UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2022

or

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

For the transition period from           to

Commission File Number: 001-39203

1LIFE HEALTHCARE, INC.

(Exact name of registrant as specified in its charter)

Delaware	76-0707204
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Embarcadero Center, Suite 1900

San Francisco, CA 94111

(Address of principal executive offices and zip code)

(415) 814-0927

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	ONEM	The Nasdaq Global Select Market

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

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

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

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

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

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

As of July 22, 2022, the registrant had 195,181,497 shares of common stock, $0.001 par value per share, outstanding. 

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Operations (Unaudited)	2
	Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	3
	Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to Unaudited Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	92
Item 3.	Defaults Upon Senior Securities	92
Item 4.	Mine Safety Disclosures	92
Item 5.	Other Information	92
Item 6.	Exhibits	93
Signatures		94

Where You Can Find More Information

Investors and others should note that we announce material financial and other information using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We also post supplemental materials on the “Events” section of our investor relations website at investor.onemedical.com. Except as specifically noted herein, information on or accessible through our website is not, and will not be deemed to be, a part of this Quarterly Report on Form 10-Q or incorporated by reference into any other filings we may make with the U.S. Securities and Exchange Commission (the “SEC”).

We also use our Facebook, Twitter and LinkedIn accounts as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these accounts, in addition to following our press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this Quarterly Report on Form 10-Q. These channels may be updated from time to time on our investor relations website.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

1LIFE HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except par value amounts)

(unaudited)

	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	184,748	$	341,971
Short-term marketable securities	162,874		111,671
Accounts receivable, net	153,155		103,498
Inventories	6,571		6,065
Prepaid expenses	28,555		28,055
Other current assets	24,429		21,767
Total current assets	560,332		613,027
Long-term marketable securities	—		48,296
Restricted cash	3,785		3,801
Property and equipment, net	204,814		193,716
Right-of-use assets	272,966		256,293
Intangible assets, net	334,325		352,158
Goodwill	1,157,179		1,147,464
Other assets	7,518		12,277
Total assets	$	2,540,919	$	2,627,032
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	17,046	$	18,725
Accrued expenses	76,289		72,672
Deferred revenue, current	57,651		47,928
Operating lease liabilities, current	36,465		31,152
Other current liabilities	29,030		31,632
Total current liabilities	216,481		202,109
Operating lease liabilities, non-current	291,596		269,641
Convertible senior notes	310,782		309,844
Deferred income taxes	60,199		73,875
Deferred revenue, non-current	25,768		29,317
Other non-current liabilities	11,611		13,663
Total liabilities	916,437		898,449
Commitments and contingencies (Note 13)
Stockholders' Equity:
Common stock, $0.001 par value, 1,000,000 and 1,000,000 shares authorized as of June 30, 2022 and December 31, 2021, respectively; 195,154 and 191,722 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	195		193
Additional paid-in capital	2,428,684		2,346,781
Accumulated deficit	(802,866)		(618,198)
Accumulated other comprehensive income	(1,531)		(193)
Total stockholders' equity	1,624,482		1,728,583
Total liabilities and stockholders' equity	$	2,540,919	$	2,627,032

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

1

1LIFE HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net revenue:
Medicare revenue	$	131,594	$	—	$	259,016	$	—
Commercial revenue	124,245		120,416		250,925		241,768
Total net revenue	255,839		120,416		509,941		241,768
Operating expenses:
Medical claims expense	108,900		—		213,866		—
Cost of care, exclusive of depreciation and amortization shown separately below	106,948		67,922		208,325		138,014
Sales and marketing	23,193		10,570		45,652		23,259
General and administrative	92,422		77,196		189,458		141,541
Depreciation and amortization	21,783		7,292		42,676		13,899
Total operating expenses	353,246		162,980		699,977		316,713
Loss from operations	(97,407)		(42,564)		(190,036)		(74,945)
Other income (expense), net:
Interest income	364		79		521		184
Interest and other expense	(3,682)		(2,842)		(8,801)		(5,685)
Total other income (expense), net	(3,318)		(2,763)		(8,280)		(5,501)
Loss before income taxes	(100,725)		(45,327)		(198,316)		(80,446)
Provision for (benefit from) income taxes	(6,916)		(4,040)		(13,648)		159
Net loss	$	(93,809)	$	(41,287)	$	(184,668)	$	(80,605)
Net loss per share — basic and diluted	$	(0.48)	$	(0.30)	$	(0.95)	$	(0.59)
Weighted average common shares outstanding — basic and diluted	194,488		136,788		193,774		137,045

