10-Q

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, 2021

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: 001-39427

Oak Street Health, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	84-3446686
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
30 W. Monroe Street Suite 1200 Chicago, Illinois 60603	60603
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (312) 733-9730

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	OSH	NYSE

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 August 4, 2021, the registrant had 240,858,856 shares of common stock, $0.001 par value per share, outstanding.

PART I.	FINANCIAL INFORMATION	5
Item 1.	Financial Statements	5
	Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020	6
	Consolidated Statements of Operations for the Three and Six-Months Ended June 30, 2021 and 2020 (unaudited)	7
	Consolidated Statements of Comprehensive Loss for the Three and Six-Months Ended June 30, 2021 and 2020 (unaudited)	8
	Consolidated Statements of Changes in Redeemable Investor Units and Stockholders’ Equity/Members’ (Deficit) for the Three and Six-Months Ended June 30, 2021 and 2020 (unaudited)	9
	Consolidated Statements of Cash Flows for the Six-Months Ended June 30, 2021 and 2020 (unaudited)	11
	Notes to Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46
Item 4.	Controls and Procedures	46
PART II.	OTHER INFORMATION	47
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	49
Item 3.	Defaults upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	50

FORWARD-LOOKING STATEMENTS

Throughout this Quarterly Report on Form 10-Q, we make “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as “may,” “will,” “estimate,” “intend,” “plan,” “continue,” “believe,” “expect,” “anticipate,” “target,” “should,” “could,” “potential,” “opportunity,” “goal” or similar terminology. The forward-looking statements contained in this Quarterly Report on Form 10-Q are generally set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” but may be found in other sections as well. These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of timing, future results or performance. Therefore, you should not rely on any of these forward-looking statements as predictions of future events. Actual results may differ materially from those contemplated in these statements due to a variety of risks and uncertainties and other factors, including, among other things:

• our history of net losses and our ability to achieve or maintain profitability in an environment of increasing expenses;

• the impact of the Coronavirus disease (“COVID-19”) pandemic or any other pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide on our business, financial condition and results of operations;

• the effect of our relatively limited operating history on investors’ ability to evaluate our current business and future prospects;

• the viability of our growth strategy and our ability to realize expected results;

• our ability to attract new patients;

• the dependence of our revenues and operations on a limited number of key payors;

• the risk of termination or non-renewal of the Medicare Advantage contracts held by the health plans with which we contract, or the termination or non-renewal of our contracts with those plans;

• the impact on our business from changes in the payor mix of our patients and potential decreases in our reimbursement rates;

• our ability to manage our growth effectively, execute our business plan, maintain high levels of service and patient satisfaction and adequately address competitive challenges;

• our ability to compete in the healthcare industry;

• our ability to timely enroll new physicians and other providers in governmental healthcare programs before we can receive reimbursement for their services;

• the impact on our business of reductions in Medicare reimbursement rates or changes in the rules governing the Medicare program;

• our dependence on reimbursements by third-party payors and payments by individuals;

• our assumption under most of our agreements with health plans of some or all of the risk that the cost of providing services will exceed our compensation;

• the impact on our business of renegotiation, non-renewal or termination of capitation agreements with health plans;

• risks associated with estimating the amount of revenues and refund liabilities that we recognize under our risk agreements with health plans;

• the impact on our business of security breaches, loss of data or other disruptions causing the compromise of sensitive information or preventing us from accessing critical information;

• our ability to develop and maintain proper and effective internal control over financial reporting;

• the impact on our business of disruptions in our disaster recovery systems or management continuity planning;

• the potential adverse impact of legal proceedings and litigation;

• the impact of reductions in the quality ratings of the health plans we serve;

• the risk of our agreements with the physician equity holder of our practices being deemed invalid;

• our ability to maintain and enhance our reputation and brand recognition;

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• our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems;

• our ability to obtain, maintain and enforce intellectual property protection for our technology;

• the potential adverse impact of claims by third parties that we are infringing on or otherwise violating their intellectual property rights;

• our ability to protect the confidentiality of our trade secrets, know-how and other internally developed information;

• the impact of any restrictions on our use of or ability to license data or our failure to license data and integrate third-party technologies;

• risks associated with our use of “open-source” software;

• our dependence on our senior management team and other key employees;

• the concentration of our primary care centers in Illinois, Michigan, Pennsylvania, Ohio, Texas and Indiana;

• the impact on our business of an economic downturn;

• our ability to attract and retain highly qualified personnel;

• our management team’s limited experience managing a public company;

• the impact on our business of the termination of our leases, increases in rent or inability to renew or extend leases;

• the impact of failures by our suppliers, material price increases on supplies, lack of reimbursement for drugs we purchase or limitations on our ability to access new technology or products;

• our ability to maintain our corporate culture;

• the impact of competition for physicians and nurses, shortages of qualified personnel and related increases in our labor costs;

• our ability to attract and retain the services of key primary care physicians;

• the risk that our submissions to health plans may contain inaccurate or unsupportable information regarding risk adjustment scores of members;

• our ability to accurately estimate incurred but not reported medical expense;

• the impact of negative publicity regarding the managed healthcare industry;

• the impact of state and federal efforts to reduce Medicaid spending;

• the impact on our centers of adverse weather conditions and other factors beyond our control;

• factors related to our issuance of Convertible Senior Notes (as defined later within this Quarterly Report on Form-10-Q); and

• other factors disclosed in the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q and in similar sections in our other filings with the Securities and Exchange Commission (“SEC”).

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. 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 the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q 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 or affect us or our operations in the way we expect. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

4

PART I FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

OAK STREET HEALTH, INC.

CONSOLIDATED FINANCIAL STATEMENTS

For the quarterly period ended June 30, 2021

5

OAK STREET HEALTH, INC.

CONSOLIDATED BALANCE SHEETS

($ in millions, except shares/units and per share data)

		June 30, 2021 (unaudited)				December 31, 2020
Assets
Current assets:
Cash	$		409.9		$		409.3
Restricted cash			15.9				10.4
Other patient service receivables, net (Humana comprised $0.1 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)			0.5				7.6
Capitated accounts receivable (Humana comprised $109.8 and $65.7 as of June 30, 2021 and December 31, 2020, respectively)			383.7				248.9
Marketable debt securities			669.2				-
Prepaid expenses			3.7				6.8
Other current assets			7.3				4.2
Total current assets			1,490.2				687.2
Long-term assets:
Property and equipment, net			91.8				78.8
Security deposits			1.5				1.3
Operating lease right-of-use assets (Humana comprised $49.8 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)			127.4				-
Goodwill			11.4				9.6
Intangible assets, net			2.8				3.0
Other long-term assets			0.9				1.1
Total assets	$		1,726.0		$		781.0
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$		15.2		$		8.8
Accrued compensation and benefits			39.9				32.0
Liability for unpaid claims (Humana comprised $96.6 and $78.5 as of June 30, 2021 and December 31, 2020, respectively)			357.4				262.1
Other liabilities (Humana comprised $13.7 and $4.6 as of June 30, 2021 and December 31, 2020, respectively)			25.5				12.6
Total current liabilities			438.0				315.5
Long-term liabilities:
Long-term operating lease liabilities (Humana comprised $46.3 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)			135.4				-
Deferred rent expense (Humana comprised $0.0 and $0.8 as of June 30, 2021 and December 31, 2020, respectively)			-				13.5
Other long-term liabilities (Humana comprised $28.3 and $20.1 as of June 30, 2021 and December 31, 2020, respectively)			32.6				28.8
Long-term debt			899.2				-
Total liabilities			1,505.2				357.8
Commitments and contingencies (See Notes 7 & 14)
Stockholders' equity:
Preferred Stock, par value $0.001; 50,000,000 shares authorized as of June 30, 2021 and December 31, 2020; no shares issued and outstanding as of June 30, 2021 and December 31, 2020			-				-
Common stock, par value $0.001; 500,000,000 shares authorized as of June 30, 2021 and December 31, 2020; 240,785,554 and 240,756,714 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively			0.2				0.2
Additional paid-in capital (Humana comprised $50.0 and $50.0 as of June 30, 2021 and December 31, 2020, respectively)			935.0				971.8
Accumulated other comprehensive loss			(0.3	)			-
Accumulated deficit			(717.2	)			(555.8	)
Total stockholders' equity allocated to Oak Street Health, Inc.			217.7				416.2
Non-controlling interests			3.1				7.0
Total stockholders' equity			220.8				423.2
Total liabilities and stockholders' equity	$		1,726.0		$		781.0

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

6

OAK STREET HEALTH, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

($ in millions, except shares/units and per share data)

		Three-Months Ended								Six-Months Ended
		June 30, 2021				June 30, 2020				June 30, 2021				June 30, 2020
Revenues:
Capitated revenue (Humana comprised $127.1 and $97.4 for the three-months ended June 30, 2021 and 2020, respectively, and $248.5 and $193.9 for the six-months ended June 30, 2021 and 2020, respectively)	$		346.7		$		208.0		$		637.9		$		404.6
Other patient service revenue (Humana comprised $1.5 and $0.8 for the three-months ended June 30, 2021 and 2020, respectively, and $2.7 and $1.6 for the six-months ended June 30, 2021 and 2020, respectively)			6.4				6.4				11.9				11.6
Total revenues			353.1				214.4				649.8				416.2
Operating expenses:
Medical claims expense (Humana comprised $105.7 and $64.0 for the three-months ended June 30, 2021 and 2020, respectively, and $178.7 and $123.8 for the six-months ended June 30, 2021 and 2020, respectively)			281.4				155.4				481.1				287.7
Cost of care, excluding depreciation and amortization (Humana comprised $2.3 and $1.2 for the three-months ended June 30, 2021 and 2020, respectively, and $4.3 and $2.4 for the six-months ended June 30, 2021 and 2020, respectively)			67.0				39.5				127.3				83.3
Sales and marketing			25.9				10.1				50.0				22.0
Corporate, general and administrative expenses			74.2				31.1				147.3				55.4
Depreciation and amortization			3.9				2.7				7.2				5.2
Total operating expenses			452.4				238.8				812.9				453.6
Loss from operations			(99.3	)			(24.4	)			(163.1	)			(37.4	)
Other (expense)/income:
Interest expense, net			(1.0	)			(2.4	)			(1.2	)			(4.9	)
Other			-				-				-				0.1
Total other (expense)			(1.0	)			(2.4	)			(1.2	)			(4.8	)
Net loss			(100.3	)			(26.8	)			(164.3	)			(42.2	)
Net loss attributable to non-controlling interests			2.3				0.1				2.9				0.4
Net loss attributable to Oak Street Health, Inc.	$		(98.0	)	$		(26.7	)	$		(161.4	)	$		(41.8	)
Undeclared and deemed dividends	$		-		$		(12.2	)	$		-		$		(21.8	)
Net loss attributable to common stock/unitholders			(98.0	)			(38.9	)			(161.4	)			(63.6	)
Weighted average common stock outstanding - basic and diluted1			221,168,630			N/A					221,595,670			N/A
Net loss per share – basic and diluted	$		(0.44	)		N/A			$		(0.73	)		N/A

¹  Basic and diluted earnings per share of common stock is applicable only for periods after the Company's IPO that was completed on August 10, 2020.

7

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

OAK STREET HEALTH, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

($ in millions, except shares/units and per share data)

		Three-Months Ended								Six-Months Ended
		June 30, 2021				June 30, 2020				June 30, 2021				June 30, 2020
Net loss	$		(100.3	)	$		(26.8	)	$		(164.3	)	$		(42.2	)
Other comprehensive loss:
Net unrealized loss on marketable debt securities, net of tax			(0.3	)			-				(0.3	)			-
Comprehensive loss			(100.6	)			(26.8	)			(164.6	)			(42.2	)
Less: Comprehensive loss attributable to non-controlling interests			2.3				0.1				2.9				0.4
Comprehensive loss attributable to Oak Street Health, Inc.	$		(98.3	)	$		(26.7	)	$		(161.7	)	$		(41.8	)

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

8

OAK STREET HEALTH, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN

REDEEMABLE INVESTOR UNITS AND STOCKHOLDERS’ EQUITY/MEMBERS’ (DEFICIT)

(Unaudited)

($ in millions, except shares/units and per share data)

	Three-Months Ended
	Redeemable Investor Units					Members’ Capital
	Shares Issued			Amount		Shares Issued				Amount			Accumulated Deficit				Non-controlling Interests			Total Equity/Deficit
Balances March 31, 2020		12,472,242	$		545.0		2,790,395		$		6.0			(369.4	)	$		4.9	$		(358.5	)
Issuance of common units		-			-		829,567				-			-				-			-
Tender offer		-			-		(131,151	)			(5.9	)		(13.5	)			-			(19.4	)
Repurchases – profits interests		-			-		(1,594	)			-			-				-			-
Forfeitures – profits interests		-			-		(25,757	)			(0.1	)		-				-			(0.1	)
Unit-based compensation expense		-			-						3.5			-				-			3.5
Net loss		-			-						-			(26.8	)			-			(26.8	)
Balances June 30, 2020		12,472,242	$		545.0		3,461,460		$		3.5			(409.7	)	$		4.9	$		(401.3	)

	Three-Months Ended
	Common Stock
	Shares Issued				Amount			Additional Paid-In Capital				Accumulated Deficit				Accumulated Other Comprehensive Loss				Non-controlling Interests				Total Equity/Deficit
Balances March 31, 2021		240,784,438		$		0.2	$		891.7		$		(619.2	)	$		-		$		5.3		$		278.0
Issuance of common stock upon vesting of restricted stock units		4,375				-			-				-				-				-				-
Issuance of common stock upon exercise of options		121,507				-			2.5				-				-				-				2.5
Shares withheld related to net settlement of stock based awards		(630	)			-			-				-				-				-				-
Forfeitures		(124,136	)			-			(0.7	)			-				-				-				(0.7	)
Stock compensation expense		-				-			41.5				-				-				-				41.5
Payments from non-controlling interests		-				-			-				-				-				0.1				0.1
Net unrealized loss on marketable debt securities		-				-			-				-				(0.3	)			-				(0.3	)
Net loss		-				-			-				(98.0	)			-				(2.3	)			(100.3	)
Balances June 30, 2021		240,785,554		$		0.2	$		935.0		$		(717.2	)	$		(0.3	)	$		3.1		$		220.8

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

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OAK STREET HEALTH, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN

REDEEMABLE INVESTOR UNITS AND STOCKHOLDERS’ EQUITY/MEMBERS’ (DEFICIT)

(Unaudited)

($ in millions, except shares/units and per share data)

	Six-Months Ended
	Redeemable Investor Units					Members’ Capital
	Shares Issued			Amount		Shares Issued				Amount			Accumulated Deficit				Non-controlling Interests				Total Equity/Deficit
Balances December 31, 2019		11,000,619	$		320.6		2,530,864		$		4.2			(354.4	)	$		5.3		$		(344.9	)
Issuance of series I, II and III investor units		1,471,623			224.4		-				-			-				-				-
Issuance of common units		-			-		1,095,067				-			-				-				-
Tender offer							(131,151	)			(5.9	)		(13.5	)			-				(19.4	)
Repurchases – profits interests		-			-		(2,031	)			-			-				-				-
Forfeitures – profits interests		-			-		(31,289	)			(0.1	)		-				-				(0.1	)
Unit-based compensation expense		-			-		-				5.3			-				-				5.3
Net loss		-			-		-				-			(41.8	)			(0.4	)			(42.2	)
Balances June 30, 2020		12,472,242	$		545.0		3,461,460		$		3.5			(409.7	)	$		4.9		$		(401.3	)

	Six-Months Ended
	Common Stock
	Shares Issued				Amount			Additional Paid-In Capital				Accumulated Deficit				Accumulated Other Comprehensive Income (Loss)				Non-controlling Interest				Total Equity/Deficit
Balances December 31, 2020		240,756,714		$		0.2	$		971.8		$		(555.8	)	$		-		$		7.0		$		423.2
Purchase of capped calls		-				-			(123.6	)			-				-				-				(123.6	)
Issuance of common stock upon vesting of restricted stock units		22,239				-			-				-				-				-				-
Issuance of common stock upon exercise of options		174,814				-			3.6				-				-				-				3.6
Shares withheld related to net settlement of stock based awards		(630	)			-			-				-				-				-				-
Forfeitures		(167,583	)			-			(0.8	)			-				-				-				(0.8	)
Stock compensation expense		-				-			84.0				-				-				-				84.0
Payments from non-controlling interest		-				-			-				-				-				0.1				0.1
Payments to non-controlling interest		-				-			-				-				-				(1.1	)			(1.1	)
Net unrealized loss on marketable debt securities		-				-			-				-				(0.3	)			-				(0.3	)
Net loss		-				-			-				(161.4	)			-				(2.9	)			(164.3	)
Balances June 30, 2021		240,785,554		$		0.2	$		935.0		$		(717.2	)	$		(0.3	)	$		3.1		$		220.8

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

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OAK STREET HEALTH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

($ in millions)

		Six-Months Ended
		June 30, 2021				June 30, 2020
Cash flows from operating activities:
Net loss	$		(164.3	)	$		(42.2	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount on debt and related issuance costs			1.3				0.8
Accretion of discounts and amortization of premiums on short-term marketable securities, net			0.4				-
Depreciation and amortization			7.2				5.2
Non-cash operating lease costs			7.3				-
Stock and unit-based compensation, net of forfeitures			83.2				5.2
Change in fair value of bifurcated derivative			-				0.3
Change in fair value of marketable debt securities			-				-
Change in operating assets and liabilities, net of impact of acquisitions:
Accounts receivable			(127.7	)			(75.9	)
Prepaid expenses and other current assets			(0.9	)			1.9
Security deposits and other long-term assets			-				0.1
Accounts payable			4.3				(6.9	)
Accrued compensation and benefits			7.9				(6.0	)
Liability for unpaid claims			95.4				65.2
Operating lease liabilities			(6.6	)			-
Other current liabilities			1.6				6.1
Other long-term liabilities			8.9				2.9
Other			-				0.1
Net cash used in operating activities			(82.0	)			(43.2	)
Cash flows from investing activities:
Proceeds from sales of marketable debt securities			2.2				-
Purchases of marketable debt securities			(672.0	)			-
Purchase of business			(1.0	)			-
Purchases of property and equipment			(18.0	)			(8.0	)
Net cash used in investing activities			(688.8	)			(8.0	)
Cash flows from financing activities:
Proceeds from borrowings on convertible senior notes, net			897.9				-
Purchase of capped calls			(123.6	)			-
Proceeds from issuance of redeemable investor units			-				224.4
Capital contributions from non-controlling interests			0.1				-
Capital distributions to non-controlling interests			(1.1	)			-
Tender Offer - common units			-				(19.4	)
Proceeds from exercise of options			3.6				-
Net cash provided by financing activities			776.9				205.0
Net change in cash, cash equivalents and restricted cash			6.1				153.8
Cash, cash equivalents and restricted cash, beginning of period			419.7				42.2
Cash, cash equivalents and restricted cash, end of period	$		425.8		$		196.0
Supplemental disclosures
Cash paid for interest			-				4.0
Additions to construction in process funded through accounts payable			2.1				-

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

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OAK STREET HEALTH, INC.  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION AND NATURE OF BUSINESS

Description of Business

Oak Street Health, Inc. (collectively with its consolidated subsidiaries is referred to as “Oak Street Health,” “OSH,” “we,” “us,” “our,” or the “Company”) was formed as a Delaware corporation on October 22, 2019 for the purpose of completing a public offering and related reorganization transactions (collectively referred to as the “IPO”) in order to carry on the business of Oak Street Health, LLC (“OSH LLC”) and its affiliates. As the managing member of OSH LLC, Oak Street Health, Inc. operates and controls all of the business affairs of OSH LLC and its affiliates.

The Company operates primary care centers serving Medicare beneficiaries. The Company, through its centers and management services organization, combines an innovative care model with superior patient experience. The Company invests resources into primary care to prevent unnecessary acute events and manage chronic illnesses. The Company engages Medicare eligible patients through the use of an innovative community outreach approach. Once patients are engaged, the Company integrates population health analytics, social support services and primary care into the care model to drive improved outcomes. The Company contracts with health plans to generate medical costs savings and realize a return on its investment in primary care. As of June 30, 2021, the Company operated 95 centers.

Initial Public Offering and Reorganization Transactions

On August 10, 2020, we completed our IPO in which we issued and sold 17,968,750 shares of common stock, par value $0.001 per share, at an offering price of $21.00 per share. The share amount included the exercise in full of the underwriters’ option to purchase 2,343,750 additional shares of common stock. We received net proceeds of $351.2 million, after deducting underwriting discounts and commissions of $22.6 million and deferred offering costs of $3.5 million. Deferred, direct offering costs were capitalized and recorded against proceeds from the offering and consisted of fees and expenses incurred in connection with the sale of our common stock in the IPO, including the legal, accounting, printing and other offering related costs.

In conjunction with the IPO, OSH LLC completed a series of transactions that resulted in Oak Street Health, Inc. becoming the ultimate parent company of OSH LLC and subsidiaries. Additionally, immediately prior to the closing of the IPO, unitholders of OSH LLC exchanged their membership interests for common stock in Oak Street Health, Inc. as part of the related IPO reorganization transactions. All 15,928,876 units of our then outstanding redeemable investor units (preferred stock including their respective undeclared and deemed dividends) and members’ capital (former founders’ units and incentive units/profits interests) plus 1,924 of options to purchase incentive units were converted into 200,286,312 shares of common stock of the Company and 22,612,472 shares of restricted common stock subject to service-based vesting (“RSA”) of the Company.

Basis of Presentation and Consolidation

The accompanying unaudited interim consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such regulations. These financial statements have been prepared on a basis consistent with the accounting principles applied for the fiscal year ended December 31, 2020 in the Company’s Form 10-K filed with the SEC. In the opinion of management, all adjustments (consisting of all normal and recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six-months ended June 30, 2021, including the impact of COVID-19, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

The consolidated financial statements of the Company include the financial statements of all wholly owned subsidiaries and majority-owned or controlled companies. For those consolidated subsidiaries where our ownership is less than 100%, the portion of the net income or loss allocable to the non-controlling interests is reported as “Net loss (gain) attributable to non-controlling interests” in the consolidated statements of operations. Intercompany balances and transactions have been eliminated in consolidation.

The Company evaluates its ownership, contractual and other interests in entities to determine if it has any variable interest in a variable interest entity (“variable interest entities” or “VIEs”). These evaluations are complex, involve judgment and the use of estimates and assumptions based on available historical information, among other factors. The Company considers itself to control an entity if it

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is the majority owner of or has voting control over such entity. The Company also assesses control through means other than voting rights and determines which business entity is the primary beneficiary of the VIE. The Company consolidates VIEs when it is determined that the Company is the primary beneficiary of the VIE. Management performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change. Changes in consolidation status are applied prospectively.

Upon completion of our IPO, OSH’s sole material asset is its interest in OSH LLC and its affiliates. In accordance with the master structuring agreement dated August 10, 2020, by and among OSH and the other signatories party thereto (the “Master Structuring Agreement”), we have all management powers over the business and affairs of OSH LLC and to conduct, direct and exercise full control over the activities of OSH LLC. Due to our power to control the activities most directly affecting the results of OSH LLC, we are considered the primary beneficiary of the VIE. Accordingly, following the effective date of the IPO, we consolidate the financial results of OSH LLC and its affiliates and the financial statements for the periods prior to the IPO have been adjusted to combine the previously separate entities for presentation purposes.

Oak Street Health MSO LLC (“MSO”), a wholly owned subsidiary of OSH LLC, was formed in 2013 to provide a wide range of management services to the Physician Groups (as defined below). Activities include but are not limited to operational support of the centers, marketing, information technology infrastructure and the sourcing and managing of health plan contracts. Oak Street Health Physicians Group PC, OSH-IN Physicians Group PC, OSH-MI Physicians Group PC, OSH-OH Physicians Group LLC, OSH-PA Physicians Group PC, OSH-RI Physicians Group PC, Oak Street Health of Texas, PLLC, Griffin Myers Medical PC, Oak Street Health Physicians Group of South Carolina LLC, Oak Street Health Physicians Group of Louisiana LLC, Oak Street Health Physicians Group of Mississippi LLC, Oak Street Health Physicians Group of Alabama, LLC, Oak Street Health Physicians Group of Kentucky, LLC, Oak Street Health Physicians Group of Missouri, Oak Street Health Physicians Group of New Mexico, LLC, Oak Street Health Physicians Group of Arizona, PLLC and Oak Street Health Physicians Group of Oklahoma, LLC (collectively, the “Physician Groups”) employ healthcare providers to deliver primary care services to the Medicare covered population of Alabama, Georgia, Illinois, Indiana, Louisiana, Michigan, Mississippi, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee and Texas. These entities are consolidated as each are considered variable interest entities where the Company has a controlling financial interest (see Note 15).

In addition, Oak Street Health is the majority interest owner in three joint ventures: OSH-PCJ Joliet, LLC, OSH-RI, LLC and OSH-ESC Joint Venture, LLC, which are consolidated in the Company’s financial statements. In March 2021, distributions were made from OSH-PCJ Joliet, LLC to Oak Street Health MSO, LLC (50.1% ownership) and Primary Care Physicians of Joliet (49.9% ownership) totaling $1.1 million to each owner.  

Emerging Growth Company Status

We currently meet the definition of an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We elected to use this extended transition period until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period. Based on the aggregate worldwide market value of our shares of common stock held by our non-affiliate stockholders as of June 30, 2021, we expect that we will become a “large accelerated filer” and lose emerging growth status beginning with our Annual Report on Form 10-K for the year ended December 31, 2021. We will also no longer be exempt from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and our independent registered public accounting firm will evaluate and report on the effectiveness of internal control over financial reporting.

