject to renegotiation on an annual basis. We may be unable to renegotiate acceptable fees, in which event many of the administrative services agreements provide for binding arbitration. If we are unsuccessful in renegotiations or arbitration this could negatively impact our operating margins or result in the termination of our administrative services agreements.

        Additionally, we lease 37 of our treatment centers from ownership groups that consist of certain of our directors, executive officers and equityholders. Before we enter into these leases, we compare rates and terms with our standard documentation as well as rely on third-party fair market value reports for relevant markets. We may be unable to renegotiate these leases when they come up for renewal on terms acceptable to us, if at all.

        In October 2003, we replaced our existing third-party medical malpractice insurance coverage with coverage we obtained from an insurance entity which is owned by certain of our directors, executive

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officers and equityholders. After soliciting various third-party proposals for malpractice insurance coverage on an annual basis, we renewed this coverage in 2010, 2011 and 2012, with the approval of the Audit and Compliance Committee of the Company's Board of Directors. We may be unable to renegotiate this coverage at acceptable rates and comparable coverage may not be available from third-party insurance companies. If we are unsuccessful in renewing our malpractice insurance coverage, we may not be able to continue to operate without being exposed to substantial risks of claims being made against us for damage awards we are unable to pay.

        Related party transactions between us and any related party are subject to approval by the Audit and Compliance Committee on behalf of the Company's Board of Directors or by the Company's Board of Directors, and disputes are handled by the Company's Board of Directors. There can be no assurance that the above or any future conflicts of interest will be resolved in our favor. If not resolved in our favor, such conflicts could harm our business. For a further description of our related party transactions, see "Certain Relationships and Related Party Transactions."

In recent years, accreditation of facilities and the establishment of a national error reporting database have been under consideration.

        The Chairman of the American College of Radiology ("ACR") called for the required accreditation of all facilities which bill Medicare for advanced medical imaging and radiation oncology services, including those in hospitals at a congressional hearing on medical radiation. In addition, ASTRO called for the establishment of the nation's first central database for the reporting of errors involving linear accelerators and CT scanners. Federal legislation was also introduced in March 2013, which requires certain personnel furnishing medical imaging examinations or radiation therapy to obtain state licensure and certification from certain approved certification organizations, and directs HHS to establish a program for designating and publishing a list of such certification organizations.

        Of our 133 U.S. treatment centers, 96 have received or are in process of receiving ACR accreditation. In addition to a deep physics infrastructure and internal maintenance department, we have recently begun to utilize Gamma Function as a broad application radiation safety monitoring tool to minimize potential errors in our radiation therapy treatments. While we continue to improve upon safety measures aimed at minimizing errors in radiation therapy treatment in accordance with our internal protocols as well as the mandates of organizations like ACR, we cannot assure you that any further critical press and government scrutiny will not adversely affect our business and results of operations.

Our financial results could be adversely affected by claims brought against our facilities, the increasing costs of professional liability insurance and by successful malpractice claims.

        We could be subject to litigation relating to our business practices, including claims and legal actions by patients and others in the ordinary course of business alleging malpractice, product liability or other legal theories. We are also exposed to the risk of professional liability and other claims against us and our radiation oncologists and other physicians and professionals arising out of patient medical treatment at our treatment centers. Our risk exposure as it relates to our non-radiation oncology physicians could be greater than with our radiation oncologists to the extent such non-radiation oncology physicians are engaged in diagnostic activities. For a discussion of current pending material litigation against us, see "Business—Legal Proceedings." Malpractice claims, if successful, could result in substantial damage awards which might exceed the limits of any applicable insurance coverage. Insurance against losses of this type can be expensive and insurance premiums may increase in the near future. Insurance rates vary from state to state, by physician specialty and other factors. The rising costs of insurance premiums, as well as successful malpractice claims against us or one of our physicians, could have a material adverse effect on our financial position and results of operations.

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        It is also possible that our excess liability and other insurance coverage will not continue to be available at acceptable costs or on favorable terms. In addition, our insurance does not cover all potential liabilities arising from governmental fines and penalties, indemnification agreements and certain other uninsurable losses. For example, from time to time we agree to indemnify third parties, such as hospitals and clinical laboratories, for various claims that may not be covered by insurance. As a result, we may become responsible for substantial damage awards that are uninsured.

        If payment for claims exceed actuarially determined estimates or are not covered by insurance, or if reinsurers, if any, fail to meet their obligations, our results of operations and financial position could be adversely affected.

Our substantial debt could adversely affect our financial condition.

        We have $850.1 million of total debt outstanding as of September 30, 2013. Our high level of debt could have adverse effects on our business and financial condition. Specifically, our high level of debt could have important consequences, including the following:

    making it more difficult for us to satisfy our obligations with respect to our debt;

    limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

    requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes;

    increasing our vulnerability to general adverse economic and industry conditions;

    limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

    placing us at a disadvantage compared to other, less leveraged competitors; and

    increasing our cost of borrowing.

        Our ability to make scheduled payments on and to refinance our indebtedness depends on and is subject to our financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors beyond our control, including the availability of financing in the international banking and capital markets. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to service our debt, to refinance our debt or to fund our other liquidity needs. If we are unable to meet our debt obligations or to fund our other liquidity needs, we will need to restructure or refinance all or a portion of our debt, which could cause us to default on our debt obligations and impair our liquidity. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants which could further restrict our business operations.

Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage.

        We will have the right to incur substantial additional indebtedness in the future. The terms of our Term Facility and our $100 million revolving credit facility (the "Revolving Credit Facility" and together with the Term Facility, the "Credit Facilities") and the indentures governing our notes restrict, but do not in all circumstances, prohibit us from doing so. Under the instruments governing our debt, we are permitted to incur substantial additional debt. Any additional debt may be governed by indentures or other instruments containing covenants that could place restrictions on the operation of our business and the execution of our business strategy in addition to the restrictions on our business already contained in the agreements governing our existing debt. Because any decision to issue debt securities or enter into new debt facilities will depend on market conditions and other factors beyond our control, we cannot predict or

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estimate the amount, timing or nature of any future debt financings and whether we may be required to accept unfavorable terms for any such financings.

The indentures governing our notes and our Credit Facilities impose significant operating and financial restrictions on our Company and our subsidiaries, which may prevent us from capitalizing on business opportunities.

        The indentures governing our notes and our Credit Facilities impose significant operating and financial restrictions on us. These restrictions limit our ability, among other things, to:

    incur additional indebtedness or enter into sale and leaseback obligations;

    pay certain dividends or make certain distributions on our capital stock or repurchase our capital stock;

    make certain investments or other restricted payments;

    place restrictions on the ability of subsidiaries to pay dividends or make other payments to us;

    engage in transactions with equityholders or affiliates;

    sell certain assets or merge with or into other companies; and

    create liens.

        As a result of these covenants and restrictions, we will be limited in how we conduct our business and we may be unable to raise additional debt or other financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.

As an "emerging growth company" under the JOBS Act we are eligible to take advantage of certain exemptions from various reporting requirements.

        We are an "emerging growth company," as defined in the JOBS Act, and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act ("Section 404"), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If we take advantage of any of these exemptions, we do not know if some investors will find our securities less attractive as a result. The result may be a less active trading market for our securities and our security prices may be more volatile. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

        We could remain an "emerging growth company" for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by nonaffiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three year period.

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Pursuant to the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 for so long as we are an "emerging growth company."

        Section 404 requires annual management assessments of the effectiveness of our internal control over financial reporting, starting with the second annual report that we file with the SEC as a public company, and generally requires in the same report a report by our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. However, under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an "emerging growth company."

Risks Related to this Offering and Ownership of Our Common Stock

If we are a "controlled company" within the meaning of the corporate governance rules of                        upon completion of this offering, we will qualify for exemptions from certain corporate governance requirements.