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

2

1LIFE HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net loss	$	(93,809)	$	(41,287)	$	(184,668)	$	(80,605)
Other comprehensive loss:
Net unrealized gain (loss) on marketable securities	(305)		(12)		(1,338)		—
Comprehensive loss	$	(94,114)	$	(41,299)	$	(186,006)	$	(80,605)

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

3

1LIFE HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(Amounts in thousands)

(unaudited) 

	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity (Deficit)
	Shares	Amount
Balances at December 31, 2021	191,722	$	193	$	2,346,781	$	(618,198)	$	(193)	$	1,728,583
Exercise of stock options	579	1		2,234						2,235
Issuance of common stock for settlement of RSUs	442									—
Issuance of common stock in acquisition	740									—
Stock-based compensation expense				36,919						36,919
Net unrealized gain (loss) on marketable securities								(1,033)		(1,033)
Net loss						(90,859)				(90,859)
Balances at March 31, 2022	193,483	$	194	$	2,385,934	$	(709,057)	$	(1,226)	$	1,675,845
Exercise of stock options	824	1		3,214						3,215
Issuance of common stock under the employee stock purchase plan	234			1,659						1,659
Issuance of common stock for settlement of RSUs	79									—
Issuance of common stock in acquisition	534	—		5,541						5,541
Stock-based compensation expense				32,336						32,336
Net unrealized gain (loss) on marketable securities								(305)		(305)
Net loss						(93,809)				(93,809)
Balances at June 30, 2022	195,154	$	195	$	2,428,684	$	(802,866)	$	(1,531)	$	1,624,482

4

1LIFE HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(Amounts in thousands)

(unaudited)

	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity (Deficit)
	Shares	Amount
Balances at December 31, 2020	134,472	$	134	$	918,118	$	(369,785)	$	8	$	548,475
Impact of adoption of ASU 2020-06				(73,393)		6,656				(66,737)
Impact of adoption of ASC 326						(428)				(428)
Exercise of stock options	2,584	3		13,476						13,479
Issuance of common stock for settlement of RSUs	241									—
Stock-based compensation expense				26,328						26,328
Net unrealized (gain) loss on marketable securities								12		12
Net loss						(39,318)				(39,318)
Balances at March 31, 2021	137,297	$	137	$	884,529	$	(402,875)	$	20	$	481,811
Exercise of stock options	353	1		2,627						2,628
Issuance of common stock under the employee stock purchase plan	107			2,972						2,972
Issuance of common stock for settlement of RSUs	17									—
Stock-based compensation expense				26,332						26,332
Net unrealized (gain) loss on marketable securities								(12)		(12)
Net loss						(41,287)				(41,287)
Balances at June 30, 2021	137,774	$	138	$	916,460	$	(444,162)	$	8	$	472,444

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

5

1LIFE HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(unaudited) 