Use of Estimates

In accordance with its policy, the Company reviews its estimated liability for unpaid claims on an ongoing basis. During the second quarter of 2021, this review indicated that actual medical claims expense was higher than prior period estimates due to COVID-19 related healthcare costs and a change in historical utilization patterns. As a result, as of the period ended June 30, 2021, the Company updated its estimate of its liability of unpaid claims, primarily based on historical experience of medical claims expense. The result of this updated information was additional medical claims expense for the three-months ended June 30, 2021 of approximately $19.0 million, or ($0.09) per share (basic and diluted) and for the six-months ended June 30, 2021 of approximately $1.4 million, or ($0.01) per share (basic and diluted) related to prior periods.

COVID-19 CARES ACT

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On March 27, 2020, the United States President signed into law the Coronavirus Aid, Relief and Economic Securities Act (“CARES Act”) which provides economic assistance to a wide array of industries, including healthcare. Thus far, the Company has taken the following actions related to this legislation:

• Provider Relief Funds. The U.S. Department of Health and Human Services (“HHS”) distributed grants to healthcare providers to offset the impacts of COVID-19 pandemic related expenses and lost revenues through the Public Health and Social Services Emergency Fund. Grants received are subject to the terms and conditions of the program, including that such funds may only be used to prevent, prepare for and respond to COVID-19 and will reimburse only for health care related expenses, general and administrative expenses or lost revenues that are attributable to the COVID-19 pandemic as defined by the HHS. Payments from this fund are not loans and, therefore, they are not subject to repayment. We recognize grant payments as income when there is reasonable assurance that we have complied with conditions associated with the grant. Our estimates could change materially in the future based on the government’s evolving compliance guidance. During the six-months ended June 30, 2021 and 2020, the Company received $2.6 million and $4.7 million, respectively, related to these grants.  The Company recognized $1.6 million and $0.8 million, for the three-months ended June 30, 2021 and 2020, respectively, and $3.5 million and $0.8 million for the six-months ended June 30, 2021 and 2020, respectively, as income to offset COVID-19 pandemic related expenses incurred in the cost of care, excluding depreciation and amortization.  There were no unrecognized grants on the balance sheet as of June 30, 2021.

• Medicare Accelerated and Advanced Payment Program. The Centers for Medicare & Medicaid Services (“CMS”) expanded its Accelerated and Advance Payment Program which allows participants to receive expedited payments during periods of national emergencies. Under the program, we received an interest-free advancement of 100% of our Medicare payment amount for a three-month period. Repayment will begin one year from the date the payments were received and will be paid back against future fee-for-service claims.  Beginning at one year from the date the payment was issued and continuing for eleven months, payments will be recouped at a rate of 25%.  After the eleven months end, payments will be recouped at a rate of 50% for another six months, after which any remaining balance will become due. During 2020, the Company received approximately $1.5 million in CMS advance payments, which will be paid back against future fee-for-service claims. During the three and six-months ended June 30, 2021, the Company paid back $0.2 million and recorded an offset to other patient service receivables. As of June 30, 2021, there was $0.5 million and $0.8 million remaining in other current liabilities and other long-term liabilities, respectively.

• Payroll Tax Deferral. Under the CARES Act, the Company elected to defer payment on its portion of Social Security taxes, on an interest free basis, incurred from March 27, 2020 to December 31, 2020. One-half of such deferral amount will become due on each of December 31, 2021 and December 31, 2022. The total deferred payroll taxes were $7.0 million, $3.5 million was classified as a short-term liability and $3.5 million was classified as a long-term liability at June 30, 2021.

• Temporary Suspension of Medicare Sequestration. The Budget Control Act of 2011 requires a mandatory, across the board reduction in federal spending, called a sequestration. Medicare fee-for-service claims with dates of service or dates of discharge on or after April 1, 2013 incur a 2.0% reduction in Medicare payments. All Medicare rate payments and settlements have incurred this mandatory reduction and it will continue to remain in place through at least 2023, unless Congress takes further action. In response to COVID-19, the CARES Act temporarily suspended the automatic 2.0% reduction of Medicare claim reimbursements for the period of May 1, 2020 through December 31, 2021, which immaterially increased both revenues and medical expenses for the three and six-months ended June 30, 2021 and 2020.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company described its significant accounting policies in Note 2 of the Notes to Consolidated Financial Statements for the year ended December 31, 2020 included in its Form 10-K. During the six-months ended June 30, 2021, there were no significant changes to those accounting policies, other than the adoption of ASC 842 (as defined below), Accounting Standards Update (“ASU”) 2020-06 and those policies impacted by the new accounting pronouncements adopted during the period and further described below as well as in the “Recently Adopted Accounting Pronouncements” section.

Cash and Cash Equivalents

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 and cash equivalents consisted of cash on deposit and investments in money market funds.

Marketable Debt Securities

The Company’s investments in marketable debt securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in total equity (deficit). The

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Company determines the appropriate classification of these investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company classifies the available-for-sale investments as current assets under the caption marketable debt securities on the consolidated balance sheets as these investments generally consist of highly marketable securities that are identified to be available to meet near-term cash requirements and fund current operations. Realized gains and losses and declines in value determined to be other-than-temporary are based on the specific identification method and are included as a component of other (expense) income, net in the consolidated statements of operations.

The Company periodically evaluates its investments in marketable debt securities for other-than-temporary impairment. When assessing short-term marketable security investments for other-than-temporary declines in value, the Company considers such factors as, among other things, how significant the decline in value is as a percentage of the original cost, how long the market value of the investment has been less than its original cost, the Company’s ability and intent to retain the short-term marketable security investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general. If any adjustment to fair value reflects a decline in the value of the marketable security that the Company considers to be other-than-temporary, the Company reduces the marketable debt securities through a charge to the consolidated statement of operations. No such adjustments were necessary during the periods presented.

Leases

The Company leases offices, operating facilities, vehicles and IT equipment, which are accounted for as operating leases. These leases have remaining lease terms of up to 30 years, inclusive of renewal or termination options that the Company is reasonably certain to exercise. The Company determines if an arrangement is a lease at inception and evaluates the lease classification (i.e., operating lease or financing lease) at that time. Lease arrangements with an initial term of 12 months or less are considered short-term leases and are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the term of the lease.

Operating leases are included in operating lease right-of-use assets, operating lease liabilities, current portion (recorded within other current liabilities) and long-term operating lease liabilities on the Company’s consolidated balance sheets. Operating lease right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company has no financing leases.

The Company uses its incremental borrowing rate on the commencement date for determining the present value of lease payments. The Company considers the likelihood of exercising options to extend or terminate the lease when determining the lease term.

The Company has lease agreements with lease and non-lease components. The Company has elected the practical expedient to account for the lease and non-lease components as a single lease component for all leases.

Convertible Debt

The Company evaluates all conversion, repurchase and redemption features contained in a debt instrument to determine if there are any embedded features that require bifurcation as a derivative.  In accounting for the issuance of the 0% Convertible Senior Notes due 2026 issued in March 2021 (the “Convertible Senior Notes”), the Company recorded a long-term debt liability equal to the proceeds received from issuance, including the embedded conversion feature, net of the debt issuance and offering costs on the Company’s consolidated balance sheets. The conversion feature is not required to be accounted for separately as an embedded derivative. The Company amortizes debt issuance and offering costs over the term of the Convertible Senior Notes as interest expense utilizing the effective interest method on the Company’s consolidated statements of operations.

Capped Call Transactions

In connection with the issuance of the Convertible Senior Notes, the Company entered into capped call transactions. The capped call transactions are expected generally to reduce the potential dilution to the holders of the Company’s common stock upon any conversion of the Convertible Senior Notes. The capped call transactions are purchased call options on the issuer’s stock that settle by reference to the Company’s stock with no forced cash payment. The terms of the capped call transactions allow the purchased call options to be classified as an equity instrument and will not be subsequently remeasured as long as the conditions for equity classification continue to be met. The Company recorded the cash used to purchase the capped call transactions as a reduction to additional paid-in

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capital within the Company’s consolidated statements of changes in redeemable investor units and stockholders’ equity/members’ (deficit).

Net Income (Loss) Per Share

The diluted net income (loss) per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period determined using the treasury stock method or the if-converted method, as appropriate. For purposes of this calculation, stock options, restricted stock units, restricted stock awards and contingently issuable shares under our Convertible Senior Notes are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive.

Recently Adopted Accounting Pronouncements

In 2016, the Financial Accounting Standards Board (“FASB”) issued guidance on leases, Accounting Standards Updates 2016-02, Leases (“ASU 2016-02), with amendments issued in 2018 and 2019 (collectively, “ASC 842”). ASC 842 requires lessees to recognize assets and liabilities related to lease arrangements on the balance sheet; leases are to be recorded as a lease liability (on a discounted basis) with a corresponding right-of-use (“ROU”) asset. Leases will be classified as finance or operating, with the classification affecting the pattern and classification of expense recognition over the lease term. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. This guidance also expands the required quantitative and qualitative disclosures for leasing arrangements and gives rise to other changes impacting certain aspects of lessee and lessor accounting. The two permitted transition methods under the guidance are the modified retrospective transition approach, which requires application of the guidance for all comparative periods, and the cumulative effect adjustment approach, which requires prospective application the adoption date.

The Company adopted ASC 842 effective January 1, 2021 under the modified retrospective transition method. Under this method, financial statements for periods after the adoption date are presented in accordance with ASC 842 and prior-period financial statements continue to be presented in accordance with ASC 840, the accounting standard originally in effect for such periods. The package of practical expedients included that the Company was not required to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. Also, as part of the adoption, the Company elected to not recognize short-term leases (those with lease terms less than a year) on the consolidated balance sheets, not separate lease and non-lease components and did not use hindsight to determine lease term. The most significant impact was the recognition of ROU assets and lease liabilities for our operating leases. The ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent an obligation to make lease payments arising from the lease at lease commencement date. The Company’s operating leases resulted in the recognition of additional assets and the corresponding liabilities on its consolidated balance sheets, however it did not have a material impact on the consolidated statements of operations or cash flows for the three and six- months ended June 30, 2021. The Company recognized ROU assets and lease liabilities for operating leases of $108.1 million and $(126.8) million, respectively, upon adoption as of January 1, 2021. The difference between the lease liability and right-of-use asset mainly related to the reversal of existing deferred rent balances.

The Company utilized a comprehensive approach to assess the impact of this guidance on the consolidated financial statements and related disclosures, including the increase in assets and liabilities on the consolidated balance sheets and the impact on the current lease portfolio.

See Note 7 in this Quarterly Report for our lease accounting policy and the quarterly impact of our adoption of ASC 842.

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06 Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity. Among other changes, ASU 2020-06 removes the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share and updates the disclosure requirements in ASC 470-20, making them easier to understand for financial statement preparers and improving the decision-usefulness and relevance of the information for financial statement users. This ASU was early adopted on January 1, 2021 and applied to the Company’s 0% Convertible Senior Notes due 2026 issued in March 2021 (Refer to Note 10, Convertible Senior Notes, for further information regarding the Company’s Convertible Senior Notes). The guidance was not applied to any other debt arrangements at the Company.  

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  In December 2019, the FASB issued ASU 2019-12, “Income Taxes Topic 740-Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application of ASC 740. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods therein. The Company adopted the new guidance on January 1, 2021, noting no impact on its consolidated financial statements and related disclosures.

In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (“ASU 2020-01”). ASU 2020-01 clarifies the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The Company adopted the new guidance on January 1, 2021, noting no impact on its consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In October 2018, the FASB issued ASU 2018-17, Consolidation – Targeted Improvements to Related Party Guidance for Variable Interest Entities (Topic 810) (“ASU 2018-17”). ASU 2018-17 eliminates the requirement that entities consider indirect interests held through related parties under common control in their entirety when assessing whether a decision-making fee is a variable interest. Instead, the reporting entity will consider such indirect interests on a proportionate basis. ASU 2018-17 is effective for a private company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Due to the expected loss of emerging growth status for the year-ended December 31, 2021, this guidance will be effective in our annual filing for the year ended December 31, 2021. All entities are required to apply the adjustments in ASU 2018-17 retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The Company is currently evaluating the impact ASU 2018-17 will have on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The guidance is effective for private companies beginning January 1, 2023. Due to the expected loss of emerging growth status for the year-ended December 31, 2021, this guidance will be effective in our annual filing for the year ended December 31, 2021. The new current expected credit losses (“CECL”) model generally calls for the immediate recognition of all expected credit losses and applies to loans, accounts and trade receivables as well as other financial assets measured at amortized cost, loan commitments and off-balance sheet credit exposures, debt securities and other financial assets measured at fair value through other comprehensive income, and beneficial interests in securitized financial assets. The new guidance replaces the current incurred loss model for measuring expected credit losses, requires expected losses on available for sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities, and provides for additional disclosure requirements. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements.

We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements.

NOTE 3. REVENUE RECOGNITION

Both our capitated and fee-for-service revenue generally relate to contracts with patients in which our performance obligation is to provide healthcare services to the patients. Revenues are recorded during the period our obligations to provide healthcare services are satisfied as noted below within each service type.

Capitated Revenue and Accounts Receivable

Capitated revenue consists primarily of capitated fees for medical services provided by us under capitated arrangements directly made with various Medicare Advantage managed care payors or the Centers for Medicare and Medicaid Services (“CMS”). The Company receives a fixed fee per patient under what is typically known as a “risk contract.” Risk contracting, or full risk capitation, refers to a model in which the Company receives from the third-party payor a fixed payment per patient per month (“PPPM” payment) for a defined patient population, and the Company is then responsible for providing healthcare services required by that patient population. The Company is responsible for incurring or paying for the cost of healthcare services required by that patient population in addition to those provided by the Company. Fees are recorded gross in revenues because the Company is acting as a principal in arranging, providing and controlling the managed healthcare services provided to the eligible enrolled members. Neither the Company

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nor any of its affiliates is a registered insurance company because state law in the states in which it operates does not require such registration for risk-bearing providers.

The Company’s payor contracts generally have a term of one year or longer, but the contracts between the enrolled members (our customers) and the payor are one calendar year or less. In general, the Company considers all contracts with customers (enrolled members) as a single performance obligation to stand ready to provide managed healthcare services. The Company identified that contracts with customers for capitation arrangements have similar performance obligations and therefore groups them into one portfolio. This performance obligation is satisfied as the Company stands ready to fulfill its obligation to enrolled members.

Our revenues are based upon the estimated PPPM amounts we expect to be entitled to receive from Medicare Advantage managed care payors and CMS. Under our managed care contracts, the PPPM rates are determined as a percent of the premium the Medicare Advantage plan receives from CMS for our at-risk members. Those premiums are determined via a competitive bidding process with CMS and are based upon the cost of care in a local market and the average utilization of services by the patients enrolled. Under our contract with CMS, the PPPM rates are determined as a percent of the premium, also adjusted for the cost of care in a local market and the average utilization of services, for our at-risk members.

Medicare pays capitation using a “risk adjustment model,” which compensates providers based on the health status (acuity) of each individual patient. Payors with higher acuity patients receive more, and those with lower acuity patients receive less. Under the risk adjustment model, capitation is paid on an interim basis based on enrollee data submitted for the preceding year and is adjusted in subsequent periods after the final data is compiled. As premiums are adjusted via this risk adjustment model, our PPPM payments will change in unison with how our payor partners’ premiums change with CMS. The Company determined the transaction price for these contracts is variable as it primarily includes PPPM fees which can fluctuate throughout the contract based on the acuity of each individual enrollee. Our capitated accounts receivable includes $67.1 million and $42.2 million as of June 30, 2021 and 2020, respectively, for acuity-related adjustments that are estimated to be received in subsequent periods. In certain contracts, PPPM fees also include adjustments for items such as performance incentives or penalties based on the achievement of certain clinical quality metrics as contracted with payors. There were no PPPM adjustments related to performance incentives/penalties for quality-related metrics for the three and six-months ended June 30, 2021 and 2020. The capitated revenues are recognized based on the estimated PPPM transaction price to transfer the service for a distinct increment of the series (i.e. month) and is recognized net of projected acuity adjustments and performance incentives/penalties because the Company is able to reasonably estimate the ultimate PPPM payment of these contracts. We recognize revenue in the month in which eligible members are entitled to receive healthcare benefits during the contract term. Subsequent changes in PPPM fees and the amount of revenue to be recognized by the Company are reflected through subsequent period adjustments to properly recognize the ultimate capitation amount and do not result in a significant reversal of revenue when the uncertainty is resolved in subsequent periods. As the period between the time of service and time of payment is typically one year or less, the Company elected the practical expedient under ASC 606-10-32-18 and did not adjust for the effects of a significant financing component.

Certain third-party payor contracts include a Medicare Part D payment related to pharmacy claims, which is subject to risk sharing through accepted risk corridor provisions. Under certain agreements the fund risk allocation is established where the Company, as the contracted provider, receives only a portion of the risk and the associated surplus or deficit. The Company estimates and recognizes an adjustment to Part D capitated revenues related to these risk corridor provisions, based upon pharmacy claims experience to date, as if the annual risk contract were to terminate at the end of the reporting period. Medicare Part D comprised 2% of capitated revenues for the three and six-months ended June 30, 2021 and 2020, and 3% of medical claims expense for the three and six-months ended June 30, 2021 and 2020, respectively.

The Company had agreements in place with the payors listed below, and payor sources of capitated revenue for each period presented were as follows:

	For the three-months ended						For the six-months ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Humana		37	%		47	%		39	%		48	%
Wellcare/Meridian		17	%		13	%		17	%		13	%
Cigna-HealthSpring		9	%		11	%		9	%		11	%
Other		37	%		29	%		35	%		28	%

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Other Patient Service Revenue

Other patient service revenue is comprised of ancillary fees earned under contracts with certain managed care organizations for the provision of certain care coordination services and care management services and is also comprised of fee-for-service revenue. The composition of other patient service revenue for each period was as follows ($ in millions):

		For the three-months ended					For the six-months ended
		June 30, 2021			June 30, 2020		June 30, 2021			June 30, 2020
Fee for service	$		1.8	$		1.2		3.3	$		2.3
Care coordination and care management services			4.6			5.2		8.6			9.3
Total other patient service revenue	$		6.4	$		6.4		11.9	$		11.6

The Company has entered into multi-year agreements with Humana and its affiliates to provide services at certain centers to members covered by Humana. The agreements contain an administrative payment from Humana in exchange for the Company providing certain care coordination services during the term of the contract (“Care Coordination Payment”). The Care Coordination Payments are recognized in other patient service revenue ratably over the length of the terms stated in the contracts and are refundable to Humana on a pro-rata basis if the Company ceases to provide services at the centers within the length of the term specified in the contracts. We have identified a single performance obligation to stand ready to provide care coordination services to patients, which constitutes a series of distinct service increments. As of June 30, 2021 and December 31, 2020, the Company’s contract liabilities related to these payments totaled $22.6 million and $16.6 million, respectively. The short-term portion is recorded in other liabilities and the long-term portion is included in other long-term liabilities in the accompanying consolidated balance sheets.

Care management services are provided to enrolled members of certain contracted managed care organizations regardless of whether those members are Oak Street Health patients. Similar to the other care management services provided to the Company’s centers, the Company provides delegated services and other administrative services to plans in order to assist with the management of its Medicare population, therefore, we have identified a single performance obligation to stand ready to provide care management services, which constitutes a series of distinct service increments.

Fee-for-service revenue is primarily derived from healthcare services rendered to patients. The services provided by the Company have no fixed duration and can be terminated by the patient or the Company at any time, therefore each treatment is its own standalone contract. Services ordered by a healthcare provider during an office visit are not separately identifiable, and therefore have been combined into a single performance obligation for each contract. The Company recognizes revenue as its performance obligation is completed on the date of service. Fee-for-service revenue is recognized in the period in which services are provided at estimated net realizable amounts from patients, third-party payors and others. The fee-for-service revenue by payor source for each period presented were as follows:

	For the three-months ended						For the six-months ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Medicare		34	%		54	%		35	%		49	%
Humana		12	%		6	%		12	%		8	%
Other		54	%		40	%		53	%		43	%

Other patient service accounts receivable consists primarily of amounts due from Medicare and Medicare Advantage plans for fee-for-service patients. Receivables from commercial or government payors are recorded at a net amount determined by the original charge for the service provided, less contractual discounts provided to the payor. Receivables due directly from patients are recorded at the original charge for the service provided less amounts covered by third-party payors and an allowance for financial assistance.

The Company has a financial assistance policy in which patients will be assessed for financial hardship and other criteria that are used to make a good-faith determination of financial need, in which case the Company will waive or reduce a Medicare beneficiary’s obligation to pay copay, coinsurance or deductible amounts owed for the provision of medical services. The majority of our fee-for-service patients qualify for financial assistance. The total amount of patient revenues that were waived per the Company’s financial assistance policy were $2.1 million and $0.3 million for the three-months ended June 30, 2021 and 2020, respectively, and $3.3 million and $1.8 million for the six-months ended June 30, 2021 and 2020, respectively. The Company’s cost to provide care in regard to the services for which the patient’s financial obligation was waived was estimated to be $6.4 million and $0.5 million for the three-months ended June 30, 2021 and 2020, respectively, and $9.9 million and $3.0 million for the six-months ended June 30, 2021 and 2020, respectively using a cost-to-charge ratio estimate. The Company invests heavily in primary care to prevent unnecessary acute events and manage chronic illnesses, and the cost incurred exceeds the amount that the Company would have realized under fee-for-service

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payment arrangements. The Company is willing to accept this deficit as many fee-for-service patients become Medicare Advantage patients under capitated arrangements.

Remaining Performance Obligations

As our performance obligations relate to contracts with a duration of one year or less, the Company elected the optional exemption in ASC 606-10-50-14(a). Therefore, the Company is not required to disclose the transaction price for the remaining performance obligations at the end of the reporting period or when the Company expects to recognize revenue. The Company has minimal unsatisfied performance obligations at the end of the reporting period as our patients typically are under no obligation to continue receiving services at our facilities.

Note 4. Fair Value of Financial Instruments

Fair Value Measurements

In determining the fair value of financial assets and liabilities, the Company utilizes market data or other assumptions that it believes market participants would use in pricing the asset or liability in the principal or most advantageous market and adjusts for non-performance and/or other risks associated with the Company as well as counterparties, as appropriate. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

Level 1 – Valuations based on unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible at the measurement date.

Level 2 – Valuations with inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 – Valuations with unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

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, 2021 using:
		Level 1			Level 2			Level 3			Total
Marketable debt securities:
Commercial paper			176.0			-			-			176.0
U.S. Treasury obligations	$		-	$		42.3	$		-	$		42.3
Corporate bonds			-			377.9			-			377.9
Asset-backed securities			-			63.5			-			63.5
Other			-			9.5			-			9.5
Total financial assets	$		176.0	$		493.2	$		-	$		669.2

The Company measures the fair value of corporate bonds, U.S. treasury obligations and asset-backed securities by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. There were no investments as of December 31, 2020. During the three and six-months ended June 30, 2021, there were no transfers between Level 1, Level 2 and Level 3.

The Company's Convertible Senior Notes are classified within Level 2 of the fair value hierarchy as the valuation inputs are based on quoted prices in an inactive market on the last day in the reporting period. As of June 30, 2021, the fair value of the Convertible Senior Notes was $941.9 million compared to their carrying value of $899.2 million, which is net of unamortized debt issuance and offering costs.

Investments

        At June 30, 2021, the Company’s marketable debt securities classified as available-for-sale were as follows:

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		June 30, 2021
		Amortized cost			Net unrealized gains (losses)				Fair value
Marketable debt securities:
Commercial paper	$		176.0	$		(0.0	)	$		176.0
U.S. Treasury obligations			42.3			(0.0	)			42.3
Corporate bonds			378.2			(0.3	)			377.9
Asset-backed securities			63.5			(0.0	)			63.5
Other			9.5			(0.0	)			9.5
Total marketable debt securities	$		669.5	$		(0.3	)	$		669.2

These investments in marketable debt securities carry maturity dates between less than one year and four years from date of purchase. The net realized gains and losses were immaterial during the three and six-months ended June 30, 2021.

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of June 30, 2021 and December 31, 2020 ($ in millions):

		June 30, 2021				December 31, 2020
Leasehold improvements	$		71.0		$		63.6
Furniture and fixtures			5.1				4.9
Computer equipment			24.6				17.8
Internal use software			8.7				6.1
Office equipment			10.1				9.7
Construction in process			6.8				4.2
Total, at cost			126.3				106.3
Less accumulated depreciation			(34.5	)			(27.5	)
Property and equipment, net	$		91.8		$		78.8

The Company recorded depreciation expense of $3.8 million and $2.6 million for the three-months ended June 30, 2021 and 2020, respectively. The Company recorded depreciation expense of $7.0 million and $5.0 million for the six-months ended June 30, 2021 and 2020, respectively.

The Company expensed $0.3 million and $0.1 million of capitalized development costs for the three-months ended June 30, 2021 and 2020, respectively. The Company expensed $0.6 million and $0.1 million of capitalized development costs for the six-months ended June 30, 2021 and 2020, respectively.

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

On January 22, 2021, Oak Street Health entered into an agreement to purchase the assets of a medical practice for $1.8 million base purchase price which was accounted for under the acquisition method of accounting pursuant to ASC 805.

Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to $11.4 million and $9.6 million at June 30, 2021 and December 31, 2020, respectively.

Intangible assets with a finite useful life continue to be amortized over its useful lives. Net intangible assets amounted to $2.8 million and $3.0 million at June 30, 2021 and December 31, 2020, respectively. The Company recorded amortization expense of $0.1 million for the three-months ended June 30, 2021 and 2020. The Company recorded amortization expense of $0.2 million for the six-months ended June 30, 2021 and 2020.