        Upon completion of this offering, Vestar, through its interest in RTI, may continue to control a majority of the voting power of our outstanding common stock. Vestar has a voting majority of all outstanding voting units of RTI. If RTI owns a majority of our shares of outstanding common stock upon completion of this offering, Vestar will control a majority of the voting power of our outstanding common stock and, as a result, we will be a "controlled company" within the meaning of the applicable stock exchange corporate governance standards. Under the rules of the                                    , a company of which more than 50% of the outstanding voting power is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain stock exchange corporate governance requirements, including:

    the requirement that a majority of the Board of Directors consists of independent directors;

    the requirement that nominating and corporate governance matters be decided solely by independent directors; and

    the requirement that employee and officer compensation matters be decided solely by independent directors.

        If we were to qualify as a "controlled company" following this offering, we may choose to rely on these exemptions. As a result, we may not have a majority of independent directors and our nominating and corporate governance and compensation functions may not be decided solely by independent directors. If we choose to rely on exemptions from certain corporate governance requirements, you will not have the same protections afforded to stockholders of companies that are subject to all of the stock exchange corporate governance requirements.

An active trading market for our common stock may not develop.

        Prior to this offering, there has been no public market for our common stock or the common stock of our subsidiaries. The initial public offering price for our common stock will be determined through negotiations between us and the underwriters, and market conditions, and may not be indicative of the market price of our common stock after this offering. If you purchase shares of our common stock, you may not be able to resell those shares at or above the initial public offering price. We cannot predict the extent to which investor interest in the Company will lead to the development of an active trading market on                                    or how liquid that market might become. An active public market for our common stock may not develop or be sustained after the offering. If an active public market does not develop or is not sustained, it may be difficult for you to sell your shares of common stock at a price that is attractive to you, or at all.

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Our stock price may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.

        After this offering, the market price for our common stock is likely to be volatile, in part because our shares have not been traded publicly. In addition, the market price of our common stock may fluctuate significantly in response to a number of factors, many of which we cannot control, including those described under "—Risks Related to Our Business" and the following:

    changes in financial estimates by any securities analysts who follow our common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common stock;

    downgrades by any securities analysts who follow our common stock;

    future sales of our common stock by our officers, directors and significant stockholders;

    market conditions or trends in our industry or the economy as a whole and, in particular, in the healthcare environment;

    investors' perceptions of our prospects;

    announcements by us of significant contracts, acquisitions, joint ventures or capital commitments; and

    changes in key personnel.

        In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies, including companies in the healthcare industry. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were involved in securities litigation, we could incur substantial costs, and our resources and the attention of management could be diverted from our business.

Our equity sponsor may have the ability to control significant corporate activities after the completion of this offering and our equity sponsor's interests may not coincide with yours.

        After the consummation of this offering, Vestar will beneficially own in the aggregate, approximately        % of the voting interest in RTI. As a result of its ownership, Vestar, so long as RTI holds a majority of our outstanding shares, will have the ability to control the outcome of matters submitted to a vote of stockholders and, through our Board of Directors, the ability to control decision-making with respect to our business direction and policies. In addition, under the new stockholder's agreement that we intend to enter into with RTI prior to the completion of this offering, RTI will have the right to nominate directors for election to our board of directors, and we will agree to support those nominees. Under certain circumstances, those nominees could constitute a majority of our board of directors even though RTI at the time owns less than a majority of our common stock, giving Vestar decision-making control over us. Upon completion of this offering, if RTI holds a majority of our outstanding shares, matters over which Vestar, through its control of RTI, will, directly or indirectly, exercise control include:

    the election of our Board of Directors and the appointment and removal of our officers;

    mergers and other business combination transactions, including proposed transactions that would result in our stockholders receiving a premium price for their shares;

    other material acquisitions or dispositions of businesses or assets;

    incurrence of indebtedness and the issuance of equity securities;

    repurchase of stock and payment of dividends; and

    the issuance of shares to management under our equity incentive plans.

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        Even if RTI's ownership of our shares is, or falls, below a majority, Vestar may continue to be able to strongly influence or effectively control our decisions. Under our amended and restated certificate of incorporation, Vestar and its affiliates will not have any obligation to present to us, and Vestar may separately pursue, corporate opportunities of which they become aware, even if those opportunities are ones that we would have pursued if granted the opportunity. See "Description of Capital Stock—Corporate Opportunity."

Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.

        Sales of substantial amounts of our common stock in the public market after this offering, or the perception that these sales could occur, could adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional shares. Upon completion of this offering, we will have                 shares of common stock outstanding. The shares of common stock offered in this offering will be freely tradable without restriction under the Securities Act, except for any shares of our common stock that may be held or acquired by our directors, executive officers and other affiliates, as that term is defined in the Securities Act, which will be restricted securities under the Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available.

        We, each of our officers and directors and Vestar, through its control of RTI, and certain other securityholders have agreed, subject to certain exceptions, with the underwriters not to dispose of or hedge any of the shares of common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date that is 180 days after the date of this prospectus (subject to extension in certain circumstances), except, in our case, for the issuance of common stock upon exercise of options under our existing management incentive plan.                    may, in its sole discretion, release any of these shares from these restrictions at any time without notice. See "Underwriting."

        All of our shares of common stock outstanding as of the date of this prospectus may be sold in the public market by existing stockholders 180 days after the date of this prospectus (subject to extension in certain circumstances), subject to certain restrictions on transfer under our stockholder's agreement (the "Stockholder's Agreement"), among us and our stockholders, including funds associated with Vestar, and applicable volume and other limitations imposed under federal securities laws. See "Certain Relationships and Related Party Transactions—Stockholder's Agreement." In addition, see "Shares Eligible for Future Sale" for a more detailed description of the restrictions on selling shares of our common stock after this offering.

        After this offering, subject to any lock-up restrictions described above with respect to certain holders, holders of approximately                    shares of our common stock will have the right to require us to register the sales of their shares under the Securities Act, under the terms of an agreement between us and the holders of these securities. See "Shares Eligible for Future Sale—Registration Rights" for a more detailed description of these rights.

        In the future, we may also issue our securities in connection with acquisitions or investments. The amount of shares of our common stock issued in connection with an acquisition or investment could constitute a material portion of our then-outstanding shares of our common stock.

As a public company, we will be subject to additional financial and other reporting and corporate governance requirements that may be difficult for us to satisfy and may divert management's attention from our business.

        We will be subject to other reporting and corporate governance requirements, including the applicable stock exchange listing standards and certain provisions of the Sarbanes-Oxley Act and the regulations

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promulgated thereunder, which impose significant compliance obligations upon us. Specifically, we will be required to:

    prepare and distribute periodic reports and other stockholder communications in compliance with our obligations under the federal securities laws and applicable stock exchange rules;

    create or expand the roles and duties of our Board of Directors and committees of the Board of Directors;

    institute compliance and internal audit functions that are more comprehensive;

    evaluate and maintain our system of internal control over financial reporting, and report on management's assessment thereof, in compliance with the requirements of Section 404 and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board;

    enhance our investor relations function;

    maintain internal policies, including those relating to disclosure controls and procedures; and

    involve and retain outside legal counsel and accountants in connection with the activities listed above.

        As a public company, we will be required to commit significant resources and management time and attention to the above-listed requirements, which will cause us to incur significant costs and which may place a strain on our systems and resources. As a result, our management's attention might be diverted from other business concerns. In addition, we might not be successful in implementing these requirements. Compliance with these requirements will place significant demands on our legal, accounting and finance staff and on our accounting, financial and information systems and will increase our legal and accounting compliance costs as well as our compensation expense as we may be required to hire additional accounting, tax, finance and legal staff with the requisite technical knowledge.

        In addition, the Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures, significant resources and management oversight will be required. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. We expect to incur certain additional annual expenses related to these activities and, among other things, additional directors' and officers' liability insurance, director fees, reporting requirements, transfer agent fees, hiring additional accounting, legal and administrative personnel, increased auditing and legal fees and similar expenses.

Failure to comply with requirements to design, implement and maintain effective internal controls could have a material adverse effect on our business and stock price.

