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 September 30, 2020

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	94111
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:

(415) 814-0927

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, 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 October 30, 2020, the registrant had 133,012,658 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 Redeemable Convertible Preferred Stock and 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	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	57
Item 4.	Mine Safety Disclosures	57
Item 5.	Other Information	57
Item 6.	Exhibits	58
Signatures		59

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 and Presentations” 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.

i

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

1LIFE HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)

(unaudited)

	September 30,			December 31,
	2020			2019
Assets
Current assets:
Cash and cash equivalents	$	161,468		$	27,390
Short-term marketable securities		520,839			119,146
Accounts receivable, net		52,960			33,601
Inventories		4,588			3,192
Prepaid expenses and other current assets		18,936			16,708
Total current assets		758,791			200,037
Restricted cash		2,014			1,922
Property and equipment, net		119,098			90,716
Right-of-use assets		131,861			108,046
Intangible assets, net		-			23
Goodwill		21,301			21,301
Other assets		5,240			8,249
Total assets	$	1,038,305		$	430,294
Liabilities, Redeemable Convertible Preferred Stock and Equity (Deficit)
Current liabilities:
Accounts payable	$	9,182		$	13,853
Accrued expenses		36,938			24,863
Deferred revenue, current		35,624			27,024
Operating lease liabilities, current		15,962			12,575
Notes payable, current		-			3,282
Other current liabilities		4,872			1,884
Total current liabilities		102,578			83,481
Operating lease liabilities, non-current		146,746			120,497
Convertible senior notes		237,888			-
Redeemable convertible preferred stock warrant liability		-			7,220
Deferred revenue, non-current		7,590			-
Other non-current liabilities		5,889			639
Total liabilities		500,691			211,837
Commitments and contingencies (Note 14)
Redeemable convertible preferred stock (Series A, B, C, D, E, F, G, H and I), $0.001 par value; 0 and    89,338,425 shares authorized as of September 30, 2020 and December 31, 2019, respectively; 0 and    86,251,669 shares issued and outstanding as of September 30, 2020 and December 31, 2019,    respectively; aggregate liquidation preference of $0 and $405,585 as of September 30, 2020    and December 31, 2019, respectively		-			402,488
Equity (deficit):
Common stock, $0.001 par value, 1,000,000,000 and 150,000,000 shares authorized as of    September 30, 2020 and December 31, 2019, respectively; 132,545,706 and 18,951,416shares    issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		133			19
Additional paid-in capital		899,093			93,945
Accumulated deficit		(361,637	)		(281,068	)
Accumulated other comprehensive income		25			38
Total stockholders' equity (deficit) attributable to 1Life Healthcare, Inc. stockholders		537,614			(187,066	)
Noncontrolling interest		-			3,035
Total equity (deficit)		537,614			(184,031	)
Total liabilities, redeemable convertible preferred stock and equity (deficit)	$	1,038,305		$	430,294

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 share and per share amounts)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Net revenue	$	101,667		$	69,629		$	258,423		$	198,872
Operating expenses:
Cost of care, exclusive of depreciation and amortization    shown separately below		58,781			41,420			163,780			118,586
Sales and marketing		7,914			12,464			28,847			28,830
General and administrative		40,059			27,778			118,236			77,167
Depreciation and amortization		5,735			3,645			16,123			9,440
Total operating expenses		112,489			85,307			326,986			234,023
Loss from operations		(10,822	)		(15,678	)		(68,563	)		(35,151	)
Other income (expense), net:
Interest income		235			1,087			1,635			3,676
Interest expense		(5,647	)		(107	)		(7,676	)		(393	)
Change in fair value of redeemable convertible preferred    stock warrant liability		-			(890	)		(6,560	)		(2,226	)
Total other income (expense), net		(5,412	)		90			(12,601	)		1,057
Loss before income taxes		(16,234	)		(15,588	)		(81,164	)		(34,094	)
Provision for income taxes		181			57			109			83
Net loss		(16,415	)		(15,645	)		(81,273	)		(34,177	)
Less: Net loss attributable to noncontrolling interest		-			(388	)		(704	)		(1,049	)
Net loss attributable to 1Life Healthcare, Inc. stockholders	$	(16,415	)	$	(15,257	)	$	(80,569	)	$	(33,128	)
Net loss per share attributable to 1Life Healthcare, Inc.    stockholders — basic and diluted	$	(0.13	)	$	(0.82	)	$	(0.71	)	$	(1.80	)
Weighted average common shares outstanding — basic and    diluted		128,557,071			18,539,935			113,253,219			18,371,298