NOTE 7. LEASES

ASC 842 Disclosures

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The Company leases offices, operating facilities, vehicles and IT equipment, which are accounted for as operating leases. These leases have remaining lease terms of up to 30 years, inclusive of renewal or termination options that the Company is reasonably certain to exercise.

Operating lease and variable lease costs are included in cost of care, excluding depreciation and amortization and corporate, general and administrative expenses in the consolidated statements of operations. Variable lease costs are the portion of lease payments that are not fixed over the lease term. Variable lease costs include real estate payments that are adjusted periodically for inflation or other variables as well as payments for taxes, insurance, maintenance and other expenses. Also included in variable lease costs are license fees paid to Humana (see Note 16). We expense variable lease costs as incurred. The Company elected to combine lease and non-lease components as a single lease component and not include short-term leases, defined as leases with an initial term of twelve months or less, in its consolidated balance sheets. The Company’s short-term leases were immaterial. The components of lease expense for the Company’s operating leases were as follows for the three and six-months ended June 30, 2021 ($ in millions):

		For the three months ended June 30, 2021			For the six-months ended June 30, 2021
Operating lease cost	$		4.9	$		9.4
Variable lease cost			3.8			8.7
Total lease cost	$		8.7	$		18.1

The Company entered into operating leases that resulted in $ 19.1 million and $26.8 million of right-of-use assets in exchange for operating lease obligations for the three and six-months ended June 30, 2021, respectively.

The weighted-average remaining lease term and discount rate for operating lease liabilities included in the consolidated balance sheets are as follows:

	June 30, 2021
Weighted-average remaining lease term (in years)		10.4
Weighted-average discount rate		4.16	%

The table below presents the future minimum lease payments under the noncancelable operating leases as of June 30, 2021 ($ in millions):

2021	$	6.9
2022		20.1
2023		19.0
2024		17.3
2025		16.5
2026		16.3
Thereafter		88.8
Total lease payments	$	184.9
Less: imputed interest		(38.5	)
Total operating lease liabilities	$	146.4
Reported as:
Operating lease liabilities, current (1)		11.0
Operating lease liabilities, noncurrent		135.4
Total operating lease liabilities	$	146.4
(1) Included in other liabilities on the consolidated balance sheet

ASC 840 Disclosures

Prior to adoption of ASC 842, the Company accounted for its lease arrangements under ASC 840, Leases, with no ROU assets or lease liabilities being reflected on the consolidated balance sheets. Therefore, the Company recognized $4.6 million (including $0.9 million of Humana license fee expense) and $9.2 million (including $1.9 million of Humana license fee expense) of rent expense for the three and six-months ended June 30, 2020 included in costs of care and corporate, general and administrative expenses in the consolidated statements of operations. Additionally, the Company recorded $13.5 million at December 31, 2020 of deferred rent that was classified as a long-term liability in the consolidated balance sheets.

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NOTE 8. OTHER CURRENT AND LONG-TERM LIABILITIES

Accrued compensation and benefits consisted of the following as of ($ in millions):

		June 30, 2021			December 31, 2020
Accrued paid time off	$		6.2	$		5.0
Accrued bonus and commission			13.8			19.1
Employee stock purchase plan contributions			3.3			-
Accrued payroll and taxes			10.4			1.8
CARES Act deferred payroll taxes			3.5			3.5
Other			2.7			2.6
	$		39.9	$		32.0

Other current liabilities consisted of the following as of ($ in millions):

		June 30, 2021			December 31, 2020
Humana license fee	$		4.2	$		0.6
Operating lease liabilities			11.0			-
Contract liabilities, current			5.0			4.3
Accrual for goods or services received, not invoiced			2.9			3.6
CARES Act Medicare advances & Provider Relief Funds			0.5			2.3
Other current liabilities			1.9			1.8
	$		25.5	$		12.6

Other long-term liabilities consisted of the following as of ($ in millions):

		June 30, 2021			December 31, 2020
Humana license fee, net of current	$		10.3	$		7.3
Contract liabilities, net of current			18.0			12.8
Lease incentive obligation, net of current			-			5.1
CARES Act deferred payroll taxes			3.5			3.5
Other long-term liabilities			0.8			0.1
	$		32.6	$		28.8

NOTE 9. LIABILITY FOR UNPAID CLAIMS

Medical claims expense and the liability for unpaid claims include estimates of the Company’s obligations for medical care services that have been rendered by third parties on behalf of insured consumers for which the Company is contractually obligated to pay (through the Company’s full risk capitation arrangements), but for which claims have either not yet been received, processed or paid. The Company develops estimates for medical care services incurred but not reported, which includes estimates for claims that have not been received or fully processed, using a process that is consistently applied, centrally controlled and automated. This process includes utilizing actuarial models when a sufficient amount of medical claims history is available from the third-party healthcare service providers. The actuarial models consider factors such as time from date of service to claim processing, seasonal variances in medical care consumption, health care professional contract rate changes, medical care utilization and other medical cost trends, membership volume and demographics, and benefit plan changes. In developing its unpaid claims liability estimates, the Company applies different estimation methods depending on which incurred claims are being estimated. For the most recent three-months, the Company estimates claim costs incurred by applying observed medical cost trend factors to the average PPPM medical costs incurred in prior months for which more complete claims data are available, supplemented by a review of near-term completion factors (actuarial estimates, based upon historical experience and analysis of current trends, of the percentage of incurred claims during a given period that have been adjudicated by the Company at the date of estimation). For the months prior to the most recent three-months, the Company applies completion factors to actual claims adjudicated-to-date to estimate the expected amount of ultimate incurred claims for those months.

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The Company purchases provider excess insurance to protect against significant, catastrophic claims expenses incurred on behalf of its patients. The total amount of provider excess insurance premium was $1.0 million and $0.9 million, and total reimbursements were $3.0 million and $0.5 million for the three-months ended June 30, 2021 and 2020, respectively. The total amount of provider excess insurance premium was $1.9 million and $1.7 million, and total reimbursements were $3.4 million and $0.8 million for the six-months ended June 30, 2021 and 2020, respectively. The provider excess insurance premiums less reimbursements are reported in medical claims expense in the consolidated statements of operations. Provider excess recoverables due are reported in other current assets in the consolidated balance sheets. As of June 30, 2021, the Company’s provider excess insurance deductible was $0.3 million per member and covered up to a maximum of $5.0 million per member per calendar year.

Activity within liabilities for unpaid claims was as follows for the six-months ended ($ in millions):

		June 30, 2021				June 30, 2020
Balance, beginning of period	$		262.1		$		170.6
Incurred health care costs:
Current year			478.0				274.7
Prior years			3.9				11.3
Total claims incurred	$		481.9		$		286.0
Claims paid:
Current year			(155.1	)			(161.0	)
Prior years			(232.5	)			(59.6	)
Total claims paid	$		(387.6	)	$		(220.6	)
Adjustments to other claims-related liabilities			1.0				(0.2	)
Balance, end of period	$		357.4		$		235.8

We assess the profitability of our managed care capitation arrangement to identify contracts where current operating results or forecasts indicate probable future losses. If anticipated future variable costs exceed anticipated future revenues, a premium deficiency reserve is recognized. No premium deficiency reserves were recorded as of June 30, 2021 and December 31, 2020.

NOTE 10. LONG-TERM DEBT

Convertible Senior Notes

On March 16, 2021, the Company issued, at par value, $920.0 million aggregate principal amount of 0% Convertible Senior Notes in a private offering exempt from registration under the Securities Act of 1933, including $120.0 million in aggregate principal amount pursuant to the option we granted to the initial purchasers to purchase additional convertible senior notes, which was exercised in full in March 2021 (collectively, the “Convertible Senior Notes”). Total proceeds received by the Company from the sale of the Convertible Senior Notes, net of debt issuance and offering costs of $22.1 million, were $897.9 million. The Company used $123.6 million of the net proceeds to pay for the cost of the capped call transactions (see discussion on capped call transactions further below).

The Convertible Senior Notes are governed by an indenture (“Indenture”), dated as of March 16, 2021, between the Company and U.S. Bank National Association, as trustee. Under the Indenture, the Convertible Senior Notes are general senior, unsecured obligations of the Company and will mature on March 15, 2026, unless earlier redeemed, repurchased or converted. The Convertible Senior Notes are equal in right of payment with the Company’s future senior, unsecured indebtedness and structurally subordinated to all indebtedness and liabilities of the Company’s subsidiaries. The Convertible Senior Notes will not bear regular interest, and the principal amount of the Convertible Senior Notes will not accrete. We will pay special interest, if any, at a rate per annum not exceeding 0.50% of the principal amount of the notes outstanding as the sole remedy at our election relating to the failure to comply with our reporting requirements with the Securities and Exchange Commission and certain other obligations under the Indenture for the first 365 days after the occurrence of such an event of default.

The Convertible Senior Notes are convertible, subject to certain conditions described below, into shares of our common stock at an initial conversion rate of 12.6328 shares per $1,000 principal amount of the Convertible Senior Notes, which represents an initial conversion price of approximately $79.16 per share, subject to adjustments upon occurrence of certain events set forth in the Indenture. Certain events described in the Indenture that occur prior to the maturity date or if the Company delivers a notice of redemption may increase the conversion rate for holders who elect to convert their Convertible Senior Notes in connection with such events should they occur. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination thereof at our election. If the Company elects cash or combination settlement, the Company will pay an amount equal to the sum of the daily conversion values for each trading day in a 40 trading-day observation period. The maximum number of shares issuable should there be an increase in the conversion rate is 16,561,656 shares of the Company’s common stock.

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The Convertible Senior Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding December 15, 2025, only under the following circumstances:

• during any calendar quarter ending after June 30, 2021, if our closing stock price is greater than or equal to 130% of the conversion price on each of at least 20 trading days (whether or not consecutive) of the last 30 consecutive trading days of the immediately preceding calendar quarter;

• during the five business day period after any 10 consecutive trading day period in which the trading price (as defined in the Indenture) is less than 98% of the product of the closing price of our common stock and the conversion rate for the Notes on each such trading day;

• if the Company calls such Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the Notes called (or deemed called) for redemption; and

• upon the occurrence of specified corporate events as set forth in the Indenture.

On or after December 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Convertible Senior Notes may convert all or any portion of their Convertible Senior Notes at any time, regardless of the circumstances applicable to conversions prior to December 15, 2025.

We may not redeem the Convertible Senior Notes prior to March 20, 2024. On or after March 20, 2024, the Convertible Senior Notes are redeemable for cash, in whole or in part (subject to minimum redemption amounts), at our option at any time, and from time to time, if the last reported sale price of the common stock has been at least 130% of the conversion price for the Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Convertible Senior Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date. If the Company redeems less than all the outstanding Convertible Senior Notes, at least $150 million aggregate principal amount of Convertible Senior Notes must be outstanding and not subject to redemption as of the date of the relevant notice of redemption. No sinking fund is provided for the Convertible Senior Notes.

If the Company undergoes a fundamental change (as defined in the Indenture), holders may require, subject to certain exceptions, the Company to repurchase for cash all or any portion of their Convertible Senior Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.

The Indenture includes customary covenants and events of default after which the Convertible Senior Notes may be declared immediately due and payable. 

In accounting for the issuance of the Convertible Senior Notes, we performed an assessment of all of the embedded features of the debt instrument to determine if any will impact the initial measurement of the liability. The Company concluded that the embedded features are not required to be accounted for separately as embedded derivatives, and therefore the Convertible Senior Notes were accounted for in their entirety as a liability equal to the proceeds received from issuance net of debt issuance and offering costs. The Company will amortize debt issuance and offering costs over the term of the Convertible Senior Notes as additional non-cash interest expense utilizing the effective interest method.

Capped Call Transactions

In connection with the pricing of the Convertible Senior Notes, the Company entered into convertible note hedge transactions (the “capped call transactions”) with six initial purchasers or their respective affiliates and other financial institutions (the “option counterparties”) of $123.6 million concurrent to mitigate the impact of potential economic dilution to our common stock upon conversion of the Convertible Senior Notes and have an initial strike price of approximately $79.16 per share, which corresponds to the initial conversion price of the Convertible Senior Notes. The capped call transactions cover, subject to customary adjustments, the number of shares of common stock initially underlying the Convertible Senior Notes. The capped call transactions are expected to offset the potential dilution to the Company’s common stock upon any conversion of Convertible Senior Notes, with such reduction and/or offset subject to a cap initially equal to $138.8750 per share.

The capped call transactions will expire on March 12, 2026. The capped call transactions are separate transactions and are not part of the terms of the Convertible Senior Notes. The shares related to the capped call transactions are excluded from the calculation of diluted earnings per share as they are anti-dilutive.

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The capped call transactions cover, subject to anti-dilution adjustments, approximately 11,622,176  shares of the Company’s common stock, par value $0.001. The capped call transactions are subject to either adjustment or termination upon the occurrence of specified extraordinary and disruption events affecting the Company.

The capped call transactions are purchased call options on our own stock that settle by reference to our own stock with no forced cash payment; therefore, the transactions are classified as an equity instrument and recorded within stockholders’ equity. These transactions are not accounted for as derivatives. The Company recorded the capped call transactions as a reduction to additional paid-in capital and will not be remeasured as long as the conditions for equity classification continue to be met.

The Convertible Senior Notes and capped call transactions consisted of the following balances reported in the Consolidated Balance Sheet as of June 30, 2021 ($ in millions):

	June 30, 2021
Liability component:
Principal		920.0
Less: debt issuance costs, net of amortization		(20.8	)
Net carrying amount		899.2
Equity component recorded at issuance:
Capped call transactions		123.6

The Company recognized $1.1 million and $1.3 million related debt issuance and offering costs in interest expense, net on the consolidated statements of operations related to the Convertible Senior Notes for the three and six-months ended June 30, 2021.

NOTE 11. INCOME TAX

The most significant impact to the Company’s effective tax rate is related to the tax treatment of certain equity compensation. However, the Company continues to be in a net operating loss and deferred tax asset position. As a result, and in accordance with accounting standards, the Company recorded a valuation allowance to reduce the value of the net deferred tax assets to zero. The Company’s effective tax rate for the three and six-months ended June 30, 2021 and 2020 was 0.0%.

NOTE 12. STOCKHOLDERS’ EQUITY

Common Stock

In connection with the IPO, we increased our authorized shares from 1,000 to 500,000,000 shares of our common stock, par value of $0.001. Additionally, upon completion of our IPO in August 2020, we sold 17,968,750 shares of common stock at an offering price of $21.00 per share, including 2,343,750 shares of common stock issued pursuant to the exercise in full of the underwriters’ option to purchase additional shares.

Redeemable Investor Units, Profits Interests and Incentive Units

All shares of redeemable investor units outstanding at the time of the IPO, totaling 12,472,242 units and undeclared and deemed dividends of $103.6 million, were converted into 184,787,783 shares of common stock and their carrying value, totaling $545.0 million was reclassified into stockholders’ equity on our condensed consolidated balance sheets in conjunction with the completed IPO. No shares of redeemable convertible preferred stock were issued or outstanding as of June 30, 2021 or December 31, 2020.

Additionally, all shares of profits interests then outstanding, totaling 3,456,634 units were converted into 38,111,001 shares of common stock, 22,612,472 of which were considered RSAs at the time of conversion. The carrying value of $7.0 million was reclassified into common stock and additional paid in capital on our consolidated balance sheet. No profits interests or incentive units were issued or outstanding as of June 30, 2021 or December 31, 2020.

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Preferred Stock

Also, in connection with our IPO, we authorized the issuance of 50,000,000 shares of our preferred stock, par value $0.001. There was no preferred stock outstanding as of June 30, 2021.

NOTE 13. STOCK AND UNIT-BASED COMPENSATION

2020 Omnibus Incentive Plan

On August 5, 2020, the Company’s Board of Directors adopted the 2020 Omnibus Incentive Plan (the “2020 Plan,”). Under the 2020 Plan, employees, consultants and directors of our company and our affiliates that perform services for us are eligible to receive awards. The 2020 Plan provides for the grant of incentive stock options (“ISOs”), non-statutory stock options (“NSOs”), stock appreciation rights, restricted stock awards (“RSAs”), performance awards, other share-based awards (including restricted stock units (“RSUs”)) and other cash-based awards. The maximum number of shares available for issuance under the 2020 Plan may not exceed 48,138,967 shares (subject to annual increases as approved by the Board of Directors).

Stock Options Activity

Stock options granted by the Company generally vest over four years with 25% of the option shares vesting each year. Options generally expire ten years from the date of the grant.   

The following is a summary of stock option activity transactions as of and for the six-months ended June 30, 2021 ($ in millions):

	Number of Options				Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)			Aggregate Intrinsic Value
Outstanding, December 31, 2020		14,958,969		$		21.01		9.60	$		600.6
Granted		320,937				59.62
Exercised		(174,814	)			21.03
Cancelled		(64,707	)			23.15
Outstanding, June 30, 2021		15,040,385		$		21.83		9.11	$		553.0
Options exercisable as of June 30, 2021		3,818,414		$		21.00		9.10	$		143.5

The aggregate intrinsic value of options exercised in the three-months ended June 30, 2021 and 2020 was $4.8 million and $0.0 million, respectively and $6.6 million and $0.0 million in the six-months ended June 30, 2021 and 2020, respectively. Aggregate intrinsic value represents the difference between the exercise price of the option and the closing price of the Company’s common stock on the date of exercise. The fair value of options granted for the three-months ended June 30, 2021 and 2020 was $0.4 million and $0.0 million, respectively, and $9.2 million and $0.0 million for the six-months ended June 30, 2021 and 2020.

RSA Activity

The RSAs were granted as part of the pre-IPO conversion (see Note 12). The following is a summary of RSA transactions as of and for the six-months ended June 30, 2021:

	Unvested Shares				Grant Date Fair Value
Unvested, December 31, 2020		21,599,118		$		11.77
Granted		-
Vested		(3,477,767	)			2.63
Canceled and forfeited		(167,583	)			14.43
Unvested, June 30, 2021		17,953,768		$		13.52

RSU Activity

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RSUs granted generally vest over four years. RSUs are accounted for as equity using the fair value method, which requires measurement and recognition of compensation expense for all awards granted to our employees, directors and consultants based upon the grant-date fair value. The following is a summary of RSU transactions as of and for the six-months ended June 30, 2021:

	Unvested Shares				Grant Date Fair Value
Unvested, December 31, 2020		216,804		$		32.21
Granted		196,726				59.61
Vested		(22,239	)			50.49
Canceled and forfeited		(18,655	)			28.64
Unvested, June 30, 2021		372,636		$		45.76

Employee Stock Purchase Plan

On August 5, 2020, the Board of Directors adopted, and the OSH LLC’s and OSH MH LLC’s majority unitholders approved, the 2020 Employee Stock Purchase Plan (the “ESPP”) for the issuance of up to a total of 2,386,875 shares of common stock. In addition, the number of shares available for issuance under the ESPP will be increased annually on January 1 of each calendar year beginning in 2021 and ending in and including 2030, by an amount equal to the lesser of (A) 1% of the shares outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares as is determined by our Board of Directors, subject to an increase each January. In no event will more than 30,000,000 shares of our common stock will be available for issuance under the ESPP. Each offering period will be approximately six months in duration commencing on January and July 1 of each year and terminating on June 30 or December 31. The ESPP allows participants to purchase common stock through payroll deductions of up to 15% of their eligible compensation. The purchase price of the shares will be 85% of the lower of the fair market value of our common stock on the grant date or purchase date.

The first offering period closed on June 30, 2021, and 62,575 shares were distributed to employees in July 2021.

Stock and Unit-Based Compensation Expense

The Company recognized $0.0 million and $3.5 million in unit-based compensation expense related to the profits interests for the three-months ended June 30, 2021 and 2020, respectively. The Company recognized $0.0 million and $5.3 million in unit-based compensation expense related to the profits interests for the six-months ended June 30, 2021 and 2020, respectively. The Company recorded the expense in corporate, general and administrative expenses. The Company recognized $40.8 million and $0.0 million related to RSAs, options and RSUs for the three-months ended June 30, 2021 and 2020, respectively. The Company recorded $39.7 million in corporate, general and administrative expenses, $0.9 million in sales and marketing, and $0.3 million in cost of care for the three-months ended June 30, 2021. The Company recognized $83.2 million and $0.0 million related to RSAs, options and RSUs for the six-months ended June 30, 2021 and 2020, respectively. The Company recorded $80.9 million in corporate, general and administrative expenses, $1.7 million in sales and marketing, and $0.6 million in cost of care for the six-months ended June 30, 2021.

As part of the pre-IPO equity conversion discussed in Note 12, the profits interests that were subject to vesting over a period of continuous employment or service and were unvested upon the conversion were converted into RSAs and options that vest over the remaining requisite service period from the original grant dates. The unvested profits interests that were subject to vesting upon the “Sponsor’s Exit” performance condition were converted into RSAs and options that cliff vest between two years post IPO and four years from the original grant dates. A Sponsor's Exit is defined to occur if either (1) a Sponsor sells down to one or more third parties their direct or indirect equity investment in OSH LLC to less than 20% of the units owned by such sponsor, or (2) a sale, transfer or other disposition of all or substantially all of the assets of OSH LLC to one or more third parties.

As a result of this conversion and modification of vesting terms from Sponsor’s Exit to service-based vesting at the IPO, the Company determined that RSAs and options should be accounted for as a Type III modification (the award was not probable to vest prior to the modification but it was probable of vesting under the modified condition). The stock compensation expense, net of forfeitures, recorded for these modifications was $29.0 million and $58.3 million for the three and six-months ended June 30, 2021.

As of June 30, 2021, the Company had approximately $209.5 million in unrecognized compensation expense related to all non-vested awards (RSAs, options and RSUs) that will be recognized over the weighted-average period of 1.39 years.  

Valuation of Stock Options

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The fair value of each option granted was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

		June 30, 2021
Risk-free interest rate			0.80	%
Volatility			50.00	%
Expected term to expiration (years)			6.25
Expected dividend yield			0.00	%
Estimated fair value	$		28.70

The determination of fair value of stock options on the date of grant using a Black-Scholes option-pricing model is affected by the estimated fair value of the Company’s common stock as well as assumptions regarding a number of variables that are complex, subjective and generally require significant judgement to determine. The valuation assumptions were determined as follows:

Fair Value of Common Stock

The fair value of the Company’s common stock is determined by the closing price, on the date before the grant, of its common stock, which is traded on the NYSE.  

Expected Term

We determine the expected term of awards using the simplified method which is used when there is insufficient historical data about exercise patterns and post-vesting employment termination behavior. The simplified method is based on the vesting period and the contractual term for each grant, or for each vesting-tranche for awards with graded vesting. The mid-point between the vesting date and the maximum contractual expiration date is used as the expected term under this method.

Expected Volatility

We use an average historical stock price volatility of a peer group of comparable publicly traded healthcare companies representative of our expected future stock price volatility, as we do not have sufficient trading history for our common stock. For purposes of identifying these peer companies, we consider the industry, stage of development, size and financial leverage of potential comparable companies. For each grant, we measure historical volatility over a period equivalent to the expected term.

Risk-Free Interest Rate

The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with maturities similar to the expected term of the award.

Expected Dividend Yield

We have not paid and do not anticipate paying any dividends in the foreseeable future. Accordingly, we estimate the dividend yield to be zero.

NOTE 14. COMMITMENTS – LITIGATION AND CONTINGENCIES

Contingencies

The Company is presently, and from time to time, subject to various claims and lawsuits arising in the normal course of business. In the opinion of management, the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial position or results of operations.

Uncertainties

The healthcare industry is subject to numerous laws and regulations of federal, state and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirements, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Recently, government activity has increased with respect to investigations and allegations concerning possible violations of fraud and abuse statues and regulations by

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healthcare providers. Violations of these laws and regulations could result in expulsion from government healthcare programs together with imposition of significant fines and penalties, as well as significant repayments for patient services billed.

Management believes that the Company is in compliance with fraud and abuse as well as other applicable government laws and regulations. While no regulatory inquiries have been made, compliance with such laws and regulations is subject to government review and interpretation, as well as regulatory actions unknown at this time.

NOTE 15. VARIABLE INTEREST ENTITIES

The Physician Groups (as defined in Note 1) were established to employ healthcare providers, contract with managed care payors and to deliver healthcare services to patients in the markets that the Company serves.

The Company evaluated whether it has a variable interest in the Physician Groups, whether the Physician Groups are VIEs and whether the Company has a controlling financial interest in the Physician Groups. The Company concluded that it has variable interests in the Physician Groups on the basis of its Administrative Service Agreement (“ASA”) which provides for reimbursement of costs and a management fee payable to the Company from the Physician Groups in exchange for providing management and administrative services which creates risks and a potential return to the Company. The Physician Group’s equity at risk, as defined by U.S. GAAP, is insufficient to finance its activities without additional support, and, therefore, the Physician Groups are considered VIEs.

In order to determine whether the Company has a controlling financial interest in the Physician Groups, and, thus, is the Physician Group’s primary beneficiary, the Company considered whether it has i) the power to direct the activities of Physician Groups that most significantly impact its economic performance and ii) the obligation to absorb losses of the Physician Groups that could potentially be significant to it or the right to receive benefits from Physician Groups that could potentially be significant to it. The Company concluded that the shareholders and employees of the Physician Groups are structured in a way that neither shareholder, employees nor their designees has the individual power to direct the activities of the Physician Groups that most significantly impact its economic performance. Under the ASA, MSO is responsible for providing management and administrative services related to the growth of the patient population of the Physician Groups, the management of that population’s healthcare needs, and the provision of required healthcare services to those patients. The Company has concluded that the success or failure of MSO in conducting these activities will most significantly impact the economic performance of the Physician Groups. In addition, the Company’s variable interests in the Physician Groups provide the Company with the right to receive benefits that could potentially be significant to it. The single member of the Physician Groups is a member and employee of OSH. As a result of this analysis, the Company concluded that it is the primary beneficiary of the Physician Groups and therefore consolidates the balance sheets, results of operations and cash flows of the Physician Groups. The Company performs a qualitative assessment of the Physician Groups on an ongoing basis to determine if it continues to be the primary beneficiary.