        As a public company, we will have significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements and harm our operating results. In addition, we will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the first fiscal year beginning after the effective date of this offering. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. However, as long as we are an "emerging growth company," our independent registered public accounting firm will not be required to attest to the effectiveness of our

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internal control over financial reporting pursuant to Section 404. Testing and maintaining internal controls may divert our management's attention from other matters that are important to our business. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 or our independent registered public accounting firm may not issue an unqualified opinion. If either we are unable to conclude that we have effective internal control over financial reporting or our independent registered public accounting firm is unable to provide us with an unqualified report, investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our stock.

Anti-takeover provisions in our charter documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.

        Our amended and restated certificate of incorporation and amended and restated bylaws will contain provisions that may make the acquisition of the Company more difficult without the approval of our Board of Directors. These provisions:

    authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock;

    prohibit stockholder action by written consent, requiring all stockholder actions be taken at a meeting of our stockholders;

    provide that the Board of Directors is expressly authorized to make, alter or repeal our amended and restated bylaws;

    establish advance notice requirements for nominations for elections to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings;

    establish a classified Board of Directors, as a result of which our Board of Directors will be divided into three classes, with each class serving for staggered three-year terms, which prevents stockholders from electing an entirely new Board of Directors at an annual meeting;

    limit the ability of stockholders to remove directors if Vestar ceases to own more than 40% of our voting common stock;

    prohibit stockholders, other than Vestar for so long as it beneficially owns at least 40% of our common stock, from calling special meetings of stockholders; and

    require the approval of holders of at least 75% of the outstanding shares of our voting common stock to amend our amended and restated certificate of incorporation and for shareholders to amend our amended and restated bylaws, in each case if Vestar ceases to own more than 40% of our common stock.

        These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of the Company, even if doing so would benefit our stockholders. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire. For a further discussion of these and other such anti-takeover provisions, see "Description of Capital Stock—Anti-takeover Effects of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws."

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Our amended and restated certificate of incorporation upon consummation of this offering will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

        Our amended and restated certificate of incorporation upon consummation of this offering will provide that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the General Corporation Law of the State of Delaware (the "DGCL"), our certificate of incorporation or our by-laws or (iv) any other action asserting a claim against us that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our certificate of incorporation described above. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

If you purchase shares of common stock sold in this offering, you will incur immediate and substantial dilution.

        If you purchase shares of common stock in this offering, you will incur immediate and substantial dilution in the amount of $            per share because the initial public offering price of $            is substantially higher than the pro forma net tangible book value per share of our outstanding common stock. Dilution results from the fact that the initial public offering price per share of the common stock is substantially in excess of the book value per share of common stock attributable to the existing stockholders for the presently outstanding shares of common stock. In addition, you may also experience additional dilution upon future equity issuances or the exercise of stock options to purchase common stock granted to our employees and directors under our management incentive plan. See "Dilution."

We will have broad discretion in how we use the proceeds of this offering and we may not use these proceeds effectively. This could affect our results of operations and cause the price of our common stock to decline.

        Our management team will have considerable discretion in the application of the net proceeds of this offering, and you will not have the opportunity, as part of your investment decision, to assess whether we are using the proceeds appropriately. We intend to use the net proceeds from the sale of common stock by us in this offering to repay outstanding amounts under our Term Facility, repay certain of our other outstanding indebtedness, pay related fees and expenses and for general corporate purposes. We may use the net proceeds for corporate purposes that do not improve our results of operations or which cause our stock price to decline.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

        The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We may not obtain research coverage of our common stock by securities and industry analysts. If no securities or industry analysts commence coverage of our common stock, the trading price for our common stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our common stock or publishes inaccurate or unfavorable research about our business, our

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stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which could cause our stock price and trading volume to decline.

Provisions of our amended and restated certificate of incorporation could have the effect of preventing the Company from having the benefit of certain business opportunities that it may otherwise be entitled to pursue.

        Our amended and restated certificate of incorporation will provide that Vestar and its affiliates are not required to offer corporate opportunities of which they become aware to us and could, therefore, offer such opportunities instead to other companies including affiliates of Vestar. In the event that Vestar obtains business opportunities from which we might otherwise benefit but chooses not to present such opportunities to us, these provisions of our amended and restated certificate of incorporation could have the effect of preventing us from pursuing transactions or relationships that would otherwise be in the best interests of our stockholders. See "Description of Capital Stock—Corporate Opportunity."

Because we do not intend to pay cash dividends in the foreseeable future, you may not receive any return on investment unless you are able to sell your common stock for a price greater than your purchase price.

        The continued operation and expansion of our business will require substantial funding. Accordingly, we do not anticipate that we will pay any cash dividends on shares of our common stock for the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, contractual restrictions, including those under our Credit Facilities and the indentures governing our notes, any potential indebtedness we may incur, restrictions imposed by applicable law and other factors our Board of Directors deems relevant. Accordingly, if you purchase shares in this offering, realization of a gain on your investment will depend on the appreciation of the price of our common stock, which may never occur. Investors seeking cash dividends in the foreseeable future should not purchase our common stock.

We are a holding company and rely on dividends, distributions and other payments, advances and transfers of funds from our subsidiaries to meet our obligations.

        We are a holding company that does not conduct any business operations of our own. As a result, we are largely dependent upon cash dividends and distributions and other transfers from our subsidiaries to meet our obligations. The deterioration of income from, or other available assets of, our subsidiaries for any reason could limit or impair their ability to pay dividends or other distributions to us.

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FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this prospectus are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "aim," "anticipate," "believe," "estimate," "expect," "forecast," "outlook," "potential," "project," "projection," "plan," "intend," "seek," "believe," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected earnings, revenues, costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth or initiatives, strategies, or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:

    coverage and reimbursement policies of governmental and third-party payers, including Medicare and Medicaid;

    reforms to the U.S. healthcare system;

    general economic conditions;

    a decrease in payments by managed care organizations and other commercial payers;

    competitive factors, such as the recruitment and retention of radiation oncologist and other qualified healthcare professionals and personnel, including senior management;

    changes in medical treatment guidelines or recommendations;

    an increase in competition within the markets in which we compete;

    difficulty in developing or acquiring, operating, and integrating additional treatment centers;

    the impact of current and future laws, including referral and fee-splitting legislation;

    our substantial level of indebtedness and related debt-service obligations;

    availability of adequate financing; and

    existence of adverse litigation and risks.

        While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this prospectus. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.

        We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. The forward-looking statements included in this prospectus are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.

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USE OF PROCEEDS

        We estimate that the proceeds to us from this offering, after deducting estimated underwriting discounts and commissions and offering expenses payable by us, will be approximately $             million, assuming the shares offered by us are sold for $            per share, the midpoint of the price range set forth on the cover of this prospectus.

        We intend to use the net proceeds from the sale of common stock by us in this offering to repay all outstanding amounts under our $90 million term loan facility, repay certain of our other outstanding indebtedness, pay related fees and expenses and for general corporate purposes. For a further description of our indebtedness, see "Description of Certain Indebtedness."

        A $1.00 increase or decrease in the assumed initial public offering price of $            per share would increase or decrease the net proceeds we receive from this offering by approximately $             million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same. Similarly, each increase or decrease of one million shares in the number of shares of common stock offered by us would increase or decrease the net proceeds we receive from this offering by approximately $             million, assuming the assumed initial public offering price remains the same.

        Pending use of the net proceeds from this offering as described above, we may invest the net proceeds in short- and intermediate-term interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.

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DIVIDEND POLICY

        We currently intend to retain all available funds and any future earnings to fund the development and growth of our business, and therefore we do not anticipate paying any cash dividends in the foreseeable future. Additionally, our ability to pay dividends on our common stock will be limited by restrictions on the ability of our subsidiaries and us to pay dividends or make distributions under the terms of current and any future agreements governing our indebtedness. Any future determination to pay dividends will be at the discretion of our Board of Directors, subject to compliance with covenants in our current and future agreements governing our indebtedness, and will depend upon our results of operations, financial condition, capital requirements and other factors that our Board of Directors deems relevant.