	Six Months Ended June 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(184,668)	$	(80,605)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for bad debts	270		105
Depreciation and amortization	42,676		13,899
Amortization of debt discount and issuance costs	938		937
Accretion of discounts and amortization of premiums on marketable securities, net	661		483
Reduction of operating lease right-of-use assets	16,053		8,609
Stock-based compensation	69,255		52,660
Deferred income taxes	(13,676)		—
Other non-cash items	570		400
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net	(49,571)		11,380
Inventories	(481)		3,216
Prepaid expenses and other current assets	4,105		(21,261)
Other assets	3,792		110
Accounts payable	121		1,234
Accrued expenses	4,546		6,772
Deferred revenue	5,793		6,765
Operating lease liabilities	(13,143)		(8,761)
Other liabilities	(2,119)		17,128
Net cash (used in) provided by operating activities	(114,878)		13,071
Cash flows from investing activities:
Purchases of property and equipment, net	(34,188)		(31,172)
Purchases of marketable securities	(54,906)		(79,984)
Proceeds from sales and maturities of marketable securities	50,000		498,977
Acquisitions of businesses, net of cash and restricted cash acquired	(10,451)		(9,695)
Issuance of note receivable	—		(20,000)
Net cash (used in) provided by investing activities	(49,545)		358,126
Cash flows from financing activities:
Proceeds from the exercise of stock options	5,450		16,107
Proceeds from employee stock purchase plan	1,659		2,972
Payment of principal portion of finance lease liability	(27)		(29)
Net cash provided by financing activities	7,082		19,050
Net (decrease) increase in cash, cash equivalents and restricted cash	(157,341)		390,247
Cash, cash equivalents and restricted cash at beginning of period	346,054		115,005
Cash, cash equivalents and restricted cash at end of period	$	188,713	$	505,252
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses	$	7,732	$	5,883
Equity consideration for business acquisition	$	5,541	$	—

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

6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts)

(unaudited)

1.Nature of the Business and Basis of Presentation

1Life Healthcare, Inc. (“1Life”) was incorporated in Delaware on July 25, 2002. 1Life’s headquarters are located in San Francisco, California. 1Life has developed a modernized healthcare membership model based on direct consumer enrollment and third-party sponsorship across commercially insured and Medicare populations. Our membership model includes access to 24/7 digital health services paired with in-office care routinely covered by most health care payers, and allows the Company to engage in value-based care across all age groups, including through At-Risk arrangements as defined in Note 2 “Summary of Significant Accounting Policies” with Medicare Advantage payers and the Center for Medicare & Medicaid Services ("CMS"), in which the Company is responsible for managing a range of healthcare services and associated costs of its members. 1Life is also an administrative and managerial services company that provides services pursuant to contracts with physician-owned professional corporations (“One Medical PCs”) that provide medical services virtually and in-office.

On September 1, 2021, 1Life completed the acquisition of Iora Health, Inc. ("Iora Health"), a human-centered, value-based primary care group with built-for-purpose technology focused on serving the Medicare population.

Iora Health and Iora Senior Health, Inc. (“Iora Senior Health”) are administrative and managerial service companies that provide services pursuant to contracts with physician-owned professional corporations (“Iora PCs”, together with the One Medical PCs, the “PCs”) that provide medical services virtually and in-office.

Iora Health is an administrative and managerial services company that provides services pursuant to contracts with Iora Health NE DCE, LLC, a limited liability company that participates in the Center for Medicare and Medicaid Services’ Global and Professional Direct Contracting Model (the “DCE entity”). Iora Health, Iora Senior Health, the Iora PCs and the DCE entity are collectively referred to herein as “Iora”. See Note 7 "Business Combinations" to the unaudited condensed consolidated financial statements.

1Life, Iora Health, Iora Senior Health, the PCs and the DCE entity are collectively referred to herein as the “Company”. 1Life and the One Medical PCs operate under the brand name One Medical.

Proposed Acquisition by Amazon

As more fully described in Note 16, on July 20, 2022, the Company entered into a definitive merger agreement (the "Merger Agreement") with Amazon.com, Inc. ("Amazon"), pursuant to which (and subject to the terms and conditions described in the Merger Agreement) the Company will merge with and into a wholly-owned subsidiary of Amazon ("Amazon Merger"). Subject to the terms and conditions of the Merger Agreement, Amazon will acquire the Company for $18 per share in an all-cash transaction, valued at approximately $3.9 billion, including the Company’s net debt. As a result of the Amazon Merger, the Company will become a wholly-owned subsidiary of Amazon. The consummation of the Amazon Merger is subject to a number of closing conditions, including, among others, the approval from our shareholders, and the receipt of certain regulatory approvals, as well as other customary closing conditions.