The table below illustrates the VIE assets and liabilities and performance for the Physician Groups as of and for the periods ended ($ in millions):

		June 30, 2021			December 31, 2020
Total assets	$		448.9	$		286.1
Total liabilities			420.4			332.1

		For the three-months ended						For the six-months ended
		June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Total revenues	$		350.5	$		210.3	$		644.9	$		408.8
Medical claims expense			283.0			154.7			481.9			286.0
Cost of care			34.5			14.2			67.4			29.5
Total operating expenses	$		317.5	$		168.9	$		549.3	$		315.5

Physician Group revenues consist of amounts recognized for services provided to patients and includes capitated revenue and a portion of the Company’s other patient service revenue and exclude certain care management services. All capitation arrangements are executed at the Physician Group level.

Operating expenses consist primarily of medical claims expense, a majority of which are third-party medical claims expenses and administrative health plan fees and exclude fees to perform payor delegated activities and provider excess insurance costs, net. Cost of care, excluding depreciation and amortization primarily include provider salaries and benefits and other clinical operating costs which are reported in cost of care, excluding depreciation and amortization in the consolidated statements of operations. These amounts do not

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include intercompany revenues and costs, principally management fees between MSO and the Physician Groups, which are eliminated in consolidation.

There are no restrictions on the Physician Groups’ assets or on the settlement of its liabilities. The assets of the Physician Groups can be used to settle obligations of the Company. The Physician Groups are included in the Company’s obligated group; thus, creditors of the Company have recourse to the assets owned by the Physician Groups. There are no liabilities for which creditors of the Physician Groups do not have recourse to the general credit of the Company. There are no restrictions placed on the retained earnings or net income of the Physician Groups with respect to potential dividend payments.

NOTE 16. RELATED PARTIES

Humana

          Humana holds over 5% of our common stock and has entered into a Director Nomination Agreement with the Company.  The Company has capitated managed care contracts with Humana which result in capitated revenues and related receivables. Within the Company’s other patient services revenue, revenues from Humana are included in both fee-for-service revenue and care coordination revenue. The unearned portion of the Care Coordination Payments was recorded as contract liabilities in both the short-term and long-term other liabilities accounts.  The Company also incurs medical claims expenses related to the Humana payor contracts which are included in third-party medical expenses. Related unpaid claims are included in the liability for unpaid claims financial statement caption.

The Humana Alliance Provision contains an arrangement for a license fee that is payable by the Company to Humana for the Company’s provision of health care services in certain centers owned or leased by Humana. The license fee is a reimbursement to Humana for its costs of owning or leasing and maintaining the centers, including rental payments, center maintenance or repair expenses, equipment expenses, special assessments, cost of upgrades, taxes, leasehold improvements, and other expenses identified by Humana and is included in cost of care expenses in the consolidated statement of operations. The liability was recorded in both the short-term and long-term other liabilities accounts.

The Company has entered into certain lease arrangements with Humana and recorded rent payments within the cost of care line item. The Company adopted ASC 842 as of January 1, 2021 and recorded an ROU asset and liability related to Humana leases.

The below tables present the balances related to Humana as of June 30, 2021 and December 31, 2020 and for the three and six-months ended June 30, 2021 and 2020.

		June 30, 2021			December 31, 2020
Assets:
Other patient service receivables	$		0.1	$	0.0
Capitated accounts receivables			109.8			65.7
Operating lease right-of-use assets		49.8				-
Liabilities:
Liability for unpaid claims	$		96.6	$		78.5
Other liabilities
Short-term license fees			4.2			0.6
Short-term contract liability			4.7			4.0
Short-term operating lease liability			4.8			-
Long-term operating lease liabilities			46.3			-
Deferred rent			-			0.8
Other long-term liabilities:
Long-term license fees			10.3			7.3
Long-term contract liability			18.0			12.8
Equity:
Additional paid-in capital	$		50.0	$		50.0

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		For the three-months ended						For the six-months ended
		June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenues:
Capitated revenue	$		127.1	$		97.4	$		248.5	$		193.9
Other patient service revenue:
Care coordination revenue earned			1.2			0.7			2.3			1.4
Fee-for-service revenue			0.3			0.1			0.4			0.2
Expenses:
Medical claims expense	$		105.7	$		64.0	$		178.7	$		123.8
Cost of care:
License fee expense			0.6			0.7			1.3			1.3
Rent expense			1.7			0.5			3.0			1.1

Blue Cross Blue Shield of Rhode Island

Blue Cross Blue Shield of Rhode Island (“BCBSRI”) owns 49.9% of our joint venture, OSH-RI, LLC, and one of our Board members served as president and CEO of BCBSRI through the year ended December 31, 2020. The Board member has not served in this role in 2021, and as such we have only presented 2020 information herein. Total capitated revenue associated with the BCBSRI payor contract was $2.5 million for the three-months ended June 30, 2020, and $4.8 million for the six-months ended June 30, 2020. Capitated receivables from BCBSRI represented $10.0 million of the capitated accounts receivable balance at December 31, 2020.

Total medical claims expenses related to the BCBSRI payor contract were $2.9 million for the three-months ended June 30, 2020, and  $4.5 million for the six-months ended June 30, 2020. Unpaid claims related to these capitated contracts represented  $11.1 million of the liability for unpaid claims balance at December 31, 2020.

Consulting Arrangement with an Immediate Family Member of Our Chief Executive Officer

Carolyn Rose, the sister of Michael Pykosz, a member of our Board of Directors and our Chief Executive Officer, has provided us contracted legal services. Ms. Rose provided legal services resulting in fees of $0.1 million and $0.1 million for the three-months ended June 30, 2021 and 2020, respectively. For the six-months ended June 30, 2021 and 2020, we incurred legal fees payable to Ms. Rose of $0.1 million and $0.2 million, respectively.

NOTE 17. SEGMENT FINANCIAL INFORMATION

The Company has concluded that we have one operating and reportable segment as the chief operating decision maker (“CODM”) regularly reviews financial operating results on a consolidated basis for purposes of allocating resources and evaluating financial performance. While we generate revenues in a number of centers in several geographic regions, we have determined that the centers all have similar economic characteristics, such as the types of services provided and the nature of patients served. The Company evaluates performance and allocates resources as a single operating segment based on revenue growth and pre-tax profit or loss from operations.

NOTE 18. NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per common share for the three and six-months ended June 30, 2021 and 2020:

		Three months ended June 30, 2021				Six-months ended June 30, 2021
Numerator:
Net loss	$		(100.3	)	$		(164.3	)
Less: Net loss attributable to non-controlling interests			(2.3	)			(2.9	)
Net loss attributable to OSH Inc. stockholders			(98.0	)			(161.4	)
Denominator:
Weighted average common stock outstanding - basic and diluted			221,168,630				221,595,670
Net loss per share – basic and diluted	$		(0.44	)	$		(0.73	)

The Company’s potentially dilutive securities, which included stock options, unvested RSUs, unvested RSAs and shares issuable upon conversion of our Convertible Senior Notes have been excluded from the computation of diluted net loss per share as the

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effect would reduce the net loss per share. Therefore, the weighted average number of common shares/units outstanding used to calculate both basic and diluted net loss per share was the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated:

		Six-months ended June 30, 2021
Stock options			15,040,385
RSUs			372,636
RSAs			17,953,768
Employee stock purchase plan			62,575
Convertible Senior Notes	*		11,622,176
			45,051,540

*The Company entered into capped call transactions to mitigate the impact of potential economic dilution to our common stock upon any conversion of our Convertible Senior Notes. The capped call transactions are expected to offset the potential dilution to the Company’s common stock upon any conversion of the Convertible Senior Notes up to a cap price of $138.8750 per share. See Note 10 for further details on the capped call transactions.

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iTEM 2. Management’s Discussion and Analysis of FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. This discussion should be read in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and the accompanying notes as well as “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 001-39427). Unless the context otherwise indicates or requires, the terms “we”, “our,” “the Company” and “Oak Street Health” as used herein refer to Oak Street Health, Inc. and its consolidated subsidiaries, including Oak Street Health, LLC, which is Oak Street Health, Inc.’s predecessor for financial reporting purposes for periods presented prior to August 10, 2020.

The discussion contains forward-looking statements about the business, operations and financial performance of the Company based on our current expectations that involves risks, uncertainties and assumptions. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed above in “Forward-Looking Statements,” and Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q as well as those discussed under the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2020.

Business Overview

Oak Street Health, Inc. operates primary care centers within the United States serving Medicare beneficiaries. Since our founding in 2012, the Company’s mission has been to build a care delivery platform, built on a chassis of primary care that directly addresses rising costs and poor outcomes, two of the most pressing challenges facing the United States healthcare industry. Our approach shifts the allocation of healthcare resource delivery from traditional acute and specialist care into an enhanced, patient-centered care delivery platform which meaningfully improves the quality of care and outcomes for high-risk populations. Our approach also disrupts the current state of care delivery for Medicare-eligible patients and aims to align the incentives of our patients, our providers and our payors with the goal of simultaneously improving health outcomes and care quality, lowering medical costs and improving the patient experience.

Oak Street Health was designed to provide and manage Medicare-eligible patients’ total healthcare through capitated, value-based payments. We created a new care platform because the then-existing primary care infrastructure was not built with the capacity to drive the significant improvements in cost and quality the current health system needs. We decided to focus on the Medicare market due to its size, growth tailwinds and largely clinically cohesive population. We designed our platform to take risk in managing patients’ health below an agreed-upon baseline cost because we believed there was a meaningful opportunity to produce system-wide cost savings by changing where and how patients’ healthcare is delivered. Our platform’s design has included investments in technology and patient-centered, community-based care delivery to create a different and we believe, better approach to addressing the needs of high risk Medicare-eligible patients.

As of June 30, 2021, the Company operated 95 centers in 24 markets across 15 states, which provided care for approximately 122,000 patients. We, together with our affiliated physician practice organizations, employed approximately 3,700 team members, including approximately 400 primary care providers. Our operations are organized and reported under one segment.

COVID-19 Update on our Business

On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. The rapid spread of COVID-19 and variants around the world and throughout the United States has altered the behavior of businesses and people, with significant negative effects on federal, state and local economies, the duration of which is unknown at this time. Various policies were implemented by federal, state and local governments in response to the COVID-19 pandemic that caused many people to remain at home and forced the closure of or limitations on certain businesses, as well as suspended elective procedures by health care facilities through early 2021. While the restrictions have been eased across the U.S. and most states have lifted moratoriums on non-emergent procedures, some restrictions remain in place. The virus disproportionately impacts older adults, especially those with chronic illnesses, which describes many of our patients.

In response to the COVID-19 pandemic, we took the following actions to ensure the safety of our employees and their families and to address the physical, mental and social health of our patients:

• Created a COVID-19 Response Team in March 2020 that is supported by team members from across our organization to ensure a coordinated response to the pandemic;

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• Re-opened all of our corporate offices as of summer 2021, which were temporarily closed since March 2020, but expect that our corporate work force will continue to work remotely part-time;

• Transitioned much of our center-based care to be delivered by our providers virtually through newly developed telehealth capabilities, including video and telephone through June 2020 but have transitioned our business back to a more normal operating cadence as of July 2020, including seeing a larger proportion of our patients via in-center visits (with a corresponding reduction in telehealth visits) while maintaining stringent safety protocols to minimize the potential transmission of COVID-19. For the foreseeable future, we expect to continue to leverage our telehealth capabilities as a means of interacting with our patients to the extent an in-person visit is not required or preferred;  

• Made operational changes to the staffing and operations of our centers, which have remained open as “essential” businesses, to minimize potential exposure to and transmission of COVID-19;

• Temporarily delayed planned openings of new centers through August 2020 but restarted our growth efforts through patient outreach since then; we resumed opening new centers and are currently opening centers consistent with our pre-COVID operations;

• Temporarily halted community outreach and other marketing initiatives which drive new patients to our platform through June 2020 but have recommenced marketing initiatives since the third quarter of 2020 through the present;

• Acquired and deployed significantly greater amounts of personal protective equipment (“PPE”) to ensure the safety of our employees and patients;

• Created a program called “COVID Care,” which continues to be in full operation, to actively monitor our patients for suspected COVID-19 infections with the goal of managing those symptoms to keep our patients safely out of the hospital unless and until necessary due to the potential infection risks in the hospital environment;

• Redeployed our contracted and employed drivers, who typically transport patients to our centers, to deliver food from food pantries to our patients to address food supply issues or challenges;

• Provided free rapid COVID-19 tests to all members of the Chicago community;

• Launched an effort in January 2021 to vaccinate frontline healthcare workers (both employees of Oak Street Health and non-employees), our patients, and other eligible members of our communities without billing the federal government. While this work is critically important for our communities, we also expect our agile vaccination efforts will result in greater brand awareness and loyalty and incremental patient growth; and

• Administered more than 180,000 total COVID-19 vaccine doses as of July 21, 2021.

 COVID-19 has impacted both our per-patient capitated revenue due to lower risk scores for new patients and our medical claims expense. Although we expect risk scores for existing Oak Street Health patients to be consistent with our historical experience, due to a lack of availability of care and inadequate documentation as discussed in more detail below, we expect lower risk scores for new patients in 2021, which will result in lower per-patient capitated revenue for the year ended December 31, 2021.  As future patients not served by Oak Street Health in 2020 were unable to access the healthcare system for several months in 2020 due to local COVID-19 restrictions and therefore had fewer interactions with healthcare providers than a typical year, we expect the risk scores for these new patients in 2021 to be lower than they have been historically. As we are able to more completely and accurately document both current and new patients' health conditions, we expect that risk scores will increase to reflect the true severity of these patients' conditions, which we would further expect to result in increased revenue for the year ended December 31, 2022.

As we are financially responsible for essentially all of the healthcare costs associated with our at-risk patients whether we provide that care or a third party provides that care, we suspect that the healthcare costs of patients infected with COVID-19 will be greater than had COVID-19 not occurred. It is impossible, however, to know what other healthcare issues these patients may have encountered in their pre-COVID-19 lives and whether the COVID-19 costs are or will be greater or lesser than the costs these patients would otherwise incur. Additionally, because of the extraordinary measures taken by local governments in our markets particularly in the second quarter of 2020, all of our patients had more limited access to healthcare services, including healthcare specialists such as cardiologists or orthopedists, to schedule both inpatient and outpatient surgeries, and to some extent hospital care. Beginning in late March 2020 and extending through most of the second quarter of 2020, our patients who were not infected with COVID-19, which represented over 96% of our at-risk patients, incurred lower healthcare costs than we would have otherwise expected, which will result in lower medical claims expense that we incur. We expect the vast majority of these costs are just delayed and will be incurred at future points in time and it is possible that the deferral of healthcare services could cause additional health problems in our existing patients, which could increase our costs in the future. In the second half of 2020 and the first quarter of 2021, we did experience an increase in medical costs to levels above historical norms.  Because of the COVID-19 related volatility in medical cost data in 2020 and the first quarter of 2021, we do

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not believe that our 2020 and 2021 medical cost data can serve as a reliable basis for estimating our remaining 2021 and 2022 performance. We also do not know what the net impact to medical costs will be as a result of the surge in COVID-19 cases at the end of 2020 and the beginning of 2021.  Furthermore, due to the time it takes for medical claims to be submitted to MA plans, adjudicated, and sent to us, we believe it will be several quarters before we will be able to accurately calculate the impact on medical claims expense from the COVID-19 pandemic. We do believe, however, that the impact on per-patient revenue and medical claims related to COVID-19 that we expect to experience will not have a materially detrimental effect on our long-term financial performance.

The COVID-19 pandemic had a material impact on our results of operations, cash flows and financial position for the three and six-months ended June 30, 2021. Based upon claims paid to date, our direct costs related to COVID-19 claims was approximately $38.0 million for the period from March 1, 2020 through June 30, 2021. We expect to incur additional COVID-19 related costs given the volume of positive cases present in our markets.  Due to the uncertainty of COVID-19 infection and hospitalization rates, we cannot estimate any incremental COVID-19 related costs we may incur.  

The full extent to which the COVID-19 pandemic has and will continue to directly or indirectly impact our business, future results of operations and financial condition will depend on future factors that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 including the impact of new variants of the virus, the actions taken to contain it or treat its impact and the economic impact on our markets. Such factors include, but are not limited to, the scope and duration of stay-at-home practices and business closures and restrictions, rate and effectiveness of vaccinations in the U.S., government-imposed or recommended suspensions of elective procedures, and expenses required for supplies and personal protective equipment. Because of these and other uncertainties, we cannot estimate the length or severity of the impact of the pandemic on our business. Furthermore, because of our business model, the full impact of the COVID-19 pandemic may not be fully reflected in our results of operations and overall financial condition until future periods. We will continue to closely evaluate and monitor the nature and extent of these potential impacts to our business, results of operations and liquidity.

For additional information on the various risks posed by the COVID-19 pandemic, please see “Risk Factors” included in our Form 10-K for the year ended December 31, 2020 and our Form 10-Q for the quarter ended March 31, 2021.

Key Factors Affecting Our Performance

• Adding New Patients in Existing Centers: Our ability to add new patients is a key indicator of the market’s recognition of the attractiveness of the Oak Street Platform, both to our patients and MA plan partners, and a key growth driver for the business. As we add patients to our existing centers, we expect these patients to contribute significant incremental economics to Oak Street Health as we leverage our fixed cost base at each center. We grow our patient base through our own internal sales and marketing efforts, which drive most of our new patient growth, as well as assignments from our MA plan partners. We grew our patient base from approximately 86,500 patients as of June 30, 2020 to approximately 122,000 as of June 30, 2021.  

• Expand our Center Base within Existing and New Markets: We believe that we currently serve less than 2% of the total patients in the markets where we currently have centers. As a result, there is significant opportunity to expand in our existing markets through the acquisition of new patients to existing centers and addition of new centers. For the long term, these strategically developed new sites allow us to access additional neighborhoods while leveraging our established brand and infrastructure in a market. Our existing markets today represent a small fraction of the overall market opportunity. Based upon our experience to date, we believe our care model can scale nationally, and we therefore expect to selectively and strategically expand into new geographies. Additionally, we are hopeful that the Direct Contracting model, which started as of April 1, 2021, will allow us to convert existing fee-for-service patients into at-risk patients. The Direct Contracting model creates a new opportunity for CMS to test an array of financial risk-sharing arrangements in the traditional Medicare fee-for-service population, and it will enable us to assume financial risk for the cost of care for patients covered by traditional Medicare. Through this model, CMS aims to transform risk-sharing arrangements in Medicare fee-for-service (“FFS”), empower and engage beneficiaries (or patients or members) in their own care delivery, broaden participation in CMS Innovation Center models, reduce provider burden and shift providers from FFS to value-based payments in primary care.

• Contract with Payors: Our economic model relies on our capitated partnerships with payors and CMS, which manage and market MA plans across the United States. In our short history, we have been able to establish strategic value-based relationships with 28 different payors as of June 30, 2021, including each of the top 6 national payors by number of MA patients. These existing contracts and relationships and our partners’ understanding of the value of our model reduces the risk of entering into new markets as we typically have payor contracts before entering a new market. Maintaining, supporting, and growing these relationships, particularly as we enter new geographies, is critical to our long-term success.

• Effectively Manage the Cost of Care for Our Patients: The capitated nature of our contracting with payors requires us to prudently manage the medical expense of our patients. Our care model focuses on leveraging the primary care setting as a

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means of avoiding costly downstream healthcare costs, such as acute hospital admissions. Our patients, however, retain the freedom to seek care at emergency rooms or hospitals; we do not restrict their access to care beyond the limits of their MA plan, although we have developed many capabilities to manage and control the associated costs of this care. Therefore, we are liable for potentially large medical claims should we not effectively manage our patients’ health.

• Center-Level Contribution Margin: We endeavor to expand our number of centers and number of patients at each center over time. Due to the significant fixed costs associated with operating and managing our centers and the increases we experience in Patient Contribution on a per-patient basis the longer a patient is part of the Oak Street Platform, we generate significantly better center-level contribution margins (defined as (i) patient revenue, excluding Medicare Part D revenue minus (ii) the sum of (a) medical claims expense, excluding Medicare Part D related expenses, and (b) cost of care, excluding depreciation and amortization) as the patient base within our centers increases and matures and our costs decrease as a percent of revenue. As a result, the value of a center to our business increases over time.

• Seasonality to our Business: Our operational and financial results, including at-risk patient growth, per-patient revenue, and medical costs, will experience some variability depending upon the time of year in which they are measured. We typically experience the largest portion of our at-risk patient growth during the first quarter, when plan enrollment selections made during the prior Annual Enrollment Period (“AEP”) from October 15th through December 7th of the prior year take effect. Our per-patient revenue will generally decline over the course of the year. As the year progresses, our per-patient revenue declines as new patients join us typically with less complete or accurate documentation (and therefore lower risk-adjustment scores) and our attrition skews towards our higher-risk (and therefore greater revenue) patients. Finally, medical costs will vary seasonally depending on a number of factors, including the weather which can be a driver of certain illnesses, such as the influenza virus. We would therefore expect to see higher levels of per-patient medical costs in the first and fourth quarters. Medical costs also depend upon the number of business days in a period as periods with fewer business days will have lower medical costs all else equal.

• Investments in Growth: We expect to continue to focus on long-term growth through investments in our centers, care model, and sales and marketing. In addition, we expect our corporate, general and administrative expenses to increase in absolute dollars for the foreseeable future to support our growth and because of additional costs of being a public company.

Executive Summary

The following table presents key financial statistics for the three and six-months ended June 30, 2021 and 2020, respectively:

		For the Three-Months Ended								For the Six-Months Ended
(dollars in millions)		June 30, 2021				June 30, 2020				June 30, 2021				June 30, 2020
Centers			95				54				95				54
Total patients			122,000				86,500				122,000				86,500
At-risk			88,500				57,500				88,500				57,500
Fee-for-service			33,500				29,000				33,500				29,000
Total revenues	$		353.1		$		214.4		$		649.8		$		416.2
Loss from operations1	$		(99.3	)	$		(24.4	)	$		(163.1	)	$		(37.4	)
Net loss1	$		(100.3	)	$		(26.8	)	$		(164.3	)	$		(42.2	)
Platform contribution (Non-GAAP)2	$		4.7		$		19.5		$		41.4		$		45.2
Patient contribution (Non-GAAP)2	$		65.3		$		52.6		$		156.8		$		116.9
Adjusted EBITDA (Non-GAAP)2	$		(53.5	)	$		(17.5	)	$		(70.9	)	$		(26.2	)

1 Includes stock and unit-based compensation as shown in the table in the Results of Operations section below.

2 See “Non-GAAP Reconciliations” below for reconciliations to the most directly comparable financial measures calculated in accordance with GAAP and related disclosures.

Centers

We define our centers as those primary care centers open for business and attending to patients at the end of a particular period. Our centers are leased or licensed by Oak Street Health MSO, LLC or an affiliated entity and, pursuant to the terms of certain contractual relationships between Oak Street Health MSO, LLC and our affiliated medical practices, made available for use by the medical practices in the provision of primary care services.

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Total Patients

Total patients includes both at-risk MA and Direct Contracting patients (those patients for whom we are financially responsible for their total healthcare costs) as well as fee-for-service Medicare patients (those patients for whom our affiliated medical groups submit claims to the federal government for direct reimbursement under the Medicare program or to MA plans with which we do not have value-based arrangements). We define our total at-risk patients as at-risk patients who have selected one of our affiliated medical groups as their provider of primary care medical services as of the end of a particular period or have been aligned under the Direct Contracting program. We define our total fee-for-service Medicare patients as fee-for-service Medicare patients who come to one of our centers for medical care at least once per year. A fee-for-service patient continues to be included in our patient count until the earlier to occur of (a) more than one year since the patient’s last visit, (b) the patient communicates a desire to stop receiving care from us or (c) the patient passes away.

Non-GAAP Financial Measures

We utilize certain financial measures that are not calculated based on GAAP. Certain of these financial measures are considered “non-GAAP” financial measures within the meaning of Item 10 of Regulation S-K promulgated by the SEC. We believe that non-GAAP financial measures provide an additional way of viewing aspects of our operations that, when viewed with the GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business. These non-GAAP financial measures are also used by our management to evaluate financial results and to plan and forecast future periods. However, non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Non-GAAP financial measures used by us may differ from the non-GAAP measures used by other companies, including our competitors.

To supplement our consolidated financial statements presented on a GAAP basis, we disclose the following Non-GAAP measures: patient contribution, platform contribution and adjusted EBITDA as these are performance measures that our management uses to assess our operating performance. Because patient contribution, platform contribution and adjusted EBITDA facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes and in evaluating acquisition opportunities.

Patient and platform contribution are reconciled to loss from operations as the most directly comparable GAAP measure as set forth in the below tables under “Non-GAAP Reconciliations.” Adjusted EBITDA is reconciled to net loss as the most directly comparable GAAP measure as set forth in the below table under “Non-GAAP Reconciliations.”

Our definitions of patient contribution, platform contribution and adjusted EBITDA may differ from the definition used by other companies and therefore comparability may be limited. In addition, other companies may not publish this or similar metrics. Thus, our Non-GAAP Financial Measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP, such as net loss and loss from operations.

We provide investors and other users of our financial information with reconciliations of patient contribution, platform contribution and adjusted EBITDA to loss from operations and net loss, respectively. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view patient contribution, platform contribution and adjusted EBITDA in conjunction with loss from operations and net loss, respectively.