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						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Net loss	$	(16,415	)	$	(15,645	)	$	(81,273	)	$	(34,177	)
Other comprehensive loss:
Net unrealized gain (loss) on short-term marketable securities		(6	)		(8	)		(13	)		59
Comprehensive loss		(16,421	)		(15,653	)		(81,286	)		(34,118	)
Less: Comprehensive loss attributable to noncontrolling    interests		-			(388	)		(704	)		(1,049	)
Comprehensive loss attributable to 1Life Healthcare, Inc.    stockholders	$	(16,421	)	$	(15,265	)	$	(80,582	)	$	(33,069	)

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

3

1LIFE HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT)

(Amounts in thousands, except share amounts)

(unaudited)

																	Total
																	Stockholders'
																	Equity (Deficit)
																	Attributable
														Accumulated			to 1Life
	Redeemable Convertible								Additional					Other			Healthcare,
	Preferred Stock				Common Stock				Paid-In		Accumulated			Comprehensive			Inc.			Noncontrolling			Total
	Shares		Amount		Shares		Amount		Capital		Deficit			Income (Loss)			Stockholders'			Interest			Equity (Deficit)
Balances at December 31, 2018		86,251,669	$	402,488		18,135,457	$	18	$	76,029	$	(228,449	)	$	(14	)	$	(152,416	)	$	4,176		$	(148,240	)
Impact of adoption of ASC 606												(65	)					(65	)					(65	)
Exercise of stock options						136,548				587								587						587
Stock-based compensation expense										2,954								2,954						2,954
Net unrealized gain on short-term marketable securities															31			31						31
Net loss												(6,670	)					(6,670	)		(374	)		(7,044	)
Balances at March 31, 2019		86,251,669	$	402,488		18,272,005	$	18	$	79,570	$	(235,184	)	$	17		$	(155,579	)	$	3,802		$	(151,777	)
Exercise of stock options						182,406				685								685						685
Stock-based compensation expense										3,390								3,390						3,390
Net unrealized gain on short-term marketable securities															36			36						36
Net loss												(11,201	)					(11,201	)		(287	)		(11,488	)
Balances at June 30, 2019		86,251,669	$	402,488		18,454,411	$	18	$	83,645	$	(246,385	)	$	53		$	(162,669	)	$	3,515		$	(159,154	)
Exercise of stock options						205,118		1		676								677						677
Stock-based compensation expense										3,786								3,786						3,786
Net unrealized gain on short-term marketable securities															(8	)		(8	)					(8	)
Net loss												(15,257	)					(15,257	)		(388	)		(15,645	)
Balances at September 30, 2019		86,251,669	$	402,488		18,659,529	$	19	$	88,107	$	(261,642	)	$	45		$	(173,471	)	$	3,127		$	(170,344	)

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

4

1LIFE HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT)

(Amounts in thousands, except share amounts)

(unaudited)

																		Total
																		Stockholders'
																		Equity (Deficit)
																		Attributable
																Accumulated		to 1Life
	Redeemable Convertible										Additional					Other		Healthcare,
	Preferred Stock						Common Stock				Paid-In		Accumulated			Comprehensive		Inc.			Noncontrolling		Total
	Shares			Amount			Shares		Amount		Capital		Deficit			Income (Loss)		Stockholders'			Interest		Equity (Deficit)
Balances at December 31, 2019		86,251,669		$	402,488			18,951,416	$	19	$	93,945	$	(281,068	)	$	38	$	(187,066	)	$	3,035	$	(184,031	)
Exercise of redeemable convertible preferred stock warrant		5,573			76														-					-
Conversion of redeemable convertible preferred stock into    common stock upon closing of initial public offering		(86,257,242	)		(402,564	)		86,257,242		86		402,478							402,564					402,564
Issuance of common stock upon closing of initial     public offering, net of issuance costs and underwriting     fees of $23,631								20,125,000		20		258,099							258,119					258,119
Fair value adjustment to redeemable convertible preferred    stock warrants upon conversion into common stock warrants												13,740							13,740					13,740
Exercise of stock options								293,807		-		1,534							1,534					1,534
Exercise of common stock warrants								11,010		-		73							73					73
Cashless exercise of common stock warrants								464,297		1		-							1					1
Stock-based compensation expense