        In addition, since we are a holding company, substantially all of the assets shown on our consolidated balance sheet are held by our subsidiaries. Accordingly, our earnings, cash flow and ability to pay dividends are largely dependent upon the earnings and cash flows of our subsidiaries and the distribution or other payment of such earnings to us in the form of dividends.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and our capitalization as of September 30, 2013 on:

    an actual basis; and

    an "as adjusted" basis to give effect to the following:

    i.
    the                -for-                stock split to take place immediately prior to this offering;

    ii.
    the transactions described in "Unaudited Pro Forma Condensed Consolidated Combined Financial Information" and the sale of                shares of our common stock in this offering by us at an assumed initial public offering price of $                per share, the midpoint of the price range set forth on the cover of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us and the application of the net proceeds herefrom as described under "Use of Proceeds."

        You should read the following table in conjunction with the sections entitled "Use of Proceeds," "Selected Historical Consolidated Financial and Other Data," "Unaudited Pro Forma Condensed Consolidated Combined Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

 
  September 30, 2013  
 
  Actual   As Adjusted(1)  
 
  (in millions)
 

Cash and cash equivalents

  $ 32.5   $             
           

Debt:

             

Revolving Credit Facility

           

Term Facility

    87.8        

Senior Secured Second Lien Notes due 2017

    348.8        

Senior Subordinated Notes due 2017

    377.5        

Capital leases

    29.2        

Other notes payable and seller financing notes

    6.8        
           

Total debt

  $ 850.1 (2) $             

Stockholders' Equity:

             

Common Stock, $0.01 par value, 1,025 authorized, issued and outstanding

           

Common stock, $0.0001 par value,             authorized;            shares issued and outstanding, on an as adjusted basis

           

Additional paid-in-capital

    650.7        

Accumulated deficit

    (703.3 )      

Accumulated other comprehensive loss

    (20.4 )               
           

Total 21st Century Oncology Holdings, Inc. stockholders' (deficit) equity

    (73.0 )               
           

Total capitalization

  $ 777.1   $             
           

(1)
A $1.00 increase or decrease in the assumed initial public offering price of $            per share, the midpoint of the range set forth on the cover of this prospectus, would increase or decrease the amount of cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization by approximately $             million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease

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    of one million shares in the number of shares of common stock offered by us would increase or decrease the amount of cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization by approximately $             million, assuming the assumed initial public offering price remains the same.

(2)
Does not include $82.5 million aggregate principal amount of 113/4% Senior Secured Notes due 2017 of our subsidiary, OnCure, which was acquired by us on October 25, 2013, of which $7.5 million aggregate principal amount is being held in escrow pending satisfaction of certain conditions. Does not include term loans of $60 million and $7.9 million aggregate principal amount outstanding under the SFRO Credit Agreement, entered into on February 10, 2014.

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DILUTION

        If you invest in our common stock, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share of our common stock and the net tangible book value per share of our common stock after this offering. Dilution results from the fact that the initial public offering price per share of the common stock is substantially in excess of the book value per share of common stock attributable to the existing stockholders for the presently outstanding shares of common stock.

        Our net tangible book deficit as of            was $             million, or $            per share of common stock (after giving effect to this offering and the             -for-            stock split to take place immediately prior to this offering). Net tangible book value per share represents the amount of our total tangible assets (which for the purpose of this calculation excludes capitalized debt issuance costs) less total liabilities, divided by the basic weighted average number of shares of common stock outstanding.

        After giving effect to the sale of the            shares of common stock offered by us in this offering at an assumed initial public offering price of $            , which is the midpoint of the price range set forth on the cover of this prospectus, less estimated underwriting discounts and commissions and estimated offering expenses, our pro forma net tangible book value (deficit) as of            would have been approximately $             million, or $            per share of common stock (after giving effect to the            -for-             stock split to take place immediately prior to this offering). This represents an immediate increase in net tangible book value to our existing stockholders of $            per share and an immediate dilution to new investors in this offering of $            per share. The following table illustrates this pro forma per share dilution in net tangible book value to new investors.

Assumed initial public offering price per share

  $               $            

Pro forma net tangible book value (deficit) per share as of            

                             

Increase per share attributable to new investors

       

Pro forma net tangible book value per share after this offering

       
         

Dilution per share to new investors

      $            
         

        A $1.00 increase or decrease in the assumed initial public offering price of $            per share, the mid-point of the price range set forth on the cover of this prospectus, would increase or decrease net tangible book value by $             million, or $            per share, and would increase or decrease the dilution per share to new investors by $            based on the assumptions set forth above.

        The following table summarizes as of            , on an as adjusted basis, the number of shares of common stock purchased, the total consideration paid and the average price per share paid by the equity grant recipients and by new investors, based upon an assumed initial public offering price of $            per share (the mid-point of the initial public offering price range) and before deducting estimated underwriting discounts and commissions and offering expenses:

 
   
   
  Total
Consideration
   
 
  Shares Purchased    
 
  Average Price
Per Share
 
  Number   Percent   Amount   Percent

Existing stockholders

          % $       % $

New investors

                       
                     

Total

        100 % $     100 %  
                     

        Except as otherwise indicated, the discussion and tables above assume no exercise of the underwriters' option to purchase additional shares and no exercise of any outstanding options. If the underwriters' option to purchase additional shares is exercised in full, our existing stockholders would own

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approximately        % and our new investors would own approximately        % of the total number of shares of our common stock outstanding after this offering. If the underwriters exercise their option to purchase additional shares in full, the pro forma net tangible book value per share after this offering would be $            per share, and the dilution in the pro forma net tangible book value per share to new investors in this offering would be $            per share.

        The tables and calculations above are based on            shares of common stock outstanding as of            and assume no exercise by the underwriters of their option to purchase up to an additional            shares from us. This number excludes, as of            , an aggregate of            shares of common stock reserved for issuance under our equity incentive plan that we intend to adopt in connection with this offering.

        To the extent that any outstanding options are exercised, new investors will experience further dilution. As of            ,             shares of common stock were issuable upon the exercise of outstanding options at a weighted-average exercise price of $            per share. If all of our outstanding options had been exercised as of            , our pro forma net tangible book value as of            would have been approximately $             million or $            per share of our common stock, and the pro forma net tangible book value after giving effect to this offering would have been $            per share, representing dilution in our pro forma net tangible book value per share to new investors of $            .

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

        The following selected historical consolidated financial data as of December 31, 2008 (Successor), 2009 (Successor), and 2010 and for the period from January 1 to February 21, 2008 (Predecessor), the period from February 22 to December 31, 2008 (Successor) and the year ended December 31, 2009 (Successor) were derived from our audited consolidated financial statements, which are not included in this prospectus. The consolidated financial data as of December 31, 2011 and 2012 and for the years ended December 31, 2010, 2011 and 2012 were derived from our audited consolidated financial statements, included elsewhere in this prospectus. As a result of the purchase accounting treatment applied in the Merger, our audited consolidated financial statements include the consolidated accounts of the Successor as of December 31, 2008, 2009, 2010, 2011 and 2012 and the years ended December 31, 2009, 2010, 2011, 2012 and the period from February 22, 2008 to December 31, 2008. For the period prior to February 22, 2008, our audited consolidated financial statements are of the Predecessor. These statements have been prepared using the Predecessor's basis in the assets and liabilities and the historical results of operations for periods prior to the Merger. Periods subsequent to February 22, 2008 have been prepared using our basis in the assets and liabilities acquired in the purchase transaction. The consolidated financial and other data as of and for the nine months ended September 30, 2012 and 2013 have been derived from our historical unaudited condensed consolidated financial statements, which are included elsewhere in this prospectus. Operating results for the nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2013. All adjustments necessary for a fair presentation have been included. All such adjustments are considered to be of a normal recurring nature.

        Our historical results included below and elsewhere in this prospectus are not necessarily indicative of our future performance. You should read the following data in conjunction with "Capitalization," "Unaudited Pro Forma Condensed Consolidated Combined Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited historical

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consolidated financial statements and the accompanying notes, included elsewhere in this prospectus, and other financial information included in this prospectus.