Patient Contribution

We define patient contribution as capitated revenue less medical claims expense. We view patient contribution as all of the dollars available for us to manage our business, including providing care to our patients, investing in marketing to attract new patients to the Oak Street Platform, and supporting the organization through our central corporate infrastructure. We expect that patient contribution will grow year-over-year in absolute dollars as our at-risk patient base continues to grow. We would also expect that our patient contribution per-patient-per-month economics on our at-risk patients will continue to improve the longer our patients are part of the Oak Street Platform as we better understand their health conditions and the patients better engage with our care model. We would expect, however, that our aggregate patient contribution per-patient-per-month economics on our at-risk patients may decrease at an aggregate level to the extent our patient growth skews our mix of patients towards patients newer to the Oak Street Platform. We would also expect to experience seasonality in patient contribution per-patient-per-month with the first quarter generally generating the greatest patient contribution per-patient-per-month, decreasing for the rest of the year. This seasonality is primarily driven by our adding new patients to the Oak Street Platform throughout the year, who generally have lower per-patient capitated revenue compared to our existing patient base.

Platform Contribution

We define platform contribution as total revenues less the sum of medical claims expense and cost of care, excluding depreciation and amortization. We believe this metric best reflects the economics of our care model as it includes all medical claims expense

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associated with our patients’ care as well as the costs we incur to care for our patients via the Oak Street Platform. As a center matures, we expect the platform contribution from that center to increase both in terms of absolute dollars as well as a percent of capitated revenue. This increase will be driven by improving patient contribution economics over time as well as our ability to generate operating leverage on the costs of our centers. Our aggregate platform contribution may not increase despite improving economics at our existing centers should we open new centers at a pace that skews our mix of centers towards newer centers. We would expect to experience seasonality in platform contribution due to seasonality in our patient contribution.

Adjusted EBITDA

We define adjusted EBITDA as net loss excluding other income (expense), income taxes, depreciation and amortization, transaction/offering costs and stock and unit-based compensation. We include adjusted EBITDA in this Quarterly Report because it is an important measure upon which our management assesses and believes investors should assess our operating performance. We also consider adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business and our historical operating performance on a more consistent basis.

Results of Operations

The following tables set forth our results of operations for the periods presented and as a percentage of our total revenues for those periods.

		For the Three-Months Ended											For the Six-Months Ended
(dollars in millions)		June 30, 2021				June 30, 2020			% Change				June 30, 2021				June 30, 2020			% Change
Revenues:
Capitated revenue	$		346.7		$		208.0			67	%	$		637.9		$		404.6			58	%
Other patient service revenue			6.4				6.4			0	%			11.9				11.6			3	%
Total revenues			353.1				214.4			65	%			649.8				416.2			56	%
Operating expenses:
Medical claims expense			281.4				155.4			81	%			481.1				287.7			67	%
Cost of care, excluding depreciation and amortization (1)			67.0				39.5			70	%			127.3				83.3			53	%
Sales and marketing (2)			25.9				10.1			156	%			50.0				22.0			127	%
Corporate, general and administrative (3)			74.2				31.1			139	%			147.3				55.4			166	%
Depreciation and amortization			3.9				2.7			44	%			7.2				5.2			38	%
Total operating expenses			452.4				238.8			89	%			812.9				453.6			79	%
Loss from operations	$		(99.3	)	$		(24.4	)		307	%	$		(163.1	)	$		(37.4	)		336	%
Other income/(expense):
Interest expense, net			(1.0	)			(2.4	)		(58	)%			(1.2	)			(4.9	)		(76	)%
Other			-				-			0	%			-				0.1			(100	)%
Total other expense			(1.0	)			(2.4	)		(58	)%			(1.2	)			(4.8	)		(75	)%
Net loss	$		(100.3	)	$		(26.8	)		274	%	$		(164.3	)	$		(42.2	)		289	%
Net loss attributable to non-controlling interests			2.3				0.1			2200	%			2.9				0.4			625	%
Net loss attributable to the Company	$		(98.0	)	$		(26.7	)		267	%	$		(161.4	)	$		(41.8	)		286	%
(1) Includes stock-based compensation, as follows:	$		0.3		$		-		*			$		0.6		$		-		*
(2) Includes stock-based compensation, as follows:			0.9				-		*					1.7				-		*
(3) Includes stock-based compensation, as follows:	$		39.7		$		4.2		*			$		80.9		$		6.0		*

____________

* Percentage not meaningful

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	For the Three-Months Ended						For the Six-Months Ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenues:
Capitated revenue		98	%		97	%		98	%		97	%
Other patient service revenue		2	%		3	%		2	%		3	%
Total revenues		100	%		100	%		100	%		100	%
Operating expenses:
Medical claims expense		80	%		73	%		74	%		69	%
Cost of care, excluding depreciation and amortization		19	%		18	%		20	%		20	%
Sales and marketing		7	%		5	%		8	%		5	%
Corporate, general and administrative		21	%		14	%		22	%		13	%
Depreciation and amortization		1	%		1	%		1	%		1	%
Total operating expenses		128	%		111	%		125	%		109	%
Loss from operations		(28	)%		(11	)%		(25	)%		(9	)%
Other income/(expense):
Interest expense, net		(0	)%		(1	)%		(0	)%		(1	)%
Other		0	%		0	%		0	%		0	%
Total other expense		(0	)%		(1	)%		(0	)%		(1	)%
Net loss		(28	)%		(13	)%		(24	)%		(10	)%
Net loss attributable to noncontrolling interests		1	%		0	%		0	%		0	%
Net loss attributable to the Company		(28	)%		(12	)%		(25	)%		(10	)%

Total Revenues

		For the Three-Months Ended June 30,						Change						For the Six-Months Ended June 30,						Change
(dollars in millions)		2021			2020			$		%				2021			2020			$		%
Revenues:
Capitated revenue	$		346.7	$		208.0	$		138.7		67	%	$		637.9	$		404.6	$		233.3		58	%
Other patient service revenue			6.4			6.4			-		0	%			11.9			11.6			0.3		3	%
Total revenues	$		353.1	$		214.4	$		138.7		65	%	$		649.8	$		416.2	$		233.6		56	%

Capitated revenue was $346.7 million for the three-months ended June 30, 2021, an increase of $138.7 million, or 67%, compared to $208.0 million for the three-months ended June 30, 2020. This increase was driven primarily by a 54% increase in total patients under capitated arrangements, and an increase of approximately 9% in capitated revenue rates primarily due to increased premiums from patients with a higher average level of acuity. For the three-months ended June 30, 2021, capitated revenue of $14.5 million was recorded related to prior periods, which is an increase of $8.6 million as compared to the prior period amount of $5.9 million recorded during the three-months ended June 30, 2020. This prior period increase was primarily driven by increases in our at-risk patients and acuity adjustments.

Capitated revenue was $637.9 million for the six-months ended June 30, 2021, an increase of $233.3 million, or 58%, compared to $404.6 million for the six-months ended June 30, 2020. This increase was driven primarily by a 54% increase in total patients under capitated arrangements, and an increase of approximately 3% in capitated revenue rates primarily due to increased premiums from patients with a higher average level of acuity. For the six-months ended June 30, 2021, capitated revenue of $17.6 million was recorded related to prior periods, which is an increase of $12.0 million as compared to the prior period amount of $5.6 million recorded during the six-months ended June 30, 2020. This prior period increase was primarily driven by increases in our at-risk patients and acuity adjustments.

Operating Expenses

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		For the Three-Months Ended June 30,						Change						For the Six-Months Ended June 30,						Change
(dollars in millions)		2021			2020			$		%				2021			2020			$		%
Medical claims expense	$		281.4	$		155.4	$		126.0		81	%	$		481.1	$		287.7	$		193.4		67	%
Cost of care, excluding depreciation and amortization			67.0			39.5			27.5		70	%			127.3			83.3			44.0		53	%
Sales and marketing			25.9			10.1			15.8		156	%			50.0			22.0			28.0		127	%
Corporate, general and administrative			74.2			31.1			43.1		139	%			147.3			55.4			91.9		166	%
Depreciation and amortization			3.9			2.7			1.2		44	%			7.2			5.2			2.0		38	%
Total operating expenses	$		452.4	$		238.8	$		213.6		89	%	$		812.9	$		453.6	$		359.3		79	%

Medical claims expense was $281.4 million or 80% of total revenues for the three-months ended June 30, 2021, an increase of $126.0 million, or 81%, compared to $155.4 million or 73% of total revenues for the three-months ended June 30, 2020. The increase was primarily due to a 54% increase in total patients under capitated arrangements and an 18% increase in cost per patient. For the three-months ended June 30, 2021, medical claims expense of $19.0 million was recorded as a result of an increase in prior period incurred claims, which is an increase of $3.1 million as compared to the same period in prior year of $15.9 million prior period incurred claims. These prior period adjustments were driven by COVID-19 costs and an increase in our at-risk patients and cost per patient.

Medical claims expense was $481.1 million or 74% of total revenues for the six-months ended June 30, 2021, an increase of $193.4 million, or 67%, compared to $287.7 million or 69% of total revenues for the six-months ended June 30, 2020. The increase was primarily due to a 54% increase in total patients under capitated arrangements and a 9% increase in cost per patient. For the six-months ended June 30, 2021, medical claims expense of $1.4 million was recorded as a result of an increase in prior period incurred claims, which was a decrease of $9.9 million as compared to the same period in prior year of $11.3 million prior period incurred claims. These prior period adjustments were driven by an increase in our at-risk patients and cost per patient.

Cost of care, excluding depreciation and amortization was $67.0 million or 19% of total revenues for the three-months ended June 30, 2021, an increase of $27.5 million or 70%, compared to $39.5 million or 18% of total revenues for the three-months ended June 30, 2020. The increase was driven by increases in salaries and benefits of $15.1 million, including an increase of $0.3 million of stock compensation; occupancy costs of $6.5 million; and medical supplies and patient transportation costs of $4.4 million, due to increases in both the number of centers we operate and our patient base. Also, expenses related to our COVID-19 response (including our vaccination efforts) of $1.6 million were incurred for the three-months ended June 30, 2021 but were offset by the recognition of the CARES Act provider relief funds.

Cost of care, excluding depreciation and amortization was $127.3 million or 20% of total revenues for the six-months ended June 30, 2021, an increase of $44.0 million or 53%, compared to $83.3 million or 20% of total revenues for the six-months ended June 30, 2020. The increase was driven by increases in salaries and benefits of $24.5 million, including an increase of $0.6 million of stock compensation; occupancy costs of $11.4 million; and medical supplies and patient transportation costs of $6.4 million, due to increases in both the number of centers we operate and our patient base. Also, expenses related to our COVID-19 response (including our vaccination efforts) of $3.5 million were incurred for the six-months ended June 30, 2021 but were offset by the recognition of the CARES Act provider relief funds.

Sales and marketing expense was $25.9 million or 7% of total revenues for the three-months ended June 30, 2021, an increase of $15.8 million or 156%, compared to $10.1 million or 5% of total revenues for the three-months ended June 30, 2020. The increase was driven by greater advertising spend of $10.8 million to drive new patients to our clinics; net headcount growth of $4.7 million, including $0.9 million of stock compensation primarily due to the modification of vesting terms for pre-IPO equity awards that occurred post-IPO.  Sales and marketing expense for the three-months ended June 30, 2020 were partially depressed during the COVID-19 pandemic which included the temporary suspension of community outreach roles and other marketing initiatives which drive new patients to our platform through June 2020.

Sales and marketing expense was $50.0 million or 8% of total revenues for the six-months ended June 30, 2021, an increase of $28.0 million, or 127%, compared to $22.0 million or 5% of total revenues for the six-months ended June 30, 2020. The increase was driven by greater advertising spend of $18.8 million to drive new patients to our clinics; net headcount growth of $8.5 million, including $1.7 million in stock compensation primarily due to the modification of vesting terms for pre-IPO equity awards that occurred post-IPO.  Sales and marketing expense for the six-months ended June 30, 2020 were partially depressed during the COVID-19 pandemic due to the temporary suspension of community outreach roles and other marketing initiatives which drive new patients to our platform through June 2020.

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Corporate, general and administrative expense was $74.2 million or 21% of total revenues for the three-months ended June 30, 2021, an increase of $43.1 million, or 139%, compared to $31.1 million or 14% of total revenues for the three-months ended June 30, 2020. The increase was primarily driven by greater salaries and benefits of $38.4 million, which included an increase in stock and unit-based compensation expense of $35.5 million primarily due to pre-IPO equity issuances and the modification of vesting terms for pre-IPO equity awards that occurred post-IPO. As a result of being a public company, the insurance and legal expenses increased $3.1 million, and the remainder of the increases in corporate, general and administrative expense were primarily to support the continued growth of our business.

Corporate, general and administrative expense was $147.3 million or 22% of total revenues for the six-months ended June 30, 2021, an increase of $91.9 million, or 166%, compared to $55.4 million or 13% of total revenues for the six-months ended June 30, 2020. The increase was primarily driven by greater salaries and benefits of $83.8 million, which included an increase in stock and unit-based compensation expense of $74.9 million primarily due to pre-IPO equity issuances and the modification of vesting terms for pre-IPO equity awards that occurred post-IPO. As a result of being a public company, the insurance and legal expenses increased $6.0 million, and the remainder of the increases in corporate, general and administrative expense were primarily to support the continued growth of our business.

Depreciation and amortization expense was $3.9 million or 1% of total revenues for the three-months ended June 30, 2021, an increase of $1.2 million, or 44%, compared to $2.7 million or 1% of total revenues for the three-months ended June 30, 2020. Depreciation and amortization expense was $7.2 million or 1% of total revenues for the six-months ended June 30, 2021, an increase of $2.0 million, or 38%, compared to $5.2 million or 1% of total revenues for the six-months ended June 30, 2020. The increases were primarily due to capital expenditures purchased to support the continued growth of our business.

Other (Expense) Income

		For the Three-Months Ended June 30,								Change						For the Six-Months Ended June 30,								Change
(dollars in millions)		2021				2020				$		%				2021				2020				$			%
Other income (expense):
Interest expense, net	$		(1.0	)	$		(2.4	)	$		1.4		(58	)%	$		(1.2	)	$		(4.9	)	$		3.7			(76	)%
Other			-				-				-		0	%			-				0.1				(0.1	)		(100	)%
Total other (expense) income	$		(1.0	)	$		(2.4	)	$		1.4		(58	)%	$		(1.2	)	$		(4.8	)			3.6			(75	)%

Interest expense was $1.0 million for the three-months ended June 30, 2021, a decrease of $1.4 million, or 58%, compared to $2.4 million for the three-months ended June 30, 2020. Interest expense was $1.2 million for the six-months ended June 30, 2021, a decrease of $3.7 million, or 76%, compared to $4.9 million for the six-months ended June 30, 2020. The decrease was primarily due to the payoff of outstanding debt and related interest from the Hercules Loan Agreement on August 11, 2020, slightly offset by the amortization of debt issuance and offering costs related to the Convertible Senior Notes issued in March 2021 and interest earned on investments made in debt securities in June 2021.

Non-GAAP Reconciliations

The following table provides a reconciliation of loss from operations, the most closely comparable GAAP financial measure, to Platform Contribution:

		For the Three-Months Ended								For the Six-Months Ended
(dollars in millions)		June 30, 2021				June 30, 2020				June 30, 2021				June 30, 2020
Loss from operations	$		(99.3	)	$		(24.4	)	$		(163.1	)	$		(37.4	)
Depreciation and amortization			3.9				2.7				7.2				5.2
Corporate, general and administrative			74.2				31.1				147.3				55.4
Sales and marketing			25.9				10.1				50.0				22.0
Platform contribution	$		4.7		$		19.5		$		41.4		$		45.2

The following table provides a reconciliation of loss from operations, the most closely comparable GAAP financial measure, to Patient Contribution.

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		For the Three-Months Ended								For the Six-Months Ended
(dollars in millions)		June 30, 2021				June 30, 2020				June 30, 2021				June 30, 2020
Loss from operations	$		(99.3	)	$		(24.4	)	$		(163.1	)	$		(37.4	)
Other patient service revenue			(6.4	)			(6.4	)			(11.9	)			(11.6	)
Cost of care, excluding depreciation and amortization			67.0				39.5				127.3				83.3
Sales and marketing			25.9				10.1				50.0				22.0
Corporate, general and administrative expenses			74.2				31.1				147.3				55.4
Depreciation and amortization			3.9				2.7				7.2				5.2
Patient contribution	$		65.3		$		52.6		$		156.8		$		116.9

The following table provides a reconciliation of net loss, the most closely comparable GAAP financial measure, to Adjusted EBITDA:

		For the Three-Months Ended								For the Six-Months Ended
(dollars in millions)		June 30, 2021				June 30, 2020				June 30, 2021				June 30, 2020
Net loss	$		(100.3	)	$		(26.8	)	$		(164.3	)	$		(42.2	)
Interest expense and other income			1.0				2.4				1.2				4.8
Depreciation and amortization			3.9				2.7				7.2				5.2
Stock and unit-based compensation			40.9				4.2				83.2				6.0
Transaction/offering related costs			1.0				-				1.8				-
Adjusted EBITDA	$		(53.5	)	$		(17.5	)	$		(70.9	)	$		(26.2	)

Liquidity and Capital Resources

Overview

We have funded our operations through the issuance of equity and debt. As of June 30, 2021, we had cash, restricted cash and cash equivalents of $425.8 million. Our restricted cash balance was $15.9 million as of June 30, 2021. Our cash and cash equivalents primarily consist of highly liquid investments in money market funds, commercial paper and cash. Since our inception and through June 30, 2021, we have generated significant operating losses from our operations as reflected in our accumulated deficit and negative cash flows from operations.

We expect to continue to incur operating losses and generate negative cash flows from operations for the foreseeable future due to the investments we intend to continue to make in expanding our operations and sales and marketing and due to additional general and administrative costs we expect to incur in connection with operating as a public company. As a result, we may require additional capital resources to execute strategic initiatives to grow our business.

We believe that the proceeds from the convertible debt offering described below and IPO are sufficient to satisfy our anticipated cash requirements, which consist of capital expenditures, working capital, and potential acquisition and strategic transactions, for the next twelve months even with the uncertainty arising from the COVID-19 pandemic. Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties. Our actual results and our future capital requirements could vary because of, many factors, including our growth rate, the timing and extent of spending to open new centers and expand into new markets and the expansion of sales and marketing activities.

We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations, and financial condition would be adversely affected.

Convertible Senior Notes, Capped Call Transactions and Marketable Debt Securities

In March 2021, we issued $920.0 million aggregate principal amount of 0% Convertible Senior Notes (the “Convertible Senior Notes”), including the exercise in full of the initial purchasers’ option to purchase up to an additional $120.0 million, in a private offering exempt from registration under the Securities Act of 1933. The Convertible Senior Notes are governed by an indenture (“Indenture”), dated as of March 16, 2021, between the Company and U.S. Bank National Association, as trustee. Total proceeds realized from the sale of the Convertible Senior Notes, net of debt issuance and offering costs of $22.1 million, were $897.9 million. The Convertible Senior Notes will not bear regular interest and the principal amount of the Convertible Senior Notes will not accrete. We will pay special

43

interest, if any, as the sole remedy, at our election, relating to the failure to comply with our reporting and certain other obligations under the Indenture for the first 365 days after the occurrence of such an event. The Convertible Senior Notes are general senior, unsecured obligations of the Company and will mature on March 15, 2026, unless earlier redeemed, repurchased or converted. Refer to Note 10, Convertible Senior Notes, of the Notes to Consolidated Financial Statements included in this quarterly report.

We used approximately $123.6 million of the net proceeds to pay the cost of the capped call transactions. We intend to use the remainder of the net proceeds for general corporate purposes, which may include working capital, capital expenditures, and potential acquisitions and strategic transactions.

The Indenture contains customary covenants related to timely filings and reporting, and customary events of default. As of June 30, 2021, we were in compliance with all covenants under the Indenture.

In June 2021, the Company invested $671.7 million of the proceeds from the Convertible Senior Notes in marketable debt securities.

Changes in Cash Flows

The following table presents a summary of our consolidated cash flows from operating, investing and financing activities for the periods indicated.

		For the Six-Months Ended
(dollars in millions)		June 30, 2021				June 30, 2020				$ Change			% Change
Net cash used in operating activities	$		(82.0	)	$		(43.2	)	$		(38.8	)		90	%
Net cash used in investing activities			(688.8	)			(8.0	)			(680.8	)		8510	%
Net cash provided by financing activities			776.9				205.0				571.9			279	%
Net change in cash	$		6.1		$		153.8		$		(147.7	)		(96	)%

Operating Activities

For the six-months ended June 30, 2021, net cash used in operating activities was $82.0 million, an increase of $38.8 million in cash outflows compared to net cash used in operating activities of $43.2 million for the six-months ended June 30, 2020. The principal contributors to the year-over-year change in the operating cash flows were as follows:

• An increase of $4.6 million in cash outflows related to operating assets and liabilities primarily resulting from:

o Changes in accounts receivable due to the timing of collections and the growth in the number of at-risk patients;

o Changes in liability for unpaid claims due to the growth in the number of at-risk patients; and

o Changes in accrued compensation and benefits due to the payment of employee bonuses.

• A net change of $34.2 million in net loss and non-cash charges and credits, primarily due to an increase in net loss for the business, as noted above under “Results of Operations” offset by increased stock and unit-based compensation, non-cash operating lease charges and depreciation and amortization.

Investing Activities

For the six-months ended June 30, 2021, net cash used in investing activities was $688.8 million, an increase of $680.8 million in cash outflows compared to net cash used in investing activities of $8.0 million for the six-months ended June 30, 2020 primarily due to the investment of $672.0 million in marketable debt securities and increased capital expenditures for the continued growth in new centers.

Financing Activities

Cash provided by financing activities for the six-months ended June 30, 2021 was $776.9 million, an increase of $571.9 million in cash inflows compared to cash provided by financing activities of $205.0 million for the six-months ended June 30, 2020 primarily due to $897.9 million in proceeds from the issuance of the Convertible Senior Notes and cash outflows of $123.6 million related to the capped call transactions completed in March 2021. Cash provided by financing activities for the six-months ended June 30, 2020 of $205.0 million was due to proceeds of $224.4 million from the issuance of redeemable investor units partially offset by the payment for repurchases of units of $19.4 million as a result of the completed tender offer in 2020.

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Contractual Obligations and Commitments

As of June 30, 2021, our contractual obligations are summarized in the table below.

(dollars in millions)		Total			Less than 1 Year			1-3 Years			3-5 Years			More than 5 Years
Convertible Senior Notes	$		920.0	$		-	$		-	$		920.0	$		-
Operating Lease Obligations			184.9			17.0			37.8			33.1			97.0
Other Obligations			67.0			4.3			17.2			15.2			30.3
Total	$		1,171.9	$		21.3	$		55.0	$		968.3	$		127.3

Off-Balance Sheet Obligations

As of June 30, 2021, we did not have any significant off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. The future effects of the COVID-19 pandemic on our results of operations, cash flows and financial position are unclear, however, we believe we have made reasonable estimates and assumptions in preparing the financial statements. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.

For a description of our policies regarding our critical accounting policies, see “Critical Accounting Policies” in our Form 10-K for the year ended December 31, 2020. There have been no significant changes in our critical accounting estimate policies or methodologies to our condensed consolidated financial statements.

Recently Adopted Accounting Pronouncements

For a description of recently issued accounting pronouncements, see Note 1 to our consolidated financial statements of this Quarterly Report on Form 10-Q.

Emerging Growth Company Status

We currently meet the definition of an emerging growth company, as defined in the Jumpstart Our Business Startups Act (JOBS Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We elected to use this extended transition period until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period. Based on the aggregate worldwide market value of our shares of common stock held by our non-affiliate stockholders as of June 30, 2021, we expect that we will become a “large accelerated filer” and lose emerging growth status beginning with our Annual Report on Form 10-K for the year ended December 31, 2021. We will also no longer be exempt from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and our independent registered public accounting firm will evaluate and report on the effectiveness of internal control over financial reporting.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information regarding our exposure to certain market risks, see “Quantitative and Qualitative Disclosures about Market Risk,” in Part II, Item 7A of our Form 10-K for the year ended December 31, 2020. There have been no material changes in our market risk exposures for the six-months ended June 30, 2021, as compared to those discussed in our Annual Report on Form 10-K for the year ended December 31, 2020, other than as discussed below.

Interest Rate Sensitivity

We had cash and cash equivalents of $425.8 million as of June 30, 2021, compared to $419.7 million as of December 31, 2020, held primarily in cash deposits and money market funds for working capital purposes.

We had marketable debt securities of $669.2 million as of June 30, 2021, compared to $0.0 million as of December 31, 2020, consisting of U.S. Treasury obligations, corporate bonds, available-for-sale securities and others. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes. All our investments are denominated in U.S. dollars.

Our cash and cash equivalents, marketable debt securities and debt are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value negatively impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates.

We do not believe that an increase or decrease in interest rates of 100 basis points would have a material effect on our business, financial condition or results of operations.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective as of June 30, 2021.

Changes to our Internal Controls over Financial Reporting

There were no material changes in our internal control over financial reporting during the six-months ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As a result of the COVID-19 pandemic, certain employees began working remotely in March 2020. We have not identified any material changes in our internal control over financial reporting as a result of these changes to the working environment, in part because our internal control over financial reporting was designed to operate in a remote working environment. We are continually monitoring and assessing the COVID-19 situation to determine any potential impact on the design and operating effectiveness of our internal controls over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 14, Commitments – Litigation and Contingencies to Oak Street Health, Inc.’s Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed under Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and our Form 10-Q for the quarter ended March 31, 2021, except that the risk factors set forth are added.

Our investments in marketable debt securities are subject to certain risks which could affect our overall financial condition, results of operations or cash flows.