Basis of Presentation

The Company has prepared the accompanying unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Pursuant to these rules and regulations, the Company has condensed or omitted certain information and footnote disclosures it normally includes in its annual consolidated financial statements prepared in accordance with U.S. GAAP.

The accompanying condensed consolidated financial statements include the accounts of 1Life, Iora Health and Iora Senior Health, their wholly owned subsidiaries, and variable interest entities (“VIE”) in which 1Life, Iora Health and Iora Senior Health have an interest and are the primary beneficiaries. See Note 3, “Variable Interest Entities”. All significant intercompany balances and transactions have been eliminated in consolidation.

In management’s opinion, the Company has made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly state its condensed consolidated financial position, results of operations, comprehensive loss and cash flows. The Company’s interim period operating results do not necessarily indicate the results that

7

may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 as filed with the SEC on February 23, 2022 (the “Form 10-K”).

Use of Estimates

The preparation of condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP and regulations of the SEC requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates include, but are not limited to, revenue recognition, liability for medical claims incurred in the period but not yet reported (“IBNR”), valuation of certain assets and liabilities acquired from business combinations, stock-based compensation, and determining the fair value of a reporting unit. Actual results could differ from these estimates and may result in material effects on the Company’s operating results and financial position.

Due to the COVID-19 global pandemic, the global economy and financial markets have been disrupted and there continues to be a significant amount of uncertainty about the length and severity of the consequences caused by the pandemic. The Company has considered information available to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or an adjustment to the carrying value of its assets or liabilities. The accounting estimates and other matters assessed include, but were not limited to, allowance for credit losses, goodwill and other long-lived assets, and revenue recognition. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020. Intended to provide economic relief to those impacted by the COVID-19 pandemic, the CARES Act includes various tax and lending provisions, among others. Under the CARES Act, the Company received an income grant from the Provider Relief Fund administered by the Department of Health and Human Services (“HHS”), which we recognized as Grant income during the six months ended June 30, 2021. The Company did not receive any income grant from the HHS for the three and six months ended June 30, 2022. See Note 5, "Revenue Recognition".

Cash, Cash Equivalents and Restricted Cash

The Company considers all short-term, highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash deposits are all in financial institutions in the United States. Cash and cash equivalents consist of cash on deposit, investments in money market funds and commercial paper. Restricted cash represents cash held under letters of credit for various leases and certain At-Risk arrangements. The expected duration of restrictions on the Company’s restricted cash generally ranges from 1 to 8 years.

The reconciliation of cash, cash equivalents and restricted cash reported within the applicable balance sheet line items that sum to the total of the same such amount shown in the condensed consolidated statements of cash flows is as follows:

	June 30,		December 31,		June 30,		December 31,
	2022		2021		2021		2020
Cash and cash equivalents	$	184,748	$	341,971	$	503,238	$	112,975
Restricted cash, current (included in other current assets)	180		282		119		119
Restricted cash, non-current	3,785		3,801		1,895		1,911
Total cash, cash equivalents, and restricted cash	$	188,713	$	346,054	$	505,252	$	115,005

Concentration of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents, marketable securities and accounts receivable. The Company’s cash balances with individual banking institutions might be in excess of federally insured limits. Cash equivalents are invested in highly rated money market funds and commercial paper. The Company’s marketable securities are invested in U.S. Treasury obligations and commercial paper. The Company is not exposed to any significant concentrations of credit risk from these financial instruments. The Company has not experienced any losses on its deposits of cash, cash equivalents or marketable securities. The Company grants unsecured credit to patients, most of whom reside in the service area of the One Medical or Iora facilities and are largely insured under third-

8

party payer agreements. The Company’s concentration of credit risk is limited by the diversity, geography and number of patients and payers.