 
  Predecessor    
  Successor    
 
  Period From
January 1 to
February 21,
2008
   
  Period From
February 22 to
December 31,
2008
   
   
   
   
  Nine Months
Ended
September 30,
2012
  Nine Months
Ended
September 30,
2013
 
 
   
  Year Ended
December 31,
2009
  Year Ended
December 31,
2010
  Year Ended
December 31,
2011
  Year Ended
December 31,
2012
 
 
   
   
  (in thousands, except share and per share data)
 

Consolidated Statements of Operations Data:

                                                     

Revenues:

                                                     

Net patient service revenue

  $ 76,927       $ 413,305   $ 517,646   $ 535,913   $ 638,690   $ 686,216   $ 519,432   $ 526,475  

Other revenue

    1,179         5,864     6,838     8,050     6,027     7,735     5,783     6,651  
                                       

Total revenues

    78,106         419,169     524,484     543,963     644,717     693,951     525,215     533,126  

Expenses:

                                                     

Salaries and benefits

    42,209         206,159     259,532     282,302     326,782     372,656     276,199     293,972  

Medical supplies

    2,924         32,545     45,361     43,027     51,838     61,589     47,785     46,166  

Facility rent expense

    2,269         13,783     22,106     27,885     33,375     39,802     29,634     32,285  

Other operating expenses

    3,102         17,027     24,398     27,103     33,992     38,988     28,663     33,155  

General and administrative expenses

    20,340         43,393     54,537     65,798     81,688     82,236     60,059     68,832  

Depreciation and amortization

    5,347         32,609     46,416     46,346     54,084     64,893     48,140     46,550  

Provision for doubtful accounts

    3,789         17,896     12,871     8,831     16,117     16,916     15,286     8,857  

Interest expense, net

    4,721         55,100     62,502     58,505     60,656     77,494     57,182     62,369  

Electronic health records incentive income

                            (2,256 )        

Fair value adjustment of earn-out liability and noncontrolling interests-redeemable

                            1,219     1,261      

Gain on sale of interest in a radiation practice

            (3,113 )                        

Loss on sale of assets of a radiation treatment center                        

                    1,903                  

Termination of professional services agreement

            7,000                          

Loss on sale of real estate

            1,036                          

Loss on investments

                        250              

Gain on fair value adjustment of previously held equity investment

                        (234 )            

Gain on the sale of an interest in a joint venture

                                    (1,460 )

Loss on foreign currency transactions

                        106     339     234     1,166  

Loss on foreign currency derivative contracts

                        672     1,165     1,006     309  

Early extinguishment of debt

    3,688                 10,947         4,473     4,473      

Impairment loss

                3,474     97,916     360,639     81,021     69,946      
                                       

Total expenses

    88,389         423,435     531,197     670,563     1,019,965     840,535     639,868     592,201  

Loss before income taxes

    (10,283 )       (4,266 )   (6,713 )   (126,600 )   (375,248 )   (146,584 )   (114,653 )   (59,075 )

Income tax expense (benefit)

    570         (1,413 )   1,002     (12,810 )   (25,365 )   4,545     3,254     4,849  
                                       

Net loss

    (10,853 )       (2,853 )   (7,715 )   (113,790 )   (349,883 )   (151,129 )   (117,907 )   (63,924 )

Net income attributable to non-controlling interests

    (19 )       (2,483 )   (1,835 )   (1,698 )   (3,558 )   (3,079 )   (3,231 )   (1,365 )
                                       

Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder

  $ (10,872 )     $ (5,336 ) $ (9,550 ) $ (115,488 ) $ (353,441 ) $ (154,208 ) $ (121,138 ) $ (65,289 )
                                       

Net loss per common share:

                                                     

Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder—basic

  $ (0.46 )     $ (5,336.00 ) $ (9,550.00 ) $ (115,488.00 ) $ (346,171.40 ) $ (150,446.83 ) $ (118,183.41 ) $ (63,696.59 )
                                       

Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder—diluted

  $ (0.45 )     $ (5,336.00 ) $ (9,550.00 ) $ (115,488.00 ) $ (346,171.40 ) $ (150,446.83 ) $ (118,183.41 ) $ (63,696.59 )
                                       

Weighted average shares outstanding:

                                                     

Basic

    23,537         1,000     1,000     1,000     1,021     1,025     1,025     1,025  
                                       

Diluted

    24,199         1,000     1,000     1,000     1,021     1,025     1,025     1,025  
                                       

 

 
  Successor  
 
  As of
December 31,
2008
  As of
December 31,
2009
  As of
December 31,
2010
  As of
December 31,
2011
  As of
December 31,
2012
  As of
September 30,
2013
 
 
  (in thousands)
 

Balance Sheet Data (at end of period):

                                     

Cash and cash equivalents

  $ 49,168   $ 32,958   $ 13,977   $ 10,177   $ 15,410   $ 32,469  

Working capital(1)

    93,935     49,970     19,076     19,929     24,262     34,361  

Total assets

    1,405,940     1,379,225     1,236,330     998,592     922,301     968,563  

Finance obligations

    60,605     77,230     8,568     14,266     17,192     22,387  

Total debt

    577,444     549,059     598,831     679,033     762,368     850,143  

Total (deficit) equity

    629,171     622,007     508,208     177,294     18,467     (59,749 )

(1)
Working capital is calculated as current assets minus current liabilities.

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL INFORMATION

        On October 25, 2013, we completed the acquisition of OnCure. The accompanying unaudited pro forma condensed consolidated combined balance sheet as of September 30, 2013 presents our historical financial position combined with OnCure as if the acquisition and the financing for the acquisition had occurred on September 30, 2013. The accompanying unaudited pro forma condensed consolidated combined statements of operations for the nine months ended September 30, 2013 and the year ended December 31, 2012 present the combined results of our operations with OnCure as if the acquisition and the financing for the acquisition had occurred on January 1, 2012. The historical unaudited pro forma condensed consolidated financial information includes adjustments that are directly attributable to the acquisition, factually supportable and with respect to the statement of operations are expected to have a continuing effect on our combined results. The unaudited pro forma condensed consolidated combined financial information does not reflect the costs of any integration activities or benefits that may result from realization of future cost savings from operating efficiencies, or any revenue, tax, or other synergies that may result from the acquisition. As contemplated in the OnCure transaction, we did not acquire the rights to certain management service agreements included in OnCure's historical financial results. Accordingly we have excluded revenues and costs specifically identifiable with these management service agreements from the unaudited pro forma condensed consolidated combined financial information as noted in the pro forma adjustments below. The unaudited pro forma condensed consolidated combined financial information and related notes are being provided for illustrative purposes only and are not necessarily indicative of what our financial position or results of operations actually would have been had we completed the acquisition at the dates indicated nor are they necessarily indicative of the combined company's future financial position or operating results of the combined company.

        The accompanying unaudited pro forma condensed consolidated combined financial information and related notes should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2012 and our unaudited condensed consolidated financial statements as of and for the nine months ended September 30, 2013 and OnCure's audited consolidated financial statements as of and for the year ended December 31, 2012 and OnCure's unaudited consolidated financial statements as of and for the nine months ended September 30, 2013.

        We prepared the unaudited pro forma condensed consolidated combined financial information pursuant to Regulation S-X Article 11. Accordingly, our cost to acquire OnCure of approximately $125.0 million has been allocated to the assets acquired and liabilities assumed according to their estimated fair values at the date of acquisition. Any excess of the purchase price over the estimated fair value of the net assets acquired has been recorded as goodwill. The preliminary estimates of fair values are reflected in the accompanying unaudited pro forma condensed consolidated combined financial information. The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date. The final valuation will be based on the actual fair values of assets acquired and liabilities assumed at the acquisition date. Although the final determination may result in asset and liability fair values that are different than the preliminary estimates of these amounts included herein, it is not expected that those differences will be material to an understanding of the impact of this transaction to our financial results.