In June 2021, the Company invested $672.0 million in marketable debt securities consisting of U.S. Treasury obligations, corporate bonds, available-for-sale securities and other instruments. The investment was made for capital preservation purposes. We did not enter into investments for trading or speculative purposes. Our marketable debt securities debt are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value negatively impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. Should our marketable debt securities lose value or have their liquidity impaired, it could affect our overall financial condition. Additionally, should we choose or be required to sell these securities in the future at a loss, our consolidated operating results or cash flows may be affected. Furthermore, these securities require mark-to-market accounting treatment and could result in a gain or loss on a quarterly basis with regards to their mark-to-market value. Such accounting treatment could have a material impact on, and could potentially result in significant volatility in, our quarterly results of operations.

As a result of being a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting in order to comply with Section 404 of the Sarbanes- Oxley Act. We may not complete our analysis of our internal control over financial reporting in a timely manner, these internal controls may not be determined to be effective, or our independent registered public accountants may issue an adverse opinion on these controls once we lose our status as an emerging growth company, all of which may adversely affect investor confidence in us and, as a result, the value of our common stock.

As a result of our IPO, we are required by Section 404 of the Sarbanes-Oxley Act to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting as of the year ending December 31, 2021. The process of designing and implementing internal control over financial reporting required to comply with this requirement will be time- consuming, costly and complicated. If during the evaluation and testing process we identify one or more other material weaknesses in our internal control over financial reporting, our management will be unable to assert that our internal control over financial reporting is effective. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.

Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed.  Our independent registered public accounting firm is currently not be required to attest formally to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act because we currently qualify as an “emerging growth company.” However, based on our aggregate worldwide market value of our shares of common stock held by non-affiliates as of June 30, 2021, we expect that we will become a “large accelerated filer” and lose emerging growth company status beginning with our Annual Report on Form 10-K for the year ended December 31, 2021. Accordingly, our independent registered public accounting firm will be required to formally attest to the effectiveness of our internal control over financial reporting as of December 31, 2021. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could materially and adversely affect our business, results of operations and financial condition and could cause a decline in the trading price of our common stock.

We cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance, our independent registered public accounting firm may issue an adverse opinion due to ineffective internal controls over financial reporting, and we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. As a

47

result, there could be a negative reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, we may be required to incur costs in improving our internal control system and the hiring of additional personnel. Any such action could negatively affect our results of operations and cash flows.

The requirements of being a public company, particularly after we are no longer an “emerging growth company,” may strain our resources and distract our management, which could make it difficult to manage our business.

As a public company, we incur legal, accounting and other expenses that we did not previously incur. We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Sarbanes-Oxley Act, the listing requirements of the NYSE and other applicable securities rules and regulations. For as long as we continue to be an emerging growth company, we are eligible for certain exemptions from various public company reporting requirements. These exemptions include, but are not limited to, (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, (iii) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved, and (iv) an extended transition period to comply with new or revised accounting standards applicable to public companies. However, based on our aggregate worldwide market value of the shares of our common stock held by non-affiliates as of June 30, 2021, we expect that we will become a “large accelerated filer” and lose emerging growth company status beginning with our Annual Report on Form 10-K for the year ended December 31, 2021. At such time, we will no longer be eligible to rely on the various exemptions available for “emerging growth companies” in our filings with the SEC. Compliance with these rules and regulations will continue to increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. In addition, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain the same or similar coverage. These additional obligations could have a material adverse effect on our business, financial condition and results of operations.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

Information regarding the issuance of the Convertible Senior Notes was previously provided in the Current Report on Form 8-K filed with the SEC on March 16, 2021, and therefore is not required to be furnished herein.

Use of Proceeds

Initial Public Offering

On August 10, 2020, we completed the IPO of our common stock pursuant to a Registration Statement (File No. 333-239818) which was declared effective on August 5, 2020. There have been no material change in the planned use of proceeds from the IPO from those that were described in the final prospectus filed pursuant to Rule 424(b) under the Securities Act and our Annual Report on Form 10-K for the year ended December 31, 2020.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit No.	Description
31.1	Certification of the Chief Executive Officer pursuant to Exchange Act Rules Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2020, filed herewith.
31.2	Certification of the Chief Financial Officer pursuant to Exchange Act Rules Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2020, filed herewith.
32.1*	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, filed herewith.
32.2*	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, filed herewith.
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted in Inline XBRL)

* The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

50

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Oak Street Health, Inc.    (Registrant)
Date: August 9, 2021	By:	/s/Timothy Cook
		Timothy Cook
		Chief Financial Officer (Principal Financial Officer)

51

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

I, Michael Pykosz, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Oak Street Health, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2021

/s/ Michael Pykosz

Michael Pykosz

Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

I, Timothy Cook, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Oak Street Health, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2021

/s/ Timothy Cook

Timothy Cook

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of the Chief Executive Officer

Pursuant to Rule 18 U.S.C. Section 1350

In connection with the Quarterly Report on Form 10-Q of Oak Street Health, Inc. (the “Company”) for the period ended June 30, 2021, as filed with the U.S. Securities and Exchange Commission (the “Report”), I, Michael Pykosz, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2021

/s/ Michael Pykosz

Michael Pykosz

Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of the Chief Financial Officer

Pursuant to Rule 18 U.S.C. Section 1350

In connection with the Quarterly Report on Form 10-Q of Oak Street Health, Inc. (the “Company”) for the period ended June 30, 2021 as filed with the U.S. Securities and Exchange Commission (the “Report”), I, Timothy Cook, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2021

/s/ Timothy Cook

Timothy Cook

Chief Financial Officer

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	Jun. 30, 2021	Aug. 04, 2021
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Document Fiscal Year Focus	2021
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Entity Registrant Name	Oak Street Health, Inc.
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Current Fiscal Year End Date	--12-31
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Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	30 W. Monroe Street Suite 1200
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60603
City Area Code	312
Local Phone Number	733-9730
Title of 12(b) Security	Common Stock, $0.001 par value
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Consolidated Balance sheets - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Long-term assets:
Operating lease right-of-use assets (Humana comprised $49.8 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	$ 0.0
Long-term liabilities:
Long-term operating lease liabilities (Humana comprised $46.3 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	135.4
Deferred rent expense (Humana comprised $0.0 and $0.8 as of June 30, 2021 and December 31, 2020, respectively)		$ 13.5
OAK Street Health Inc and Affiliates [Member]
Current assets:
Cash	409.9	409.3
Restricted cash	15.9	10.4
Other patient service receivables, net (Humana comprised $0.1 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	0.5	7.6
Capitated accounts receivable (Humana comprised $109.8 and $65.7 as of June 30, 2021 and December 31, 2020, respectively)	383.7	248.9
Marketable debt securities	669.2
Prepaid expenses	3.7	6.8
Other current assets	7.3	4.2
Total current assets	1,490.2	687.2
Long-term assets:
Property and equipment, net	91.8	78.8
Security deposits	1.5	1.3
Operating lease right-of-use assets (Humana comprised $49.8 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	127.4
Goodwill	11.4	9.6
Intangible assets, net	2.8	3.0
Other long-term assets	0.9	1.1
Total assets	1,726.0	781.0
Current liabilities:
Accounts payable	15.2	8.8
Accrued compensation and benefits	39.9	32.0
Liability for unpaid claims (Humana comprised $96.6 and $78.5 as of June 30, 2021 and December 31, 2020, respectively)	357.4	262.1
Other liabilities (Humana comprised $13.7 and $4.6 as of June 30, 2021 and December 31, 2020, respectively)	25.5	12.6
Total current liabilities	438.0	315.5
Long-term liabilities:
Long-term operating lease liabilities (Humana comprised $46.3 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	135.4
Deferred rent expense (Humana comprised $0.0 and $0.8 as of June 30, 2021 and December 31, 2020, respectively)		13.5
Other long-term liabilities (Humana comprised $28.3 and $20.1 as of June 30, 2021 and December 31, 2020, respectively)	32.6	28.8
Long-term debt	899.2
Total liabilities	1,505.2	357.8
Commitments and contingencies (See Notes 7 & 14)
Stockholders' equity:
Preferred Stock, par value $0.001; 50,000,000 shares authorized as of June 30, 2021 and December 31, 2020; no shares issued and outstanding as of June 30, 2021 and December 31, 2020
Common stock, par value $0.001; 500,000,000 shares authorized as of June 30, 2021 and December 31, 2020; 240,785,554 and 240,756,714 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	0.2	0.2
Additional paid-in capital (Humana comprised $50.0 and $50.0 as of June 30, 2021 and December 31, 2020, respectively)	935.0	971.8
Accumulated other comprehensive loss	(0.3)
Accumulated deficit	(717.2)	(555.8)
Total stockholders' equity allocated to Oak Street Health, Inc.	217.7	416.2
Non-controlling interests	3.1	7.0
Total stockholders' equity	220.8	423.2
Total liabilities and stockholders' equity	$ 1,726.0	$ 781.0

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Consolidated Balance sheets (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Operating lease right-of-use assets (Humana comprised $49.8 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	$ 0.0
Long-term operating lease liabilities (Humana comprised $46.3 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	$ 135.4
Deferred rent expense (Humana comprised $0.0 and $0.8 as of June 30, 2021 and December 31, 2020, respectively)		$ 13.5
Common stock, par value	$ 0.001
OAK Street Health Inc and Affiliates [Member]
Other patient service receivables, net (Humana comprised $0.1 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	$ 0.5	7.6
Capitated accounts receivable (Humana comprised $109.8 and $65.7 as of June 30, 2021 and December 31, 2020, respectively)	383.7	248.9
Operating lease right-of-use assets (Humana comprised $49.8 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	127.4
Liability for unpaid claims (Humana comprised $96.6 and $78.5 as of June 30, 2021 and December 31, 2020, respectively)	357.4	262.1
Other liabilities (Humana comprised $13.7 and $4.6 as of June 30, 2021 and December 31, 2020, respectively)	25.5	12.6
Long-term operating lease liabilities (Humana comprised $46.3 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	135.4
Deferred rent expense (Humana comprised $0.0 and $0.8 as of June 30, 2021 and December 31, 2020, respectively)		13.5
Other long-term liabilities (Humana comprised $28.3 and $20.1 as of June 30, 2021 and December 31, 2020, respectively)	$ 32.6	$ 28.8
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	240,785,554	240,756,714
Common stock, shares outstanding	240,785,554	240,756,714
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Additional paid-in capital (Humana comprised $50.0 and $50.0 as of June 30, 2021 and December 31, 2020, respectively)	$ 935.0	$ 971.8
OAK Street Health Inc and Affiliates [Member] | Humana [Member]
Other patient service receivables, net (Humana comprised $0.1 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	0.1	0.0
Capitated accounts receivable (Humana comprised $109.8 and $65.7 as of June 30, 2021 and December 31, 2020, respectively)	109.8	65.7
Operating lease right-of-use assets (Humana comprised $49.8 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	49.8	0.0
Liability for unpaid claims (Humana comprised $96.6 and $78.5 as of June 30, 2021 and December 31, 2020, respectively)	96.6	78.5
Other liabilities (Humana comprised $13.7 and $4.6 as of June 30, 2021 and December 31, 2020, respectively)	13.7	4.6
Long-term operating lease liabilities (Humana comprised $46.3 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	46.3	0.0
Deferred rent expense (Humana comprised $0.0 and $0.8 as of June 30, 2021 and December 31, 2020, respectively)	0.0	0.8
Other long-term liabilities (Humana comprised $28.3 and $20.1 as of June 30, 2021 and December 31, 2020, respectively)	28.3	20.1
Additional paid-in capital (Humana comprised $50.0 and $50.0 as of June 30, 2021 and December 31, 2020, respectively)	$ 50.0	$ 50.0

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Consolidated Statements of Operations - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Other (expense)/income:
Net loss	$ (100.3)	$ (26.8)	$ (164.3)	$ (42.2)
Undeclared and deemed dividends			(103.6)
OAK Street Health Inc and Affiliates [Member]
Total revenues	353.1	214.4	649.8	416.2
Operating expenses:
Cost of providing patient care in relation to revenue waived			387.6	220.6
Sales and marketing	25.9	10.1	50.0	22.0
Corporate, general and administrative expenses	74.2	31.1	147.3	55.4
Depreciation and amortization	3.9	2.7	7.2	5.2
Total operating expenses	452.4	238.8	812.9	453.6
Loss from operations	(99.3)	(24.4)	(163.1)	(37.4)
Other (expense)/income:
Interest expense, net	(1.0)	(2.4)	(1.2)	(4.9)
Total other (expense)	(1.0)	(2.4)	(1.2)	(4.8)
Net loss	(100.3)	(26.8)	(164.3)	(42.2)
Net loss attributable to non-controlling interests	2.3	0.1	2.9	0.4
Net loss attributable to Oak Street Health, Inc.	(98.0)	(26.7)	(161.4)	(41.8)
Undeclared and deemed dividends		0.0		0.0
Net loss attributable to common stock/unitholders	$ (98.0)	(38.9)	$ (161.4)	(63.6)
Weighted average common stock outstanding - basic and diluted	221,168,630		221,595,670
Net loss per share – basic and diluted	$ (0.44)		$ (0.73)
OAK Street Health Inc and Affiliates [Member] | Medical Claims Expenses [Member]
Operating expenses:
Cost of providing patient care in relation to revenue waived	$ 281.4	155.4	$ 481.1	287.7
OAK Street Health Inc and Affiliates [Member] | Cost of Care [Member]
Operating expenses:
Cost of providing patient care in relation to revenue waived	67.0	39.5	127.3	83.3
OAK Street Health Inc and Affiliates [Member] | Capitated Revenue [Member]
Total revenues	346.7	208.0	637.9	404.6
OAK Street Health Inc and Affiliates [Member] | Other Patient Service Revenue [Member]
Total revenues	$ 6.4	$ 6.4	$ 11.9	$ 11.6

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Consolidated Statements of Operations - (Parenthetical) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Total revenues	$ 353.1	$ 214.4	$ 649.8	$ 416.2
Cost of providing patient care in relation to revenue waived			387.6	220.6
Medical Claims Expenses [Member]
Cost of providing patient care in relation to revenue waived	281.4	155.4	481.1	287.7
Medical Claims Expenses [Member] | Humana [Member]
Cost of providing patient care in relation to revenue waived	105.7	64.0	178.7	123.8
Cost of Care [Member]
Cost of providing patient care in relation to revenue waived	67.0	39.5	127.3	83.3
Cost of Care [Member] | Humana [Member]
Cost of providing patient care in relation to revenue waived	2.3	1.2	4.3	2.4
Capitated Revenue [Member]
Total revenues	346.7	208.0	637.9	404.6
Capitated Revenue [Member] | Humana [Member]
Total revenues	127.1	97.4	248.5	193.9
Other Patient Service Revenue [Member]
Total revenues	6.4	6.4	11.9	11.6
Other Patient Service Revenue [Member] | Humana [Member]
Total revenues	$ 1.5	$ 0.8	$ 2.7	$ 1.6

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Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (100.3)	$ (26.8)	$ (164.3)	$ (42.2)
Other comprehensive loss:
Net unrealized loss on marketable debt securities, net of tax	(0.3)		(0.3)
Comprehensive loss	(100.6)	(26.8)	(164.6)	(42.2)
Less: Comprehensive loss attributable to non-controlling interests	2.3	0.1	2.9	0.4
Comprehensive loss attributable to Oak Street Health, Inc.	$ (98.3)	$ (26.7)	$ (161.7)	$ (41.8)

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Consolidated Statements of Changes in Redeemable Investor Units and Stockholders' Equity/Members' (Deficit) - USD ($) $ in Millions	Total	OAK Street Health Inc and Affiliates [Member]	OAK Street Health Inc and Affiliates [Member] Redeemable Investor Units [Member]	OAK Street Health Inc and Affiliates [Member] Members' Capital [Member]	OAK Street Health Inc and Affiliates [Member] Accumulated Deficit [Member]	OAK Street Health Inc and Affiliates [Member] Non-controlling Interests [Member]	OAK Street Health Inc and Affiliates [Member] Common Stock [Member]	OAK Street Health Inc and Affiliates [Member] Accumulated Other Comprehensive Loss [Member]	OAK Street Health Inc and Affiliates [Member] Additional Paid-In Capital [Member]
Redeemable Investor, Beginning balance at Dec. 31, 2019			$ 320.6
Beginning balance at Dec. 31, 2019		$ (344.9)		$ 4.2	$ (354.4)	$ 5.3
Beginning balance (In Shares) at Dec. 31, 2019			11,000,619	2,530,864
Issuance of series I, II and III investor units			$ 224.4
Issuance of Series I, II and III Investor Units (In Shares)			1,471,623
Issuance of common units				1,095,067
Tender offer		(19.4)		$ (5.9)	(13.5)
Tender Offer – Investor Units, Founder’s Units, Incentive Units (In Shares)				(131,151)
Repurchases – profits interests				(2,031)
Forfeitures – profits interests		(0.1)		$ (0.1)
Forfeitures - Profits Interests (In Shares)				(31,289)
Stock and Unit-based compensation expense		5.3		$ 5.3
Net loss	$ (42.2)	(42.2)			(41.8)	(0.4)
Redeemable Investor, Ending balance at Jun. 30, 2020			$ 545.0
Ending balance at Jun. 30, 2020		(401.3)		$ 3.5	(409.7)	4.9
Ending balance (In Shares) at Jun. 30, 2020			12,472,242	3,461,460
Redeemable Investor, Beginning balance at Mar. 31, 2020			$ 545.0
Beginning balance at Mar. 31, 2020		(358.5)		$ 6.0	(369.4)	4.9
Beginning balance (In Shares) at Mar. 31, 2020			12,472,242	2,790,395
Issuance of common units				829,567
Tender offer		(19.4)		$ (5.9)	(13.5)
Tender Offer – Investor Units, Founder’s Units, Incentive Units (In Shares)				(131,151)
Repurchases – profits interests				(1,594)
Forfeitures – profits interests		(0.1)		$ (0.1)
Forfeitures - Profits Interests (In Shares)				(25,757)
Stock and Unit-based compensation expense		3.5		$ 3.5
Net loss	(26.8)	(26.8)			(26.8)
Redeemable Investor, Ending balance at Jun. 30, 2020			$ 545.0
Ending balance at Jun. 30, 2020		(401.3)		$ 3.5	(409.7)	4.9
Ending balance (In Shares) at Jun. 30, 2020			12,472,242	3,461,460
Beginning balance at Dec. 31, 2020		423.2			(555.8)	7.0	$ 0.2		$ 971.8
Beginning balance (In Shares) at Dec. 31, 2020							240,756,714
Purchase of capped calls		(123.6)							(123.6)
Issuance of common stock upon vesting of restricted stock units, (in shares)							22,239
Issuance of common stock upon exercise of options		$ 3.6							3.6
Issuance of common stock upon exercise of options, ( in shares)		174,814					174,814
Shares withheld related to net settlement of stock based awards							(630)
Forfeitures – profits interests		$ (0.8)							(0.8)
Forfeitures - Profits Interests (In Shares)		(64,707)					(167,583)
Stock and Unit-based compensation expense		$ 84.0							84.0
Payments from non-controlling interests		0.1				0.1
Payments to non-controlling interest		(1.1)				(1.1)
Net unrealized loss on marketable debt securities		(0.3)						$ (0.3)
Net loss	(164.3)	(164.3)			(161.4)	(2.9)
Redeemable Investor, Ending balance at Jun. 30, 2021	545.0
Ending balance at Jun. 30, 2021		220.8			(717.2)	3.1	$ 0.2	(0.3)	935.0
Ending balance (In Shares) at Jun. 30, 2021							240,785,554
Beginning balance at Mar. 31, 2021		278.0			(619.2)	5.3	$ 0.2		891.7
Beginning balance (In Shares) at Mar. 31, 2021							240,784,438
Issuance of common stock upon vesting of restricted stock units, (in shares)							4,375
Issuance of common stock upon exercise of options		2.5							2.5
Issuance of common stock upon exercise of options, ( in shares)							121,507
Shares withheld related to net settlement of stock based awards							(630)
Forfeitures – profits interests		(0.7)							(0.7)
Forfeitures - Profits Interests (In Shares)							(124,136)
Stock and Unit-based compensation expense		41.5							41.5
Payments from non-controlling interests		0.1				0.1
Net unrealized loss on marketable debt securities		(0.3)						(0.3)
Net loss	(100.3)	(100.3)			(98.0)	(2.3)
Redeemable Investor, Ending balance at Jun. 30, 2021	$ 545.0
Ending balance at Jun. 30, 2021		$ 220.8			$ (717.2)	$ 3.1	$ 0.2	$ (0.3)	$ 935.0
Ending balance (In Shares) at Jun. 30, 2021							240,785,554

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Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities:
Net loss	$ (164.3)	$ (42.2)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount on debt and related issuance costs	1.3	0.8
Accretion of discounts and amortization of premiums on short-term marketable securities, net	0.4
Depreciation and amortization	7.2	5.2
Non-cash operating lease costs	7.3
Stock and unit-based compensation, net of forfeitures	83.2	5.2
Change in fair value of bifurcated derivative		0.3
Net unrealized loss on marketable debt securities, net of tax	(0.3)
Change in operating assets and liabilities, net of impact of acquisitions:
Accounts receivable	(127.7)	(75.9)
Prepaid expenses and other current assets	(0.9)	1.9
Security deposits and other long-term assets		0.1
Accounts payable	4.3	(6.9)
Accrued compensation and benefits	7.9	(6.0)
Liability for unpaid claims	95.4	65.2
Operating lease liabilities	(6.6)
Other current liabilities	1.6	6.1
Other long-term liabilities	8.9	2.9
Other		0.1
Net cash used in operating activities	(82.0)	(43.2)
Cash flows from investing activities:
Proceeds from sales of marketable debt securities	2.2
Purchases of marketable debt securities	(672.0)
Purchase of business	(1.0)
Purchases of property and equipment	(18.0)	(8.0)
Net cash used in investing activities	(688.8)	(8.0)
Cash flows from financing activities:
Proceeds from borrowings on convertible senior notes, net	897.9
Purchase of capped calls	(123.6)
Proceeds from issuance of redeemable investor units		224.4
Capital contributions from non-controlling interests	0.1
Capital distributions to non-controlling interests	(1.1)
Tender Offer - common units		(19.4)
Proceeds from exercise of options	3.6
Net cash provided by financing activities	776.9	205.0
Net change in cash, cash equivalents and restricted cash	6.1	153.8
Cash, cash equivalents and restricted cash, beginning of period	419.7	42.2
Cash, cash equivalents and restricted cash, end of period	425.8	196.0
Supplemental disclosures
Cash paid for interest		$ 4.0
Additions to construction in process funded through accounts payable	$ 2.1

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Organization and Nature of Business

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Organization And Nature Of Business [Line Items]

Organization and Nature of Business

NOTE 1. ORGANIZATION AND NATURE OF BUSINESS

Description of Business

Oak Street Health, Inc. (collectively with its consolidated subsidiaries is referred to as “Oak Street Health,” “OSH,” “we,” “us,” “our,” or the “Company”) was formed as a Delaware corporation on October 22, 2019 for the purpose of completing a public offering and related reorganization transactions (collectively referred to as the “IPO”) in order to carry on the business of Oak Street Health, LLC (“OSH LLC”) and its affiliates. As the managing member of OSH LLC, Oak Street Health, Inc. operates and controls all of the business affairs of OSH LLC and its affiliates.

The Company operates primary care centers serving Medicare beneficiaries. The Company, through its centers and management services organization, combines an innovative care model with superior patient experience. The Company invests resources into primary care to prevent unnecessary acute events and manage chronic illnesses. The Company engages Medicare eligible patients through the use of an innovative community outreach approach. Once patients are engaged, the Company integrates population health analytics, social support services and primary care into the care model to drive improved outcomes. The Company contracts with health plans to generate medical costs savings and realize a return on its investment in primary care. As of June 30, 2021, the Company operated 95 centers.

Initial Public Offering and Reorganization Transactions

On August 10, 2020, we completed our IPO in which we issued and sold 17,968,750 shares of common stock, par value $0.001 per share, at an offering price of $21.00 per share. The share amount included the exercise in full of the underwriters’ option to purchase 2,343,750 additional shares of common stock. We received net proceeds of $351.2 million, after deducting underwriting discounts and commissions of $22.6 million and deferred offering costs of $3.5 million. Deferred, direct offering costs were capitalized and recorded against proceeds from the offering and consisted of fees and expenses incurred in connection with the sale of our common stock in the IPO, including the legal, accounting, printing and other offering related costs.

In conjunction with the IPO, OSH LLC completed a series of transactions that resulted in Oak Street Health, Inc. becoming the ultimate parent company of OSH LLC and subsidiaries. Additionally, immediately prior to the closing of the IPO, unitholders of OSH LLC exchanged their membership interests for common stock in Oak Street Health, Inc. as part of the related IPO reorganization transactions. All 15,928,876 units of our then outstanding redeemable investor units (preferred stock including their respective undeclared and deemed dividends) and members’ capital (former founders’ units and incentive units/profits interests) plus 1,924 of options to purchase incentive units were converted into 200,286,312 shares of common stock of the Company and 22,612,472 shares of restricted common stock subject to service-based vesting (“RSA”) of the Company.

Basis of Presentation and Consolidation

The accompanying unaudited interim consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such regulations. These financial statements have been prepared on a basis consistent with the accounting principles applied for the fiscal year ended December 31, 2020 in the Company’s Form 10-K filed with the SEC. In the opinion of management, all adjustments (consisting of all normal and recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six-months ended June 30, 2021, including the impact of COVID-19, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

The consolidated financial statements of the Company include the financial statements of all wholly owned subsidiaries and majority-owned or controlled companies. For those consolidated subsidiaries where our ownership is less than 100%, the portion of the net income or loss allocable to the non-controlling interests is reported as “Net loss (gain) attributable to non-controlling interests” in the consolidated statements of operations. Intercompany balances and transactions have been eliminated in consolidation.