The table below presents the customers or payers that individually represented 10% or more of the Company’s accounts receivable, net balance as of June 30, 2022 and December 31, 2021. 

	June 30,		December 31,
	2022		2021
Customer F	45	%	38	%
Customer I	17	%	23	%

* Represents percentages below 10% of the Company’s accounts receivable in the period.

The table below presents the customers or payers that individually represented 10% or more of the Company’s net revenue for the three and six months ended June 30, 2022 and 2021.

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Customer A	*		12	%	*		12	%
Customer F	*		12	%	*		12	%
Customer I	28	%	N/A		27	%	N/A
Customer J	15	%	N/A		17	%	N/A

* Represents percentages below 10% of the Company’s net revenue in the period.

2.Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2 “Summary of Significant Accounting Policies” in Item 15 of its Form 10-K for the fiscal year ended December 31, 2021.

Recently Adopted Pronouncements as of June 30, 2022

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance which requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. The amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2021. The Company adopted the standard on January 1, 2022 on a prospective basis. The adoption did not have a material impact to the Company's condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted as of June 30, 2022

There have been no recent accounting pronouncements or changes in accounting pronouncements that are of significance or potential significance to the Company as of June 30, 2022.

3.Variable Interest Entities

1Life, Iora Health and Iora Senior Health's agreements with the PCs generally consist of both Administrative Services Agreements (“ASAs”), which provide for various administrative and management services to be provided by 1Life, Iora Health or Iora Senior Health, respectively, to the PCs, and succession agreements, which provide for transition of ownership of the PCs under certain conditions ("Succession Agreements").

The ASAs typically provide that the term of the arrangements is ten to twenty years with automatic renewal for successive one-year terms, subject to termination by the contracting parties in certain specified circumstances. The outstanding voting equity instruments of the PCs are owned by nominee shareholders appointed by 1Life, Iora Health or Iora Senior Health (or the PC in one instance) under the terms of the Succession Agreements or other shareholders who are also subject to the terms of the Succession Agreements. 1Life, Iora Health and Iora Senior Health have the right to receive income as an ongoing administrative fee in an amount that represents the fair value of services rendered and has provided all financial support through loans to the PCs. 1Life, Iora Health and Iora Senior Health have exclusive responsibility for the provision of all nonmedical

9

services including facilities, technology and intellectual property required for the day-to-day operation and management of each of the PCs, and makes recommendations to the PCs in establishing the guidelines for the employment and compensation of the physicians and other employees of the PCs. In addition, the agreements provide that 1Life, Iora Health and Iora Senior Health have the right to designate a person(s) to purchase the stock of the PCs for a nominal amount in the event of a succession event. Based upon the provisions of these agreements, 1Life determined that the PCs are variable interest entities due to its equity holder having insufficient capital at risk, and 1Life has a variable interest in the PCs.

The contractual arrangement to provide management services allows 1Life, Iora Health or Iora Senior Health to direct the economic activities that most significantly affect the PCs. Accordingly, 1Life, Iora Health or Iora Senior Health is the primary beneficiary of the PCs and consolidates the PCs under the VIE model. Furthermore, as a direct result of nominal initial equity contributions by the physicians, the financial support 1Life, Iora Health or Iora Senior Health provides to the PCs (e.g. loans) and the provisions of the nominee shareholder succession arrangements described above, the interests held by noncontrolling interest holders lack economic substance and do not provide them with the ability to participate in the residual profits or losses generated by the PCs. Therefore, all income and expenses recognized by the PCs are allocated to 1Life stockholders. The aggregate carrying value of the assets and liabilities included in the condensed consolidated balance sheets for the PCs after elimination of intercompany transactions and balances were $191,665 and $120,995, respectively, as of June 30, 2022 and $129,474 and $115,744, respectively, as of December 31, 2021.