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Unaudited Pro Forma Condensed Combined Balance Sheet
September 30, 2013
(dollars in thousands)

 
  21CH   OnCure   Reclass
Adjustments
(A)
  Pro Forma
Adjustments
   
  Pro Forma
Combined
 

Current Assets:

                                   

Cash and cash equivalents

  $ 32,469   $ 16,237   $   $ (40,500 ) (a)   $ 8,206  

Restricted cash

    5,002                     5,002  

Accounts receivable, net

    97,337     15,275                 112,612  

Prepaid expenses

    7,898     3,537     (195 )           11,240  

Inventories

    4,647         195             4,842  

Deferred income taxes

    981     982                 1,963  

Other current assets

    8,445     143                 8,588  
                           

Total current assets

    156,779     36,174         (40,500 )       152,453  

Equity investments in joint ventures

    684         900     725   (b)     2,309  

Property and equipment, net

    217,575     24,972         (2,984 ) (c)     239,563  

Real estate subject to finance obligation

    20,704                     20,704  

Goodwill

    503,908     25,904         30,552   (d)     560,364  

Intangible assets, net

    30,816     21,698         35,421   (e)     87,935  

Other noncurrent assets

    38,097     1,960     (900 )   (73 ) (f)     39,084  
                           

Total Assets

  $ 968,563   $ 110,708   $   $ 23,141       $ 1,102,412  
                           

Current liabilities:

                                   

Accounts payable

  $ 38,030   $ 7,401   $   $       $ 45,431  

Accrued expenses

    63,974     6,696     57     (375 ) (g)     70,352  

Accrued interest

        57     (57 )            

Income tax payable

    2,769                     2,769  

Current portion of long-term debt

    12,333     22,190         (20,000 ) (h)     14,523  

Current portion of finance obligation

    298                     298  

Other current liabilities

    5,014     235         (170 ) (i)     5,079  
                           

Total current liabilities

    122,418     36,579         (20,545 )       138,452  

Long-term debt, less current portion

    837,810     126         75,000   (j)     912,936  

Finance obligation, less current portion

    22,089                     22,089  

Other long-term liabilities

    25,007     2,527         11,176   (k)     38,710  

Deferred income taxes

    5,055     1,476         26,211   (l)     32,742  
                           

Total liabilities not subject to compromise

    1,012,379     40,708         91,842         1,144,929  

Liabilities subject to compromise

        226,739         (226,739 ) (m)      
                           

Total liabilities

    1,012,379     267,447         (134,897 )       1,144,929  

Noncontrolling interests—redeemable

    15,933                     15,933  

Commitment and contingencies

                                   

Equity:

                                   

Common stock

        26         (26 ) (n)      

Additional paid-in capital

    650,680     96,890         (96,890 ) (n)     650,680  

(Accumulated deficit) retained earnings

    (703,312 )   (255,855 )       255,855   (n)     (703,312 )

Accumulated other comprehensive loss, net of tax

    (20,432 )                   (20,432 )
                           

Total 21st Century Oncology Holdings, Inc. shareholder's equity

    (73,064 )   (158,939 )       158,939   (n)     (73,064 )

Noncontrolling interests—nonredeemable

    13,315     2,200         (901 ) (o)     14,614  
                           

Total equity

    (59,749 )   (156,739 )       158,038         (58,450 )
                           

Total liabilities and equity

  $ 968,563   $ 110,708   $   $ 23,141       $ 1,102,412  
                           

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Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2013
(dollars in thousands, except share and per share data)

 
  21CH   OnCure   Reclass
Adjustments
(A)
  Pro Forma
Adjustments
   
  Pro Forma
Combined
 

Total revenues

  $ 533,126   $ 62,383   $   $ 10,167   (a)   $ 605,676  

Salaries and benefits

    293,972     23,992         2,262   (b)     320,226  

Medical supplies

    46,166         1,155     (18 ) (c)     47,303  

Facility rent expenses

    32,285         6,695     (658 ) (d)     38,322  

Other operating expenses

    33,155         8,736     (1,056 ) (e)     40,835  

General and administrative expenses

    68,832     36,962     (16,586 )   (5,294 ) (f)     83,914  

Depreciation and amortization

    46,550     8,521         (898 ) (g)     54,173  

Provision for doubtful accounts

    8,857                     8,857  

Interest expense, net

    62,369     15,829     (119 )   (9,082 ) (h)     68,997  

Gain on the sale of an interest in a joint venture

    (1,460 )                   (1,460 )

Impairment loss

        59,686                 59,686  

Equity interest in net earnings of joint ventures

        (138 )               (138 )

Interest income and other expense, net

        (119 )   119              

Reorganization items, net

        12,368         (12,368 ) (i)      

Loss on foreign currency transactions

    1,166                     1,166  

Loss on foreign currency derivative contracts

    309                     309  
                           

(Loss) income before income taxes

    (59,075 )   (94,718 )       37,279         (116,514 )

Income tax expense (benefit)

    4,849     (197 )         (j)     4,652  
                           

Net (loss) income

    (63,924 )   (94,521 )       37,279         (121,166 )

Net income attributable to noncontrolling interests—redeemable and non-redeemable

    (1,365 )   (105 )               (1,470 )
                           

Net (loss) income attributable to 21st Century Oncology Holdings, Inc. shareholder

  $ (65,289 ) $ (94,626 ) $   $ 37,279       $ (122,636 )
                           

Net (loss) per common share:

                                   

Net (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder—basic

  $ (63,696.59 )                       $ (119,644.88 )
                                 

Net (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder—diluted

  $ (63,696.59 )                       $ (119,644.88 )
                                 

Weighted average shares outstanding:

                                   

Basic

    1,025                           1,025  
                                 

Diluted

    1,025                           1,025  
                                 

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Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2012
(dollars in thousands, except share and per share data)

 
  21CH   OnCure   Reclass
Adjustments
(A)
  Pro Forma
Adjustments
   
  Pro Forma
Combined
 

Total revenues

  $ 693,951   $ 93,927   $   $ 12,195   (a)   $ 800,073  

Salaries and benefits

    372,656     31,973         3,712   (b)     408,341  

Medical supplies

    61,589         1,420     (66 ) (c)     62,943  

Facility rent expenses

    39,802         8,513     (854 ) (d)     47,461  

Other operating expenses

    38,988         11,084     (1,548 ) (e)     48,524  

General and administrative expenses

    82,236     40,026     (21,017 )   (7,011 ) (f)     94,234  

Depreciation and amortization

    64,893     15,451         (5,288 ) (g)     75,056  

Provision for doubtful accounts

    16,916                     16,916  

Interest expense, net

    77,494     27,039     59     (18,043 ) (h)     86,549  

Electronic health records incentive income

    (2,256 )                   (2,256 )

Early extinguishment of debt

    4,473     1,098                 5,571  

Fair value adjustment of earn-out liability and noncontrolling interests—redeemable

    1,219                     1,219  

Impairment loss

    81,021     107,498                 188,519  

Equity interest in net earnings of joint ventures

        (373 )               (373 )

Interest income and other expense, net

        59     (59 )            

Loss on foreign currency transactions

    339                     339  

Loss on foreign currency derivative contracts

    1,165                     1,165  
                           

(Loss) income before income taxes

    (146,584 )   (128,844 )       41,293         (234,135 )

Income tax expense (benefit)

    4,545     (10,526 )         (i)     (5,981 )
                           

Net (loss) income

    (151,129 )   (118,318 )       41,293         (228,154 )

Net income attributable to noncontrolling interests—redeemable and non-redeemable

    (3,079 )   (243 )               (3,322 )
                           

Net (loss) income attributable to 21st Century Oncology Holdings, Inc. shareholder

  $ (154,208 ) $ (118,561 ) $   $ 41,293       $ (231,476 )
                           

Net (loss) per common share:

                                   

Net (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder—basic

  $ (150,446.83 )                       $ (225,830.24 )
                                 

Net (loss) attributable to 21st Century Oncology Holdings, Inc. shareholder—diluted

  $ (150,446.83 )                       $ (225,830.24 )
                                 

Weighted average shares outstanding:

                                   

Basic

    1,025                           1,025  
                                 

Diluted

    1,025                           1,025  
                                 

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Note 1: Description of Transaction and Basis of Presentation

        On October 25, 2013, we completed the acquisition of OnCure for approximately $125.0 million, including $42.5 million in cash and up to $82.5 million in assumed debt ($7.5 million of additional debt will be assumed if certain OnCure centers achieve a minimum level of EBITDA). This acquisition has been accounted for as a purchase under GAAP. Under the purchase method of accounting, the assets and liabilities of OnCure are recorded as of the completion of the acquisition, at their respective fair values, and consolidated with our assets and liabilities. The results of operations of OnCure have been consolidated with the Company beginning on the date of the acquisition.