The Company evaluates its ownership, contractual and other interests in entities to determine if it has any variable interest in a variable interest entity (“variable interest entities” or “VIEs”). These evaluations are complex, involve judgment and the use of estimates and assumptions based on available historical information, among other factors. The Company considers itself to control an entity if it

is the majority owner of or has voting control over such entity. The Company also assesses control through means other than voting rights and determines which business entity is the primary beneficiary of the VIE. The Company consolidates VIEs when it is determined that the Company is the primary beneficiary of the VIE. Management performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change. Changes in consolidation status are applied prospectively.

Upon completion of our IPO, OSH’s sole material asset is its interest in OSH LLC and its affiliates. In accordance with the master structuring agreement dated August 10, 2020, by and among OSH and the other signatories party thereto (the “Master Structuring Agreement”), we have all management powers over the business and affairs of OSH LLC and to conduct, direct and exercise full control over the activities of OSH LLC. Due to our power to control the activities most directly affecting the results of OSH LLC, we are considered the primary beneficiary of the VIE. Accordingly, following the effective date of the IPO, we consolidate the financial results of OSH LLC and its affiliates and the financial statements for the periods prior to the IPO have been adjusted to combine the previously separate entities for presentation purposes.

Oak Street Health MSO LLC (“MSO”), a wholly owned subsidiary of OSH LLC, was formed in 2013 to provide a wide range of management services to the Physician Groups (as defined below). Activities include but are not limited to operational support of the centers, marketing, information technology infrastructure and the sourcing and managing of health plan contracts. Oak Street Health Physicians Group PC, OSH-IN Physicians Group PC, OSH-MI Physicians Group PC, OSH-OH Physicians Group LLC, OSH-PA Physicians Group PC, OSH-RI Physicians Group PC, Oak Street Health of Texas, PLLC, Griffin Myers Medical PC, Oak Street Health Physicians Group of South Carolina LLC, Oak Street Health Physicians Group of Louisiana LLC, Oak Street Health Physicians Group of Mississippi LLC, Oak Street Health Physicians Group of Alabama, LLC, Oak Street Health Physicians Group of Kentucky, LLC, Oak Street Health Physicians Group of Missouri, Oak Street Health Physicians Group of New Mexico, LLC, Oak Street Health Physicians Group of Arizona, PLLC and Oak Street Health Physicians Group of Oklahoma, LLC (collectively, the “Physician Groups”) employ healthcare providers to deliver primary care services to the Medicare covered population of Alabama, Georgia, Illinois, Indiana, Louisiana, Michigan, Mississippi, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee and Texas. These entities are consolidated as each are considered variable interest entities where the Company has a controlling financial interest (see Note 15).

In addition, Oak Street Health is the majority interest owner in three joint ventures: OSH-PCJ Joliet, LLC, OSH-RI, LLC and OSH-ESC Joint Venture, LLC, which are consolidated in the Company’s financial statements. In March 2021, distributions were made from OSH-PCJ Joliet, LLC to Oak Street Health MSO, LLC (50.1% ownership) and Primary Care Physicians of Joliet (49.9% ownership) totaling $1.1 million to each owner.  

Emerging Growth Company Status

We currently meet the definition of an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We elected to use this extended transition period until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period. Based on the aggregate worldwide market value of our shares of common stock held by our non-affiliate stockholders as of June 30, 2021, we expect that we will become a “large accelerated filer” and lose emerging growth status beginning with our Annual Report on Form 10-K for the year ended December 31, 2021. We will also no longer be exempt from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and our independent registered public accounting firm will evaluate and report on the effectiveness of internal control over financial reporting.

Use of Estimates

In accordance with its policy, the Company reviews its estimated liability for unpaid claims on an ongoing basis. During the second quarter of 2021, this review indicated that actual medical claims expense was higher than prior period estimates due to COVID-19 related healthcare costs and a change in historical utilization patterns. As a result, as of the period ended June 30, 2021, the Company updated its estimate of its liability of unpaid claims, primarily based on historical experience of medical claims expense. The result of this updated information was additional medical claims expense for the three-months ended June 30, 2021 of approximately $19.0 million, or ($0.09) per share (basic and diluted) and for the six-months ended June 30, 2021 of approximately $1.4 million, or ($0.01) per share (basic and diluted) related to prior periods.

COVID-19 CARES ACT

On March 27, 2020, the United States President signed into law the Coronavirus Aid, Relief and Economic Securities Act (“CARES Act”) which provides economic assistance to a wide array of industries, including healthcare. Thus far, the Company has taken the following actions related to this legislation:

• Provider Relief Funds. The U.S. Department of Health and Human Services (“HHS”) distributed grants to healthcare providers to offset the impacts of COVID-19 pandemic related expenses and lost revenues through the Public Health and Social Services Emergency Fund. Grants received are subject to the terms and conditions of the program, including that such funds may only be used to prevent, prepare for and respond to COVID-19 and will reimburse only for health care related expenses, general and administrative expenses or lost revenues that are attributable to the COVID-19 pandemic as defined by the HHS. Payments from this fund are not loans and, therefore, they are not subject to repayment. We recognize grant payments as income when there is reasonable assurance that we have complied with conditions associated with the grant. Our estimates could change materially in the future based on the government’s evolving compliance guidance. During the six-months ended June 30, 2021 and 2020, the Company received $2.6 million and $4.7 million, respectively, related to these grants.  The Company recognized $1.6 million and $0.8 million, for the three-months ended June 30, 2021 and 2020, respectively, and $3.5 million and $0.8 million for the six-months ended June 30, 2021 and 2020, respectively, as income to offset COVID-19 pandemic related expenses incurred in the cost of care, excluding depreciation and amortization.  There were no unrecognized grants on the balance sheet as of June 30, 2021.

• Medicare Accelerated and Advanced Payment Program. The Centers for Medicare & Medicaid Services (“CMS”) expanded its Accelerated and Advance Payment Program which allows participants to receive expedited payments during periods of national emergencies. Under the program, we received an interest-free advancement of 100% of our Medicare payment amount for a three-month period. Repayment will begin one year from the date the payments were received and will be paid back against future fee-for-service claims.  Beginning at one year from the date the payment was issued and continuing for eleven months, payments will be recouped at a rate of 25%.  After the eleven months end, payments will be recouped at a rate of 50% for another six months, after which any remaining balance will become due. During 2020, the Company received approximately $1.5 million in CMS advance payments, which will be paid back against future fee-for-service claims. During the three and six-months ended June 30, 2021, the Company paid back $0.2 million and recorded an offset to other patient service receivables. As of June 30, 2021, there was $0.5 million and $0.8 million remaining in other current liabilities and other long-term liabilities, respectively.

• Payroll Tax Deferral. Under the CARES Act, the Company elected to defer payment on its portion of Social Security taxes, on an interest free basis, incurred from March 27, 2020 to December 31, 2020. One-half of such deferral amount will become due on each of December 31, 2021 and December 31, 2022. The total deferred payroll taxes were $7.0 million, $3.5 million was classified as a short-term liability and $3.5 million was classified as a long-term liability at June 30, 2021.

• Temporary Suspension of Medicare Sequestration. The Budget Control Act of 2011 requires a mandatory, across the board reduction in federal spending, called a sequestration. Medicare fee-for-service claims with dates of service or dates of discharge on or after April 1, 2013 incur a 2.0% reduction in Medicare payments. All Medicare rate payments and settlements have incurred this mandatory reduction and it will continue to remain in place through at least 2023, unless Congress takes further action. In response to COVID-19, the CARES Act temporarily suspended the automatic 2.0% reduction of Medicare claim reimbursements for the period of May 1, 2020 through December 31, 2021, which immaterially increased both revenues and medical expenses for the three and six-months ended June 30, 2021 and 2020.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Summary of Significant Accounting Policies

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company described its significant accounting policies in Note 2 of the Notes to Consolidated Financial Statements for the year ended December 31, 2020 included in its Form 10-K. During the six-months ended June 30, 2021, there were no significant changes to those accounting policies, other than the adoption of ASC 842 (as defined below), Accounting Standards Update (“ASU”) 2020-06 and those policies impacted by the new accounting pronouncements adopted during the period and further described below as well as in the “Recently Adopted Accounting Pronouncements” section.

Cash and Cash Equivalents

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 and cash equivalents consisted of cash on deposit and investments in money market funds.

Marketable Debt Securities

The Company’s investments in marketable debt securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in total equity (deficit). The

Company determines the appropriate classification of these investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company classifies the available-for-sale investments as current assets under the caption marketable debt securities on the consolidated balance sheets as these investments generally consist of highly marketable securities that are identified to be available to meet near-term cash requirements and fund current operations. Realized gains and losses and declines in value determined to be other-than-temporary are based on the specific identification method and are included as a component of other (expense) income, net in the consolidated statements of operations.

The Company periodically evaluates its investments in marketable debt securities for other-than-temporary impairment. When assessing short-term marketable security investments for other-than-temporary declines in value, the Company considers such factors as, among other things, how significant the decline in value is as a percentage of the original cost, how long the market value of the investment has been less than its original cost, the Company’s ability and intent to retain the short-term marketable security investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general. If any adjustment to fair value reflects a decline in the value of the marketable security that the Company considers to be other-than-temporary, the Company reduces the marketable debt securities through a charge to the consolidated statement of operations. No such adjustments were necessary during the periods presented.

Leases

The Company leases offices, operating facilities, vehicles and IT equipment, which are accounted for as operating leases. These leases have remaining lease terms of up to 30 years, inclusive of renewal or termination options that the Company is reasonably certain to exercise. The Company determines if an arrangement is a lease at inception and evaluates the lease classification (i.e., operating lease or financing lease) at that time. Lease arrangements with an initial term of 12 months or less are considered short-term leases and are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the term of the lease.

Operating leases are included in operating lease right-of-use assets, operating lease liabilities, current portion (recorded within other current liabilities) and long-term operating lease liabilities on the Company’s consolidated balance sheets. Operating lease right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company has no financing leases.

The Company uses its incremental borrowing rate on the commencement date for determining the present value of lease payments. The Company considers the likelihood of exercising options to extend or terminate the lease when determining the lease term.

The Company has lease agreements with lease and non-lease components. The Company has elected the practical expedient to account for the lease and non-lease components as a single lease component for all leases.

Convertible Debt

The Company evaluates all conversion, repurchase and redemption features contained in a debt instrument to determine if there are any embedded features that require bifurcation as a derivative.  In accounting for the issuance of the 0% Convertible Senior Notes due 2026 issued in March 2021 (the “Convertible Senior Notes”), the Company recorded a long-term debt liability equal to the proceeds received from issuance, including the embedded conversion feature, net of the debt issuance and offering costs on the Company’s consolidated balance sheets. The conversion feature is not required to be accounted for separately as an embedded derivative. The Company amortizes debt issuance and offering costs over the term of the Convertible Senior Notes as interest expense utilizing the effective interest method on the Company’s consolidated statements of operations.

Capped Call Transactions

In connection with the issuance of the Convertible Senior Notes, the Company entered into capped call transactions. The capped call transactions are expected generally to reduce the potential dilution to the holders of the Company’s common stock upon any conversion of the Convertible Senior Notes. The capped call transactions are purchased call options on the issuer’s stock that settle by reference to the Company’s stock with no forced cash payment. The terms of the capped call transactions allow the purchased call options to be classified as an equity instrument and will not be subsequently remeasured as long as the conditions for equity classification continue to be met. The Company recorded the cash used to purchase the capped call transactions as a reduction to additional paid-in

capital within the Company’s consolidated statements of changes in redeemable investor units and stockholders’ equity/members’ (deficit).

Net Income (Loss) Per Share

The diluted net income (loss) per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period determined using the treasury stock method or the if-converted method, as appropriate. For purposes of this calculation, stock options, restricted stock units, restricted stock awards and contingently issuable shares under our Convertible Senior Notes are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive.

Recently Adopted Accounting Pronouncements

In 2016, the Financial Accounting Standards Board (“FASB”) issued guidance on leases, Accounting Standards Updates 2016-02, Leases (“ASU 2016-02), with amendments issued in 2018 and 2019 (collectively, “ASC 842”). ASC 842 requires lessees to recognize assets and liabilities related to lease arrangements on the balance sheet; leases are to be recorded as a lease liability (on a discounted basis) with a corresponding right-of-use (“ROU”) asset. Leases will be classified as finance or operating, with the classification affecting the pattern and classification of expense recognition over the lease term. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. This guidance also expands the required quantitative and qualitative disclosures for leasing arrangements and gives rise to other changes impacting certain aspects of lessee and lessor accounting. The two permitted transition methods under the guidance are the modified retrospective transition approach, which requires application of the guidance for all comparative periods, and the cumulative effect adjustment approach, which requires prospective application the adoption date.

The Company adopted ASC 842 effective January 1, 2021 under the modified retrospective transition method. Under this method, financial statements for periods after the adoption date are presented in accordance with ASC 842 and prior-period financial statements continue to be presented in accordance with ASC 840, the accounting standard originally in effect for such periods. The package of practical expedients included that the Company was not required to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. Also, as part of the adoption, the Company elected to not recognize short-term leases (those with lease terms less than a year) on the consolidated balance sheets, not separate lease and non-lease components and did not use hindsight to determine lease term. The most significant impact was the recognition of ROU assets and lease liabilities for our operating leases. The ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent an obligation to make lease payments arising from the lease at lease commencement date. The Company’s operating leases resulted in the recognition of additional assets and the corresponding liabilities on its consolidated balance sheets, however it did not have a material impact on the consolidated statements of operations or cash flows for the three and six- months ended June 30, 2021. The Company recognized ROU assets and lease liabilities for operating leases of $108.1 million and $(126.8) million, respectively, upon adoption as of January 1, 2021. The difference between the lease liability and right-of-use asset mainly related to the reversal of existing deferred rent balances.

The Company utilized a comprehensive approach to assess the impact of this guidance on the consolidated financial statements and related disclosures, including the increase in assets and liabilities on the consolidated balance sheets and the impact on the current lease portfolio.

See Note 7 in this Quarterly Report for our lease accounting policy and the quarterly impact of our adoption of ASC 842.

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06 Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity. Among other changes, ASU 2020-06 removes the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share and updates the disclosure requirements in ASC 470-20, making them easier to understand for financial statement preparers and improving the decision-usefulness and relevance of the information for financial statement users. This ASU was early adopted on January 1, 2021 and applied to the Company’s 0% Convertible Senior Notes due 2026 issued in March 2021 (Refer to Note 10, Convertible Senior Notes, for further information regarding the Company’s Convertible Senior Notes). The guidance was not applied to any other debt arrangements at the Company.  

  In December 2019, the FASB issued ASU 2019-12, “Income Taxes Topic 740-Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application of ASC 740. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods therein. The Company adopted the new guidance on January 1, 2021, noting no impact on its consolidated financial statements and related disclosures.

In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (“ASU 2020-01”). ASU 2020-01 clarifies the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The Company adopted the new guidance on January 1, 2021, noting no impact on its consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In October 2018, the FASB issued ASU 2018-17, Consolidation – Targeted Improvements to Related Party Guidance for Variable Interest Entities (Topic 810) (“ASU 2018-17”). ASU 2018-17 eliminates the requirement that entities consider indirect interests held through related parties under common control in their entirety when assessing whether a decision-making fee is a variable interest. Instead, the reporting entity will consider such indirect interests on a proportionate basis. ASU 2018-17 is effective for a private company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Due to the expected loss of emerging growth status for the year-ended December 31, 2021, this guidance will be effective in our annual filing for the year ended December 31, 2021. All entities are required to apply the adjustments in ASU 2018-17 retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The Company is currently evaluating the impact ASU 2018-17 will have on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The guidance is effective for private companies beginning January 1, 2023. Due to the expected loss of emerging growth status for the year-ended December 31, 2021, this guidance will be effective in our annual filing for the year ended December 31, 2021. The new current expected credit losses (“CECL”) model generally calls for the immediate recognition of all expected credit losses and applies to loans, accounts and trade receivables as well as other financial assets measured at amortized cost, loan commitments and off-balance sheet credit exposures, debt securities and other financial assets measured at fair value through other comprehensive income, and beneficial interests in securitized financial assets. The new guidance replaces the current incurred loss model for measuring expected credit losses, requires expected losses on available for sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities, and provides for additional disclosure requirements. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements.

We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements.

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Revenue Recognition

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Revenue Recognition [Line Items]

Revenue Recognition

NOTE 3. REVENUE RECOGNITION

Both our capitated and fee-for-service revenue generally relate to contracts with patients in which our performance obligation is to provide healthcare services to the patients. Revenues are recorded during the period our obligations to provide healthcare services are satisfied as noted below within each service type.

Capitated Revenue and Accounts Receivable

Capitated revenue consists primarily of capitated fees for medical services provided by us under capitated arrangements directly made with various Medicare Advantage managed care payors or the Centers for Medicare and Medicaid Services (“CMS”). The Company receives a fixed fee per patient under what is typically known as a “risk contract.” Risk contracting, or full risk capitation, refers to a model in which the Company receives from the third-party payor a fixed payment per patient per month (“PPPM” payment) for a defined patient population, and the Company is then responsible for providing healthcare services required by that patient population. The Company is responsible for incurring or paying for the cost of healthcare services required by that patient population in addition to those provided by the Company. Fees are recorded gross in revenues because the Company is acting as a principal in arranging, providing and controlling the managed healthcare services provided to the eligible enrolled members. Neither the Company

nor any of its affiliates is a registered insurance company because state law in the states in which it operates does not require such registration for risk-bearing providers.

The Company’s payor contracts generally have a term of one year or longer, but the contracts between the enrolled members (our customers) and the payor are one calendar year or less. In general, the Company considers all contracts with customers (enrolled members) as a single performance obligation to stand ready to provide managed healthcare services. The Company identified that contracts with customers for capitation arrangements have similar performance obligations and therefore groups them into one portfolio. This performance obligation is satisfied as the Company stands ready to fulfill its obligation to enrolled members.

Our revenues are based upon the estimated PPPM amounts we expect to be entitled to receive from Medicare Advantage managed care payors and CMS. Under our managed care contracts, the PPPM rates are determined as a percent of the premium the Medicare Advantage plan receives from CMS for our at-risk members. Those premiums are determined via a competitive bidding process with CMS and are based upon the cost of care in a local market and the average utilization of services by the patients enrolled. Under our contract with CMS, the PPPM rates are determined as a percent of the premium, also adjusted for the cost of care in a local market and the average utilization of services, for our at-risk members.

Medicare pays capitation using a “risk adjustment model,” which compensates providers based on the health status (acuity) of each individual patient. Payors with higher acuity patients receive more, and those with lower acuity patients receive less. Under the risk adjustment model, capitation is paid on an interim basis based on enrollee data submitted for the preceding year and is adjusted in subsequent periods after the final data is compiled. As premiums are adjusted via this risk adjustment model, our PPPM payments will change in unison with how our payor partners’ premiums change with CMS. The Company determined the transaction price for these contracts is variable as it primarily includes PPPM fees which can fluctuate throughout the contract based on the acuity of each individual enrollee. Our capitated accounts receivable includes $67.1 million and $42.2 million as of June 30, 2021 and 2020, respectively, for acuity-related adjustments that are estimated to be received in subsequent periods. In certain contracts, PPPM fees also include adjustments for items such as performance incentives or penalties based on the achievement of certain clinical quality metrics as contracted with payors. There were no PPPM adjustments related to performance incentives/penalties for quality-related metrics for the three and six-months ended June 30, 2021 and 2020. The capitated revenues are recognized based on the estimated PPPM transaction price to transfer the service for a distinct increment of the series (i.e. month) and is recognized net of projected acuity adjustments and performance incentives/penalties because the Company is able to reasonably estimate the ultimate PPPM payment of these contracts. We recognize revenue in the month in which eligible members are entitled to receive healthcare benefits during the contract term. Subsequent changes in PPPM fees and the amount of revenue to be recognized by the Company are reflected through subsequent period adjustments to properly recognize the ultimate capitation amount and do not result in a significant reversal of revenue when the uncertainty is resolved in subsequent periods. As the period between the time of service and time of payment is typically one year or less, the Company elected the practical expedient under ASC 606-10-32-18 and did not adjust for the effects of a significant financing component.

Certain third-party payor contracts include a Medicare Part D payment related to pharmacy claims, which is subject to risk sharing through accepted risk corridor provisions. Under certain agreements the fund risk allocation is established where the Company, as the contracted provider, receives only a portion of the risk and the associated surplus or deficit. The Company estimates and recognizes an adjustment to Part D capitated revenues related to these risk corridor provisions, based upon pharmacy claims experience to date, as if the annual risk contract were to terminate at the end of the reporting period. Medicare Part D comprised 2% of capitated revenues for the three and six-months ended June 30, 2021 and 2020, and 3% of medical claims expense for the three and six-months ended June 30, 2021 and 2020, respectively.

The Company had agreements in place with the payors listed below, and payor sources of capitated revenue for each period presented were as follows:

	For the three-months ended						For the six-months ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Humana		37	%		47	%		39	%		48	%
Wellcare/Meridian		17	%		13	%		17	%		13	%
Cigna-HealthSpring		9	%		11	%		9	%		11	%
Other		37	%		29	%		35	%		28	%

Other Patient Service Revenue

Other patient service revenue is comprised of ancillary fees earned under contracts with certain managed care organizations for the provision of certain care coordination services and care management services and is also comprised of fee-for-service revenue. The composition of other patient service revenue for each period was as follows ($ in millions):

		For the three-months ended					For the six-months ended
		June 30, 2021			June 30, 2020		June 30, 2021			June 30, 2020
Fee for service	$		1.8	$		1.2		3.3	$		2.3
Care coordination and care management services			4.6			5.2		8.6			9.3
Total other patient service revenue	$		6.4	$		6.4		11.9	$		11.6

The Company has entered into multi-year agreements with Humana and its affiliates to provide services at certain centers to members covered by Humana. The agreements contain an administrative payment from Humana in exchange for the Company providing certain care coordination services during the term of the contract (“Care Coordination Payment”). The Care Coordination Payments are recognized in other patient service revenue ratably over the length of the terms stated in the contracts and are refundable to Humana on a pro-rata basis if the Company ceases to provide services at the centers within the length of the term specified in the contracts. We have identified a single performance obligation to stand ready to provide care coordination services to patients, which constitutes a series of distinct service increments. As of June 30, 2021 and December 31, 2020, the Company’s contract liabilities related to these payments totaled $22.6 million and $16.6 million, respectively. The short-term portion is recorded in other liabilities and the long-term portion is included in other long-term liabilities in the accompanying consolidated balance sheets.

Care management services are provided to enrolled members of certain contracted managed care organizations regardless of whether those members are Oak Street Health patients. Similar to the other care management services provided to the Company’s centers, the Company provides delegated services and other administrative services to plans in order to assist with the management of its Medicare population, therefore, we have identified a single performance obligation to stand ready to provide care management services, which constitutes a series of distinct service increments.

Fee-for-service revenue is primarily derived from healthcare services rendered to patients. The services provided by the Company have no fixed duration and can be terminated by the patient or the Company at any time, therefore each treatment is its own standalone contract. Services ordered by a healthcare provider during an office visit are not separately identifiable, and therefore have been combined into a single performance obligation for each contract. The Company recognizes revenue as its performance obligation is completed on the date of service. Fee-for-service revenue is recognized in the period in which services are provided at estimated net realizable amounts from patients, third-party payors and others. The fee-for-service revenue by payor source for each period presented were as follows:

	For the three-months ended						For the six-months ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Medicare		34	%		54	%		35	%		49	%
Humana		12	%		6	%		12	%		8	%
Other		54	%		40	%		53	%		43	%

Other patient service accounts receivable consists primarily of amounts due from Medicare and Medicare Advantage plans for fee-for-service patients. Receivables from commercial or government payors are recorded at a net amount determined by the original charge for the service provided, less contractual discounts provided to the payor. Receivables due directly from patients are recorded at the original charge for the service provided less amounts covered by third-party payors and an allowance for financial assistance.

The Company has a financial assistance policy in which patients will be assessed for financial hardship and other criteria that are used to make a good-faith determination of financial need, in which case the Company will waive or reduce a Medicare beneficiary’s obligation to pay copay, coinsurance or deductible amounts owed for the provision of medical services. The majority of our fee-for-service patients qualify for financial assistance. The total amount of patient revenues that were waived per the Company’s financial assistance policy were $2.1 million and $0.3 million for the three-months ended June 30, 2021 and 2020, respectively, and $3.3 million and $1.8 million for the six-months ended June 30, 2021 and 2020, respectively. The Company’s cost to provide care in regard to the services for which the patient’s financial obligation was waived was estimated to be $6.4 million and $0.5 million for the three-months ended June 30, 2021 and 2020, respectively, and $9.9 million and $3.0 million for the six-months ended June 30, 2021 and 2020, respectively using a cost-to-charge ratio estimate. The Company invests heavily in primary care to prevent unnecessary acute events and manage chronic illnesses, and the cost incurred exceeds the amount that the Company would have realized under fee-for-service

payment arrangements. The Company is willing to accept this deficit as many fee-for-service patients become Medicare Advantage patients under capitated arrangements.

Remaining Performance Obligations

As our performance obligations relate to contracts with a duration of one year or less, the Company elected the optional exemption in ASC 606-10-50-14(a). Therefore, the Company is not required to disclose the transaction price for the remaining performance obligations at the end of the reporting period or when the Company expects to recognize revenue. The Company has minimal unsatisfied performance obligations at the end of the reporting period as our patients typically are under no obligation to continue receiving services at our facilities.

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Fair value of Financial Instruments

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Fair Value Of Financial Instruments [Line Items]

Fair value of Financial Instruments

Note 4. Fair Value of Financial Instruments

Fair Value Measurements

In determining the fair value of financial assets and liabilities, the Company utilizes market data or other assumptions that it believes market participants would use in pricing the asset or liability in the principal or most advantageous market and adjusts for non-performance and/or other risks associated with the Company as well as counterparties, as appropriate. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

Level 1 – Valuations based on unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible at the measurement date.