4.Fair Value Measurements and Investments

Fair Value Measurements

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

	Fair Value Measurements as of June 30, 2022 Using:
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market fund	$	116,118	$	—	$	—	$	116,118
Short-term marketable securities:
U.S. Treasury obligations	129,403		—		—		129,403
Commercial paper	—		33,471		—		33,471
Total financial assets	$	245,521	$	33,471	$	—	$	278,992

	Fair Value Measurements as of December 31, 2021 Using:
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market fund	$	315,817	$	—	$	—	$	315,817
Short-term marketable securities:
U.S. Treasury obligations	58,232		—		—		58,232
Foreign government bonds	—		5,012		—		5,012
Commercial paper	—		48,427		—		48,427
Long-term marketable securities:
U.S. Treasury obligations	48,296		—		—		48,296
Total financial assets	$	422,345	$	53,439	$	—	$	475,784

Our financial assets are valued using market prices on both active markets (Level 1) and less active markets (Level 2). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily available pricing sources for comparable instruments, identical instruments in less active markets, or models using market observable inputs.

During the three and six months ended June 30, 2022 and 2021, there were no transfers between Level 1, Level 2 and Level 3.

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Valuation of Convertible Senior Notes

The Company has $316,250 aggregate principal amount outstanding of 3.0% convertible senior notes due in 2025 (the “2025 Notes”). See Note 9, “Convertible Senior Notes” for details.

The fair value of the 2025 Notes was $262,858 and $288,461 as of June 30, 2022 and December 31, 2021, respectively. The fair value was determined based on the closing trading price of the 2025 Notes as of the last day of trading for the period. The fair value of the 2025 Notes is primarily affected by the trading price of the Company's common stock and market interest rates. The fair value of the 2025 Notes is considered a Level 2 measurement as they are not actively traded.

Investments

At June 30, 2022 and December 31, 2021, the Company’s cash equivalents and marketable securities were as follows:

	June 30, 2022
	Amortized cost		Gross unrealized gains (losses)		Fair value
Cash equivalents:
Money market fund	$	116,118	$	—	$	116,118
Total cash equivalents	116,118		—		116,118
Short-term marketable securities:
U.S. Treasury obligations	130,934		(1,531)		129,403
Commercial paper	33,471		—		33,471
Total short-term marketable securities	164,405		(1,531)		162,874
Total cash equivalents and marketable securities	$	280,523	$	(1,531)	$	278,992

	December 31, 2021
	Amortized cost		Gross unrealized gains (losses)		Fair value
Cash equivalents:
Money market fund	$	315,817	$	—	$	315,817
Total cash equivalents	315,817		—		315,817
Short-term marketable securities:
U.S. Treasury obligations	58,293		(61)		58,232
Foreign government bonds	5,013		(1)		5,012
Commercial paper	48,427		—		48,427
Total short-term marketable securities	111,733		(62)		111,671
Long-term marketable securities:
U.S. Treasury obligations	48,427		(131)		48,296
Total cash equivalents and marketable securities	$	475,977	$	(193)	$	475,784

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5.Revenue Recognition

The following table summarizes the Company’s net revenue by primary source:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net revenue:
Capitated revenue	$	128,521	$	—	$	253,151	$	—
Fee-for-service and other revenue	3,073		—		5,865		—
Total Medicare revenue	131,594		—		259,016		—
Partnership revenue	63,401		56,126		124,336		111,057
Net fee-for-service revenue	35,740		43,416		77,254		87,878
Membership revenue	25,104		20,874		49,335		41,070
Grant income	—		—		—		1,763
Total commercial revenue	124,245		120,416		250,925		241,768
Total net revenue	$	255,839	$	120,416	$	509,941	$	241,768