Note 2: Preliminary Estimated Acquisition Consideration and Preliminary Estimated Acquisition Consideration Allocation

        The following table sets forth the estimated allocation for each component of acquisition consideration paid in the OnCure Acquisition (dollars in thousands):

Preliminary Estimated Acquisition Consideration
   
 

Cash

  $ 40,500  

11.75% senior secured notes due January 2017

    75,000  

Assumed capital lease obligations & other notes

    2,316  

Fair value of contingent earn-out, represented by 11.75% senior secured notes due January 2017 issued into escrow

    7,550  
       

Total preliminary estimated acquisition consideration

  $ 125,366  

        For the purposes of these pro forma financial statements, the estimated acquisition consideration has been preliminarily allocated based on an estimate of the fair value of assets and liabilities acquired as of the acquisition date. The allocation of the estimated acquisition consideration for OnCure is based on estimates, assumptions, valuations and other studies which have not yet been finalized in order to make a definitive allocation. The final amounts allocated to assets acquired and liabilities assumed could differ materially from the amounts presented in the unaudited pro forma condensed consolidated combined financial statements.

        The total preliminary estimated acquisition consideration as shown in the table above is allocated to the tangible and intangible assets and liabilities of OnCure based on their preliminary estimated fair values as follows (in thousands):

Preliminary Estimated Acquisition Consideration Allocation
   
 

Cash and cash equivalents

  $ 16,237  

Accounts receivable

    15,275  

Other currents assets

    4,662  

Accounts payable

    (7,401 )

Accrued expenses

    (6,378 )

Other current liabilities

    (65 )

Equity investments in joint ventures

    1,625  

Property and equipment

    21,988  

Intangible assets—management services agreements

    57,119  

Other noncurrent assets

    987  

Other long-term liabilities

    (6,153 )

Deferred income taxes—liability

    (27,687 )

Noncontrolling interest—nonredeemable

    (1,299 )

Goodwill

    56,456  
       

Preliminary estimated acquisition consideration

  $ 125,366  

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        Preliminary estimated fair values for the management services arrangements were determined based on the income approach utilizing the excess earnings method. The management services agreements will be amortized on a straight-line basis over the terms of the respective agreements. As of the acquisition date the weighted average life of the management services agreements was 12 years.

Note 3: Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments

    (A)
    To reclassify OnCure balance sheet items as presented in the Company's balance sheet, including reclassification of machine parts inventory from prepaid expenses to inventory, reclassification of equity investments in joint ventures from noncurrent assets, and reclassification of accrued interest to accrued expenses.

        The pro forma adjustments are preliminary, based on estimates, and are subject to change as more information becomes available and after final analyses of the fair values of both tangible and intangible assets acquired and liabilities assumed are completed. Accordingly, the final fair value adjustments may be materially different from those presented in this document.

        Adjustments included in the column under the heading "Pro Forma Adjustments" primarily relate to the following:

(a)

 

To reflect cash consideration paid in the OnCure transaction

  $ 40,500  

(b)

 

To reverse book value of equity investments in unconsolidated joint ventures

 
$

(900

)

 

To record fair value of equity investment in unconsolidated joint ventures

    1,625  
           

 

Total adjustment to equity investments in joint ventures

  $ 725  

(c)

 

To reverse book value of property and equipment

 
$

(24,972

)

 

To record fair value of property and equipment

    21,988  
           

 

Total adjustment to property and equipment

  $ (2,984 )

(d)

 

To reverse existing OnCure goodwill

 
$

(25,904

)

 

To adjust for purchase consideration in excess of fair value of nets assets acquired

    56,456  
           

 

Total adjustment to goodwill

  $ 30,552  

(e)

 

To reverse net book value of existing OnCure intangible assets

 
$

(21,698

)

 

To record fair value of acquired intangibles, management services agreements

    57,119  
           

 

Total adjustments to intangible assets

  $ 35,421  

(f)

 

To record fair values of favorable leasehold interests

 
$

184
 

 

To reverse deferred financing costs associated with prior OnCure debt

    (257 )
           

 

Total adjustment to other noncurrent assets

  $ (73 )

(g)

 

To reverse management fee accrual of former private equity sponsor

 
$

(375

)

(h)

 

To reverse senior credit facility paid at time of exit from bankruptcy

 
$

(20,000

)

(i)

 

To reverse current portion of deferred rent liability

 
$

(170

)

(j)

 

To record assumption of 11.75% senior secured notes due January 2017

 
$

75,000
 

(k)

 

To record fair value of contingent earn-out, represented by 11.75% senior secured notes due January 2017 issued into escrow

 
$

7,550
 

 

To record fair values of unfavorable leasehold interests

    6,153  

 

To reverse long term portion of deferred rent liability

    (2,527 )
           

 

Total adjustment to other long-term liabilities

  $ 11,176  

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(l)

 

To reverse current deferred income tax liability

  $ (1,476 )

 

To record an estimated deferred tax liability on the fair value of purchased intangibles

    27,687  
           

 

Total adjustment to deferred income tax liability

  $ 26,211  

(m)

 

To reverse liabilities subject to compromise at time of exit from bankruptcy

 
$

(226,739

)

(n)

 

To reverse common stock

 
$

(26

)

 

To reverse additional paid-in capital

    (96,890 )

 

To reverse accumulated deficit

    255,855  
           

 

Total adjustment to equity

  $ 158,939  

(o)

 

To reverse book value of noncontrolling interests—nonredeemable

 
$

(2,200

)

 

To record fair value of noncontrolling interest—nonredeemable

    1,299  
           

 

Total adjustment to noncontrolling interest—nonredeemable

  $ (901 )

Note 4: Unaudited Pro Forma Condensed Combined Statement of Operations Adjustments for the Nine Months Ended September 30, 2013

    (A)
    To reclassify OnCure general and administrative expenses to certain items as presented in the Company's Statement of Operations.

        The pro forma adjustments are preliminary, based on estimates, and are subject to change as more information becomes available and after final analyses of the fair values of both tangible and intangible assets acquired and liabilities assumed are completed. Accordingly, the final fair value adjustments may be materially different from those presented herein. A summary of the pro forma adjustments follows:

        Adjustments included in the column under the heading "Pro Forma Adjustments" primarily relate to the following:

(a)

 

To eliminate total revenues of radiation therapy treatment facilities that were not acquired

  $ (1,254 )

 

Executed conversion of the Florida practices from a management services agreement to a physician employment agreement

    11,421  
                     

      $ 10,167  

(b)

 

To eliminate salaries and benefits of radiation therapy treatment facilities that were not acquired

 
$

(1,049

)

 

Executed conversion of the Florida practices from a management services agreement to a physician employment agreement

    9,819  

 

To eliminate salaries and benefits associated with contracts rejected in bankruptcy

    (6,508 )
                     

                $ 2,262  

(c)

 

To eliminate medical supplies of radiation therapy treatment facilities that were not acquired

 
$

(18

)

(d)

 

To eliminate facility rent expenses of radiation therapy treatment facilities that were not acquired

 
$

(658

)

(e)

 

To eliminate other operating expenses of radiation therapy treatment facilities that were not acquired

 
$

(1,056

)

(f)

 

To eliminate general and administrative expenses of radiation therapy treatment facilities that were not acquired

 
$

(108

)

 

To eliminate management fees of former private equity sponsor

    (1,125 )

 

To eliminate costs associated with contracts rejected in bankruptcy

    (4,061 )

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                $ (5,294 )

(g)

 

To eliminate depreciation and amortization of radiation therapy treatment facilities that were not acquired

 
$

(582

)

 

To reverse remaining depreciation and amortization expense of OnCure

    (7,939 )

 

To record amortization expense for newly identified intangible assets

    4,109  

 

To record depreciation expense for revaluation of property plant & equipment

    3,514  
                     

                $ (898 )

(h)

 

To reverse previously recorded interest expense of OnCure

 
$

(15,829

)

 

To record interest expense on $75.0 million 11.75% senior secured notes due April 2017

    6,609  

 

To record interest expense of assumed capital lease obligations and other promissory notes related to equipment purchase

    138  
                     

                $ (9,082 )

(i)

 

To eliminate costs associated with OnCure reorganization

 
$

(12,368

)

(j)

 

Effect of pro forma adjustments on (loss) income before income taxes pro forma adjustments

 
$

37,279
 

 

Federal rate

    35.00 %          

 

State rate (5%), net of Federal benefit

    3.90 %          
                     

 

Statutory Federal and state income tax rate

    38.90 %     $ 14,502  

 

Adjustment to NOL and valuation allowance

    (14,502 )
                     

                $  

Note 5: Unaudited Pro Forma Condensed Combined Statement of Operations Adjustments for the Year Ended December 31, 2012

    (A)
    To reclassify OnCure general and administrative expenses to certain items as presented in the Company's Statement of Operations.

        The pro forma adjustments are preliminary, based on estimates, and are subject to change as more information becomes available and after final analyses of the fair values of both tangible and intangible assets acquired and liabilities assumed are completed. Accordingly, the final fair value adjustments may be materially different from those presented herein.

        Adjustments included in the column under the heading "Pro Forma Adjustments" primarily relate to the following:

(a)

 

To eliminate total revenues of radiation therapy treatment facilities that were not acquired

  $ (3,033 )

 

Executed conversion of the Florida practices from a management service agreement to a physician employment agreement

    15,228  
                     

      $ 12,195  

(b)

 

To eliminate salaries and benefits of radiation therapy treatment facilities that were not acquired

 
$

(1,551

)

 

Executed conversion of the Florida practices from a management services agreement to a physician employment agreement

    13,092  

 

To eliminate salaries and benefits associated with contracts rejected in bankruptcy

    (7,829 )
                     

                $ 3,712  

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(c)

 

To eliminate medical supplies of radiation therapy treatment facilities that were not acquired

  $ (66 )

(d)

 

To eliminate facility rent expenses of radiation therapy treatment facilities that were not acquired

 
$

(854

)

(e)

 

To eliminate other operating expenses of radiation therapy treatment facilities that were not acquired

 
$

(1,548

)

(f)

 

To eliminate general and administrative expenses of radiation therapy treatment facilities that were not acquired

 
$

(165

)

 

To eliminate management fees of former private equity sponsor

    (1,500 )

 

To eliminate costs associated with contracts rejected in bankruptcy

    (5,346 )
                     

                $ (7,011 )

(g)

 

To eliminate depreciation and amortization of radiation therapy treatment facilities that were not acquired

 
$

(910

)

 

To reverse remaining depreciation and amortization expense of OnCure

    (14,541 )

 

To record amortization expense for newly identified intangible assets

    5,478  

 

To record depreciation expense for revaluation of property plant & equipment

    4,685  
                     

                $ (5,288 )

(h)

 

To reverse previously recorded interest expense of OnCure

 
$

(27,039

)

 

To record interest expense on $75.0 million 11.75% senior secured notes due April 2017

    8,813  

 

To record interest expense of assumed capital lease obligations and other promissory notes related to equipment purchase

    184  
                     

                $ (18,043 )

(i)

 

Effect of pro forma adjustment on (loss) income before income taxes pro forma adjustments

 
$

41,293
 

 

Federal rate

    35.00 %          

 

State rate (5%), net of Federal benefit

    3.90 %          
                     

 

Statutory Federal and state income tax rate

    38.90 %     $ 16,063  

 

Adjustment to NOL and valuation allowance

    (16,063 )
                     

      $  

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

        The following discussion summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the "Selected Consolidated Historical Financial and Other Data" and our Consolidated Financial Statements, including the notes thereto, appearing elsewhere in this prospectus.

        In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations, and intentions set forth under the sections entitled "Risk Factors" and "Forward-Looking Statement." Our actual results and the timing of events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section entitled "Risk Factors" and elsewhere in this prospectus.

Overview

        We own, operate and manage treatment centers focused principally on providing comprehensive radiation treatment alternatives ranging from conventional external beam radiation to IMRT, as well as newer, more technologically-advanced procedures along with other services. We believe we are the largest company in the United States focused principally on providing radiation therapy and the most advanced organization in terms of integrating oncology related physicians. We opened our first radiation treatment center in 1983 and, as of November 1, 2013 we provided radiation therapy services in 166 treatment centers. Most of our treatment centers are strategically clustered into 31 local markets in 16 states, including Alabama, Arizona, California, Florida, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, South Carolina, Rhode Island, and West Virginia and 33 treatment centers are operated in Latin America, Central America, Mexico and the Caribbean. Of these 166 treatment centers, 40 treatment centers were internally developed and 118 were acquired (including two which were transitioned from professional and other arrangements to freestanding). 41 of the 166 treatment centers are operated in partnership with health systems and other clinics and community-based sites. We have continued to expand our affiliation with physician specialties in closely related areas including gynecological, breast and surgical oncology, medical oncology and urology in a limited number of our local markets to strengthen our clinical working relationships and to evolve from a freestanding radiation oncology centric model to an ICC model.

        We use a number of metrics to assist management in evaluating financial condition and operating performance, and the most important follow:

    the number of RVUs (a standard measure of value used in the U.S. Medicare reimbursement formula for physician services) delivered per day in our freestanding centers;

    the percentage change in RVUs per day in our freestanding centers;

    the number of treatments delivered per day in our freestanding centers;

    the average revenue per treatment in our freestanding centers;

    the ratio of funded debt to pro-forma adjusted earnings before interest, taxes, depreciation and amortization (leverage ratio); and

    facility gross profit.

Revenue Drivers

        Our revenue growth is primarily driven by expanding the number of our centers, optimizing the utilization of advanced technologies at our existing centers and benefiting from demographic and population trends in most of our local markets and by providing value added services to other healthcare

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and provider organizations. New centers are added or acquired based on capacity, demographics and competitive considerations.

        The average revenue per treatment is sensitive to the mix of services used in treating a patient's tumor. The reimbursement rates set by Medicare and commercial payers tend to be higher for more advanced treatment technologies, reflecting their higher complexity. A key part of our business strategy is to make advanced technologies available once supporting economics exist. For example, we have been utilizing IGRT and Gamma Function, a proprietary capability to enable measurement of the actual amount of radiation delivered during a treatment and to provide immediate feedback for adaption of future treatments as well as for quality assurance, where appropriate, now that reimbursement codes are in place for these services.

Operating Costs

        The principal costs of operating a treatment center are (1) the salary and benefits of the physician and technical staff, and (2) equipment and facility costs. The capacity of each physician and technical position is limited to a number of delivered treatments, while equipment and facility costs for a treatment center are generally fixed. These capacity factors cause profitability to be very sensitive to treatment volume. Profitability will tend to increase as resources from fixed costs including equipment and facility costs are utilized.

Sources of Revenue By Payer

        We receive payments for our services rendered to patients from the government Medicare and Medicaid programs, commercial insurers, managed care organizations and our patients directly. Generally, our revenue is determined by a number of factors, including the payer mix, the number and nature of procedures performed and the rate of payment for the procedures. The following table sets forth the percentage of our U.S. net patient service revenue we earned based upon the patients' primary insurance by category of payer in our last three fiscal years and the nine months ended September 30, 2012 and 2013.

 
  Year Ended December 31,   Nine Months
Ended
September 30,
 
Payer (U.S.)
  2010