Net fee-for-service revenue (previously reported as net patient service revenue) is primarily generated from commercial third-party payers with which the One Medical entities have established contractual billing arrangements. The following table summarizes net fee-for-service revenue by source:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net fee-for-service revenue:
Commercial and government third-party payers	$	31,122	$	39,608	$	67,728	$	81,843
Patients, including self-pay, insurance co-pays and deductibles	4,618		3,808		9,526		6,035
Net fee-for-service revenue	$	35,740	$	43,416	$	77,254	$	87,878

The CARES Act was enacted on March 27, 2020 to provide economic relief to those impacted by the COVID-19 pandemic. The CARES Act includes various tax and lending provisions, among others. Under the CARES Act, the Company received an income grant of $1,763 from the Provider Relief Fund administered by the Health and Human Services ("HHS") during the six months ended June 30, 2021. The Company did not receive any income grants from the HHS for the three and six months ended June 30, 2022. Management has concluded that the Company met conditions of the grant funds and has recognized it as Grant income for the six months ended June 30, 2021.

During the three and six months ended June 30, 2022, the Company recognized revenue of $25,021 and $32,448, which was included in the beginning deferred revenue balances as of April 1, 2022 and January 1, 2022, respectively. During the three and six months ended June 30, 2021, the Company recognized revenue of $20,041 and $26,187, which was included in the beginning deferred revenue balances as of April 1, 2021 and January 1, 2021, respectively.

As of June 30, 2022, a total of $5,296 is included within deferred revenue related to variable consideration, of which $4,103 is classified as non-current as it will not be recognized within the next twelve months. The estimate of variable consideration is based on the Company’s assessment of historical, current, and forecasted performance.

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As summarized in the table below, the Company recorded contract assets and deferred revenue as a result of timing differences between the Company’s performance and the customer’s payment.

	June 30,		December 31,
	2022		2021
Balances from contracts with customers:
Capitated accounts receivable, net	$	32,278	$	23,903
All other accounts receivable, net	120,877		79,595
Contract asset (included in other current assets)	291		458
Deferred revenue	$	83,419	$	77,245

Capitated accounts receivable and payable related to At-Risk arrangements are recorded net in the condensed consolidated balance sheets when a legal right of offset exists. A right of offset exists when all of the following conditions are met: 1) each of two parties (the Company and the third-party payer) owes the other determinable amounts; 2) the reporting party (the Company) has the right to offset the amount owed with the amount owed by the other party (the third-party payer); 3) the reporting party (the Company) intends to offset; and 4) the right of offset is enforceable by law.

The capitated accounts receivable and payable are recorded at the contract level and consist of the Company’s Capitated Revenue attributed from enrolled At-Risk members less actual paid medical claims expense. If the Capitated Revenue exceeds the actual medical claims expense at the end of the reporting period, such surplus is recorded as capitated accounts receivable within accounts receivable, net in the condensed consolidated balance sheets. If the actual medical claims expense exceeds the Capitated Revenue, such deficit is recorded as capitated accounts payable within other current liabilities in the condensed consolidated balance sheets. As of June 30, 2022, the Company has capitated accounts receivable, net, of $32,278 and capitated accounts payable, net, of $1,680, representing amounts due from and to Medicare Advantage payers and CMS in At-Risk arrangements, respectively.

The capitated accounts receivable and payable are presented net of IBNR claims liability and other adjustments. There were no significant prior period adjustments or changes to the assumptions used in estimating the IBNR claims liability as of June 30, 2022. The Company believes the amounts accrued to cover IBNR claims as of June 30, 2022 are adequate.

Components of capitated accounts receivable, net is summarized below:

	June 30,		December 31
	2022		2021
Capitated accounts receivable	$	91,561	$	56,384
IBNR claims liability	(57,286)		(32,320)
Other adjustments	(1,997)		(161)
Capitated accounts receivable, net	$	32,278	$	23,903

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Components of capitated accounts payable, net is summarized below:

	June 30,		December 31
	2022		2021
Capitated accounts (receivable), payable	$	(6,245)	$	5,483
IBNR claims liability	7,761		1,438
Other adjustments	164		299
Capitated accounts payable, net	$	1,680	$	7,220

Activity in IBNR claims liability from December 31, 2021 through June 30, 2022 is summarized below:

	Amount
Balance as of December 31, 2021	$	33,078
Incurred related to:
Current period	215,332
Prior periods	(1,466)
	213,866
Paid related to:
Current period	(152,738)
Prior periods	(29,159)
	(181,897)
Balance as of June 30, 2022	$	65,047

The Company does not disclose the value of remaining performance obligations for (i) contracts with an original contract term of one year or less, (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice when that amount corresponds directly with the value of services performed, and (iii) variable consideration allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied distinct service that forms part of a single performance obligation. For those contracts that do not meet the above criteria, the Company’s remaining performance obligation as of June 30, 2022, is expected to be recognized as follows:

	Less than or equal to 12 months		Greater than 12 months		Total
As of June 30, 2022	$	15,193	$	27,002	$	42,195

6.Leases

Most leases contain clauses for renewal at the Company’s option with renewal terms that generally extend the lease term from 1 to 7 years. Certain lease agreements contain options to terminate the lease before maturity. The Company does not have any lease contracts with the option to purchase as of June 30, 2022. The Company’s lease agreements do not contain any significant residual value guarantees or material restrictive covenants imposed by the leases.

Certain of the Company’s furniture and fixtures and lab equipment are held under finance leases. Finance-lease-related assets are included in property and equipment, net in the condensed consolidated balance sheets and are immaterial as of June 30, 2022.

The components of operating lease costs were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating lease costs	$	13,609	$	7,856	$	26,613	$	15,189
Variable lease costs	2,449		1,222		4,496		2,533
Total lease costs	$	16,058	$	9,078	$	31,109	$	17,722

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Other information related to leases was as follows:

Supplemental Cash Flow Information

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	12,398	$	7,973	$	24,464	$	15,828
Non-cash leases activity:
Right-of-use lease assets obtained in exchange for new operating lease liabilities	$	14,477	$	19,336	$	32,726	$	35,422

Lease Term and Discount Rate

	June 30,		December 31,
	2022		2021
Weighted-average remaining lease term (in years)	7.96		8.02
Weighted-average discount rate	6.61	%	6.55	%

At the lease commencement date, the discount rate implicit in the lease is used to discount the lease liability if readily determinable. If not readily determinable or leases do not contain an implicit rate, the Company’s incremental borrowing rate is used as the discount rate. Management determines the appropriate incremental borrowing rates for each of its leases based on the remaining lease term at lease commencement.

Future minimum lease payments under non-cancellable operating leases as of June 30, 2022 were as follows (excluding the effect of lease incentives to be received that are recorded in other current assets of $16,353 which serve to reduce total lease payments):

	June 30, 2022
Remainder of 2022	$	27,674
2023	58,264
2024	56,601
2025	52,821
2026	49,304
Thereafter	183,019
Total lease payments	427,683
Less: interest	(99,622)
Total lease liabilities	$	328,061

7.Business Combinations

Acquisition of Iora

15

On September 1, 2021 ("Acquisition Date"), 1Life acquired all outstanding equity and capital stock of Iora Health, a human-centered, value-based primary care group with built-for-purpose technology focused on serving the Medicare population, for an aggregate purchase consideration of $1,424,836, which was paid through the issuance of 1Life common shares with a fair value of $1,313,312, in part by cash of $62,881, and in part by stock options of Iora assumed by 1Life towards pre-combination services of $48,643. The preliminary purchase price allocations resulted in $1,118,198 of goodwill and $363,031 of acquired identifiable intangible assets related to Iora trade name and contracts in existing geographies valued using the income method. Subsequent to the Acquisition Date, the Company recorded $285 and $