Level 2 – Valuations with inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 – Valuations with unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

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, 2021 using:
		Level 1			Level 2			Level 3			Total
Marketable debt securities:
Commercial paper			176.0			-			-			176.0
U.S. Treasury obligations	$		-	$		42.3	$		-	$		42.3
Corporate bonds			-			377.9			-			377.9
Asset-backed securities			-			63.5			-			63.5
Other			-			9.5			-			9.5
Total financial assets	$		176.0	$		493.2	$		-	$		669.2

The Company measures the fair value of corporate bonds, U.S. treasury obligations and asset-backed securities by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. There were no investments as of December 31, 2020. During the three and six-months ended June 30, 2021, there were no transfers between Level 1, Level 2 and Level 3.

The Company's Convertible Senior Notes are classified within Level 2 of the fair value hierarchy as the valuation inputs are based on quoted prices in an inactive market on the last day in the reporting period. As of June 30, 2021, the fair value of the Convertible Senior Notes was $941.9 million compared to their carrying value of $899.2 million, which is net of unamortized debt issuance and offering costs.

Investments

        At June 30, 2021, the Company’s marketable debt securities classified as available-for-sale were as follows:

		June 30, 2021
		Amortized cost			Net unrealized gains (losses)				Fair value
Marketable debt securities:
Commercial paper	$		176.0	$		(0.0	)	$		176.0
U.S. Treasury obligations			42.3			(0.0	)			42.3
Corporate bonds			378.2			(0.3	)			377.9
Asset-backed securities			63.5			(0.0	)			63.5
Other			9.5			(0.0	)			9.5
Total marketable debt securities	$		669.5	$		(0.3	)	$		669.2

These investments in marketable debt securities carry maturity dates between less than one year and four years from date of purchase. The net realized gains and losses were immaterial during the three and six-months ended June 30, 2021.

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Property And Equipment

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Property, Plant and Equipment [Line Items]

Property And Equipment

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of June 30, 2021 and December 31, 2020 ($ in millions):

		June 30, 2021				December 31, 2020
Leasehold improvements	$		71.0		$		63.6
Furniture and fixtures			5.1				4.9
Computer equipment			24.6				17.8
Internal use software			8.7				6.1
Office equipment			10.1				9.7
Construction in process			6.8				4.2
Total, at cost			126.3				106.3
Less accumulated depreciation			(34.5	)			(27.5	)
Property and equipment, net	$		91.8		$		78.8

The Company recorded depreciation expense of $3.8 million and $2.6 million for the three-months ended June 30, 2021 and 2020, respectively. The Company recorded depreciation expense of $7.0 million and $5.0 million for the six-months ended June 30, 2021 and 2020, respectively.

The Company expensed $0.3 million and $0.1 million of capitalized development costs for the three-months ended June 30, 2021 and 2020, respectively. The Company expensed $0.6 million and $0.1 million of capitalized development costs for the six-months ended June 30, 2021 and 2020, respectively.

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Goodwill And Intangible Assets

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Goodwill and Intangible Assets [Line Items]

Goodwill And Intangible Assets

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

On January 22, 2021, Oak Street Health entered into an agreement to purchase the assets of a medical practice for $1.8 million base purchase price which was accounted for under the acquisition method of accounting pursuant to ASC 805.

Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to $11.4 million and $9.6 million at June 30, 2021 and December 31, 2020, respectively.

Intangible assets with a finite useful life continue to be amortized over its useful lives. Net intangible assets amounted to $2.8 million and $3.0 million at June 30, 2021 and December 31, 2020, respectively. The Company recorded amortization expense of $0.1 million for the three-months ended June 30, 2021 and 2020. The Company recorded amortization expense of $0.2 million for the six-months ended June 30, 2021 and 2020.

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Leases

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Leases

NOTE 7. LEASES

ASC 842 Disclosures

The Company leases offices, operating facilities, vehicles and IT equipment, which are accounted for as operating leases. These leases have remaining lease terms of up to 30 years, inclusive of renewal or termination options that the Company is reasonably certain to exercise.

Operating lease and variable lease costs are included in cost of care, excluding depreciation and amortization and corporate, general and administrative expenses in the consolidated statements of operations. Variable lease costs are the portion of lease payments that are not fixed over the lease term. Variable lease costs include real estate payments that are adjusted periodically for inflation or other variables as well as payments for taxes, insurance, maintenance and other expenses. Also included in variable lease costs are license fees paid to Humana (see Note 16). We expense variable lease costs as incurred. The Company elected to combine lease and non-lease components as a single lease component and not include short-term leases, defined as leases with an initial term of twelve months or less, in its consolidated balance sheets. The Company’s short-term leases were immaterial. The components of lease expense for the Company’s operating leases were as follows for the three and six-months ended June 30, 2021 ($ in millions):

		For the three months ended June 30, 2021			For the six-months ended June 30, 2021
Operating lease cost	$		4.9	$		9.4
Variable lease cost			3.8			8.7
Total lease cost	$		8.7	$		18.1

The Company entered into operating leases that resulted in $ 19.1 million and $26.8 million of right-of-use assets in exchange for operating lease obligations for the three and six-months ended June 30, 2021, respectively.

The weighted-average remaining lease term and discount rate for operating lease liabilities included in the consolidated balance sheets are as follows:

	June 30, 2021
Weighted-average remaining lease term (in years)		10.4
Weighted-average discount rate		4.16	%

The table below presents the future minimum lease payments under the noncancelable operating leases as of June 30, 2021 ($ in millions):

2021	$	6.9
2022		20.1
2023		19.0
2024		17.3
2025		16.5
2026		16.3
Thereafter		88.8
Total lease payments	$	184.9
Less: imputed interest		(38.5	)
Total operating lease liabilities	$	146.4
Reported as:
Operating lease liabilities, current (1)		11.0
Operating lease liabilities, noncurrent		135.4
Total operating lease liabilities	$	146.4
(1) Included in other liabilities on the consolidated balance sheet

ASC 840 Disclosures

Prior to adoption of ASC 842, the Company accounted for its lease arrangements under ASC 840, Leases, with no ROU assets or lease liabilities being reflected on the consolidated balance sheets. Therefore, the Company recognized $4.6 million (including $0.9 million of Humana license fee expense) and $9.2 million (including $1.9 million of Humana license fee expense) of rent expense for the three and six-months ended June 30, 2020 included in costs of care and corporate, general and administrative expenses in the consolidated statements of operations. Additionally, the Company recorded $13.5 million at December 31, 2020 of deferred rent that was classified as a long-term liability in the consolidated balance sheets.

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Other Current And Long-Term Liabilities

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Other Liabilities [Line Items]

Other Current And Long Term Liabilities Disclosure

NOTE 8. OTHER CURRENT AND LONG-TERM LIABILITIES

Accrued compensation and benefits consisted of the following as of ($ in millions):

		June 30, 2021			December 31, 2020
Accrued paid time off	$		6.2	$		5.0
Accrued bonus and commission			13.8			19.1
Employee stock purchase plan contributions			3.3			-
Accrued payroll and taxes			10.4			1.8
CARES Act deferred payroll taxes			3.5			3.5
Other			2.7			2.6
	$		39.9	$		32.0

Other current liabilities consisted of the following as of ($ in millions):

		June 30, 2021			December 31, 2020
Humana license fee	$		4.2	$		0.6
Operating lease liabilities			11.0			-
Contract liabilities, current			5.0			4.3
Accrual for goods or services received, not invoiced			2.9			3.6
CARES Act Medicare advances & Provider Relief Funds			0.5			2.3
Other current liabilities			1.9			1.8
	$		25.5	$		12.6

Other long-term liabilities consisted of the following as of ($ in millions):

		June 30, 2021			December 31, 2020
Humana license fee, net of current	$		10.3	$		7.3
Contract liabilities, net of current			18.0			12.8
Lease incentive obligation, net of current			-			5.1
CARES Act deferred payroll taxes			3.5			3.5
Other long-term liabilities			0.8			0.1
	$		32.6	$		28.8

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Liability For Unpaid Claims

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Disclosure Of Liability For Unpaid Claims

NOTE 9. LIABILITY FOR UNPAID CLAIMS

Medical claims expense and the liability for unpaid claims include estimates of the Company’s obligations for medical care services that have been rendered by third parties on behalf of insured consumers for which the Company is contractually obligated to pay (through the Company’s full risk capitation arrangements), but for which claims have either not yet been received, processed or paid. The Company develops estimates for medical care services incurred but not reported, which includes estimates for claims that have not been received or fully processed, using a process that is consistently applied, centrally controlled and automated. This process includes utilizing actuarial models when a sufficient amount of medical claims history is available from the third-party healthcare service providers. The actuarial models consider factors such as time from date of service to claim processing, seasonal variances in medical care consumption, health care professional contract rate changes, medical care utilization and other medical cost trends, membership volume and demographics, and benefit plan changes. In developing its unpaid claims liability estimates, the Company applies different estimation methods depending on which incurred claims are being estimated. For the most recent three-months, the Company estimates claim costs incurred by applying observed medical cost trend factors to the average PPPM medical costs incurred in prior months for which more complete claims data are available, supplemented by a review of near-term completion factors (actuarial estimates, based upon historical experience and analysis of current trends, of the percentage of incurred claims during a given period that have been adjudicated by the Company at the date of estimation). For the months prior to the most recent three-months, the Company applies completion factors to actual claims adjudicated-to-date to estimate the expected amount of ultimate incurred claims for those months.

The Company purchases provider excess insurance to protect against significant, catastrophic claims expenses incurred on behalf of its patients. The total amount of provider excess insurance premium was $1.0 million and $0.9 million, and total reimbursements were $3.0 million and $0.5 million for the three-months ended June 30, 2021 and 2020, respectively. The total amount of provider excess insurance premium was $1.9 million and $1.7 million, and total reimbursements were $3.4 million and $0.8 million for the six-months ended June 30, 2021 and 2020, respectively. The provider excess insurance premiums less reimbursements are reported in medical claims expense in the consolidated statements of operations. Provider excess recoverables due are reported in other current assets in the consolidated balance sheets. As of June 30, 2021, the Company’s provider excess insurance deductible was $0.3 million per member and covered up to a maximum of $5.0 million per member per calendar year.

Activity within liabilities for unpaid claims was as follows for the six-months ended ($ in millions):

		June 30, 2021				June 30, 2020
Balance, beginning of period	$		262.1		$		170.6
Incurred health care costs:
Current year			478.0				274.7
Prior years			3.9				11.3
Total claims incurred	$		481.9		$		286.0
Claims paid:
Current year			(155.1	)			(161.0	)
Prior years			(232.5	)			(59.6	)
Total claims paid	$		(387.6	)	$		(220.6	)
Adjustments to other claims-related liabilities			1.0				(0.2	)
Balance, end of period	$		357.4		$		235.8

We assess the profitability of our managed care capitation arrangement to identify contracts where current operating results or forecasts indicate probable future losses. If anticipated future variable costs exceed anticipated future revenues, a premium deficiency reserve is recognized. No premium deficiency reserves were recorded as of June 30, 2021 and December 31, 2020.

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Long- Term Debt

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Long- Term Debt

NOTE 10. LONG-TERM DEBT

Convertible Senior Notes

On March 16, 2021, the Company issued, at par value, $920.0 million aggregate principal amount of 0% Convertible Senior Notes in a private offering exempt from registration under the Securities Act of 1933, including $120.0 million in aggregate principal amount pursuant to the option we granted to the initial purchasers to purchase additional convertible senior notes, which was exercised in full in March 2021 (collectively, the “Convertible Senior Notes”). Total proceeds received by the Company from the sale of the Convertible Senior Notes, net of debt issuance and offering costs of $22.1 million, were $897.9 million. The Company used $123.6 million of the net proceeds to pay for the cost of the capped call transactions (see discussion on capped call transactions further below).

The Convertible Senior Notes are governed by an indenture (“Indenture”), dated as of March 16, 2021, between the Company and U.S. Bank National Association, as trustee. Under the Indenture, the Convertible Senior Notes are general senior, unsecured obligations of the Company and will mature on March 15, 2026, unless earlier redeemed, repurchased or converted. The Convertible Senior Notes are equal in right of payment with the Company’s future senior, unsecured indebtedness and structurally subordinated to all indebtedness and liabilities of the Company’s subsidiaries. The Convertible Senior Notes will not bear regular interest, and the principal amount of the Convertible Senior Notes will not accrete. We will pay special interest, if any, at a rate per annum not exceeding 0.50% of the principal amount of the notes outstanding as the sole remedy at our election relating to the failure to comply with our reporting requirements with the Securities and Exchange Commission and certain other obligations under the Indenture for the first 365 days after the occurrence of such an event of default.

The Convertible Senior Notes are convertible, subject to certain conditions described below, into shares of our common stock at an initial conversion rate of 12.6328 shares per $1,000 principal amount of the Convertible Senior Notes, which represents an initial conversion price of approximately $79.16 per share, subject to adjustments upon occurrence of certain events set forth in the Indenture. Certain events described in the Indenture that occur prior to the maturity date or if the Company delivers a notice of redemption may increase the conversion rate for holders who elect to convert their Convertible Senior Notes in connection with such events should they occur. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination thereof at our election. If the Company elects cash or combination settlement, the Company will pay an amount equal to the sum of the daily conversion values for each trading day in a 40 trading-day observation period. The maximum number of shares issuable should there be an increase in the conversion rate is 16,561,656 shares of the Company’s common stock.

The Convertible Senior Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding December 15, 2025, only under the following circumstances:

• during any calendar quarter ending after June 30, 2021, if our closing stock price is greater than or equal to 130% of the conversion price on each of at least 20 trading days (whether or not consecutive) of the last 30 consecutive trading days of the immediately preceding calendar quarter;

• during the five business day period after any 10 consecutive trading day period in which the trading price (as defined in the Indenture) is less than 98% of the product of the closing price of our common stock and the conversion rate for the Notes on each such trading day;

• if the Company calls such Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the Notes called (or deemed called) for redemption; and

• upon the occurrence of specified corporate events as set forth in the Indenture.

On or after December 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Convertible Senior Notes may convert all or any portion of their Convertible Senior Notes at any time, regardless of the circumstances applicable to conversions prior to December 15, 2025.

We may not redeem the Convertible Senior Notes prior to March 20, 2024. On or after March 20, 2024, the Convertible Senior Notes are redeemable for cash, in whole or in part (subject to minimum redemption amounts), at our option at any time, and from time to time, if the last reported sale price of the common stock has been at least 130% of the conversion price for the Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Convertible Senior Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date. If the Company redeems less than all the outstanding Convertible Senior Notes, at least $150 million aggregate principal amount of Convertible Senior Notes must be outstanding and not subject to redemption as of the date of the relevant notice of redemption. No sinking fund is provided for the Convertible Senior Notes.

If the Company undergoes a fundamental change (as defined in the Indenture), holders may require, subject to certain exceptions, the Company to repurchase for cash all or any portion of their Convertible Senior Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.

The Indenture includes customary covenants and events of default after which the Convertible Senior Notes may be declared immediately due and payable. 

In accounting for the issuance of the Convertible Senior Notes, we performed an assessment of all of the embedded features of the debt instrument to determine if any will impact the initial measurement of the liability. The Company concluded that the embedded features are not required to be accounted for separately as embedded derivatives, and therefore the Convertible Senior Notes were accounted for in their entirety as a liability equal to the proceeds received from issuance net of debt issuance and offering costs. The Company will amortize debt issuance and offering costs over the term of the Convertible Senior Notes as additional non-cash interest expense utilizing the effective interest method.

Capped Call Transactions

In connection with the pricing of the Convertible Senior Notes, the Company entered into convertible note hedge transactions (the “capped call transactions”) with six initial purchasers or their respective affiliates and other financial institutions (the “option counterparties”) of $123.6 million concurrent to mitigate the impact of potential economic dilution to our common stock upon conversion of the Convertible Senior Notes and have an initial strike price of approximately $79.16 per share, which corresponds to the initial conversion price of the Convertible Senior Notes. The capped call transactions cover, subject to customary adjustments, the number of shares of common stock initially underlying the Convertible Senior Notes. The capped call transactions are expected to offset the potential dilution to the Company’s common stock upon any conversion of Convertible Senior Notes, with such reduction and/or offset subject to a cap initially equal to $138.8750 per share.

The capped call transactions will expire on March 12, 2026. The capped call transactions are separate transactions and are not part of the terms of the Convertible Senior Notes. The shares related to the capped call transactions are excluded from the calculation of diluted earnings per share as they are anti-dilutive.

The capped call transactions cover, subject to anti-dilution adjustments, approximately 11,622,176  shares of the Company’s common stock, par value $0.001. The capped call transactions are subject to either adjustment or termination upon the occurrence of specified extraordinary and disruption events affecting the Company.

The capped call transactions are purchased call options on our own stock that settle by reference to our own stock with no forced cash payment; therefore, the transactions are classified as an equity instrument and recorded within stockholders’ equity. These transactions are not accounted for as derivatives. The Company recorded the capped call transactions as a reduction to additional paid-in capital and will not be remeasured as long as the conditions for equity classification continue to be met.

The Convertible Senior Notes and capped call transactions consisted of the following balances reported in the Consolidated Balance Sheet as of June 30, 2021 ($ in millions):

	June 30, 2021
Liability component:
Principal		920.0
Less: debt issuance costs, net of amortization		(20.8	)
Net carrying amount		899.2
Equity component recorded at issuance:
Capped call transactions		123.6

The Company recognized $1.1 million and $1.3 million related debt issuance and offering costs in interest expense, net on the consolidated statements of operations related to the Convertible Senior Notes for the three and six-months ended June 30, 2021.

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Income Tax

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Income Tax

NOTE 11. INCOME TAX

The most significant impact to the Company’s effective tax rate is related to the tax treatment of certain equity compensation. However, the Company continues to be in a net operating loss and deferred tax asset position. As a result, and in accordance with accounting standards, the Company recorded a valuation allowance to reduce the value of the net deferred tax assets to zero. The Company’s effective tax rate for the three and six-months ended June 30, 2021 and 2020 was 0.0%.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2021

Stockholders Equity Note [Abstract]

Stockholders' Equity

NOTE 12. STOCKHOLDERS’ EQUITY

Common Stock

In connection with the IPO, we increased our authorized shares from 1,000 to 500,000,000 shares of our common stock, par value of $0.001. Additionally, upon completion of our IPO in August 2020, we sold 17,968,750 shares of common stock at an offering price of $21.00 per share, including 2,343,750 shares of common stock issued pursuant to the exercise in full of the underwriters’ option to purchase additional shares.

Redeemable Investor Units, Profits Interests and Incentive Units

All shares of redeemable investor units outstanding at the time of the IPO, totaling 12,472,242 units and undeclared and deemed dividends of $103.6 million, were converted into 184,787,783 shares of common stock and their carrying value, totaling $545.0 million was reclassified into stockholders’ equity on our condensed consolidated balance sheets in conjunction with the completed IPO. No shares of redeemable convertible preferred stock were issued or outstanding as of June 30, 2021 or December 31, 2020.

Additionally, all shares of profits interests then outstanding, totaling 3,456,634 units were converted into 38,111,001 shares of common stock, 22,612,472 of which were considered RSAs at the time of conversion. The carrying value of $7.0 million was reclassified into common stock and additional paid in capital on our consolidated balance sheet. No profits interests or incentive units were issued or outstanding as of June 30, 2021 or December 31, 2020.

Preferred Stock

Also, in connection with our IPO, we authorized the issuance of 50,000,000 shares of our preferred stock, par value $0.001. There was no preferred stock outstanding as of June 30, 2021.

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Stock And Unit-Based Compensation

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Stock and Unit-Based Compensation

NOTE 13. STOCK AND UNIT-BASED COMPENSATION

2020 Omnibus Incentive Plan

On August 5, 2020, the Company’s Board of Directors adopted the 2020 Omnibus Incentive Plan (the “2020 Plan,”). Under the 2020 Plan, employees, consultants and directors of our company and our affiliates that perform services for us are eligible to receive awards. The 2020 Plan provides for the grant of incentive stock options (“ISOs”), non-statutory stock options (“NSOs”), stock appreciation rights, restricted stock awards (“RSAs”), performance awards, other share-based awards (including restricted stock units (“RSUs”)) and other cash-based awards. The maximum number of shares available for issuance under the 2020 Plan may not exceed 48,138,967 shares (subject to annual increases as approved by the Board of Directors).

Stock Options Activity

Stock options granted by the Company generally vest over four years with 25% of the option shares vesting each year. Options generally expire ten years from the date of the grant.   

The following is a summary of stock option activity transactions as of and for the six-months ended June 30, 2021 ($ in millions):

	Number of Options				Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)			Aggregate Intrinsic Value
Outstanding, December 31, 2020		14,958,969		$		21.01		9.60	$		600.6
Granted		320,937				59.62
Exercised		(174,814	)			21.03
Cancelled		(64,707	)			23.15
Outstanding, June 30, 2021		15,040,385		$		21.83		9.11	$		553.0
Options exercisable as of June 30, 2021		3,818,414		$		21.00		9.10	$		143.5

The aggregate intrinsic value of options exercised in the three-months ended June 30, 2021 and 2020 was $4.8 million and $0.0 million, respectively and $6.6 million and $0.0 million in the six-months ended June 30, 2021 and 2020, respectively. Aggregate intrinsic value represents the difference between the exercise price of the option and the closing price of the Company’s common stock on the date of exercise. The fair value of options granted for the three-months ended June 30, 2021 and 2020 was $0.4 million and $0.0 million, respectively, and $9.2 million and $0.0 million for the six-months ended June 30, 2021 and 2020.

RSA Activity

The RSAs were granted as part of the pre-IPO conversion (see Note 12). The following is a summary of RSA transactions as of and for the six-months ended June 30, 2021:

	Unvested Shares				Grant Date Fair Value
Unvested, December 31, 2020		21,599,118		$		11.77
Granted		-
Vested		(3,477,767	)			2.63
Canceled and forfeited		(167,583	)			14.43
Unvested, June 30, 2021		17,953,768		$		13.52

RSU Activity

RSUs granted generally vest over four years. RSUs are accounted for as equity using the fair value method, which requires measurement and recognition of compensation expense for all awards granted to our employees, directors and consultants based upon the grant-date fair value. The following is a summary of RSU transactions as of and for the six-months ended June 30, 2021:

	Unvested Shares				Grant Date Fair Value
Unvested, December 31, 2020		216,804		$		32.21
Granted		196,726				59.61
Vested		(22,239	)			50.49
Canceled and forfeited		(18,655	)			28.64
Unvested, June 30, 2021		372,636		$		45.76

Employee Stock Purchase Plan

On August 5, 2020, the Board of Directors adopted, and the OSH LLC’s and OSH MH LLC’s majority unitholders approved, the 2020 Employee Stock Purchase Plan (the “ESPP”) for the issuance of up to a total of 2,386,875 shares of common stock. In addition, the number of shares available for issuance under the ESPP will be increased annually on January 1 of each calendar year beginning in 2021 and ending in and including 2030, by an amount equal to the lesser of (A) 1% of the shares outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares as is determined by our Board of Directors, subject to an increase each January. In no event will more than 30,000,000 shares of our common stock will be available for issuance under the ESPP. Each offering period will be approximately six months in duration commencing on January and July 1 of each year and terminating on June 30 or December 31. The ESPP allows participants to purchase common stock through payroll deductions of up to 15% of their eligible compensation. The purchase price of the shares will be 85% of the lower of the fair market value of our common stock on the grant date or purchase date.

The first offering period closed on June 30, 2021, and 62,575 shares were distributed to employees in July 2021.

Stock and Unit-Based Compensation Expense

The Company recognized $0.0 million and $3.5 million in unit-based compensation expense related to the profits interests for the three-months ended June 30, 2021 and 2020, respectively. The Company recognized $0.0 million and $5.3 million in unit-based compensation expense related to the profits interests for the six-months ended June 30, 2021 and 2020, respectively. The Company recorded the expense in corporate, general and administrative expenses. The Company recognized $40.8 million and $0.0 million related to RSAs, options and RSUs for the three-months ended June 30, 2021 and 2020, respectively. The Company recorded $39.7 million in corporate, general and administrative expenses, $0.9 million in sales and marketing, and $0.3 million in cost of care for the three-months ended June 30, 2021. The Company recognized $83.2 million and $0.0 million related to RSAs, options and RSUs for the six-months ended June 30, 2021 and 2020, respectively. The Company recorded $80.9 million in corporate, general and administrative expenses, $1.7 million in sales and marketing, and $0.6 million in cost of care for the six-months ended June 30, 2021.

As part of the pre-IPO equity conversion discussed in Note 12, the profits interests that were subject to vesting over a period of continuous employment or service and were unvested upon the conversion were converted into RSAs and options that vest over the remaining requisite service period from the original grant dates. The unvested profits interests that were subject to vesting upon the “Sponsor’s Exit” performance condition were converted into RSAs and options that cliff vest between two years post IPO and four years from the original grant dates. A Sponsor's Exit is defined to occur if either (1) a Sponsor sells down to one or more third parties their direct or indirect equity investment in OSH LLC to less than 20% of the units owned by such sponsor, or (2) a sale, transfer or other disposition of all or substantially all of the assets of OSH LLC to one or more third parties.

As a result of this conversion and modification of vesting terms from Sponsor’s Exit to service-based vesting at the IPO, the Company determined that RSAs and options should be accounted for as a Type III modification (the award was not probable to vest prior to the modification but it was probable of vesting under the modified condition). The stock compensation expense, net of forfeitures, recorded for these modifications was $29.0 million and $58.3 million for the three and six-months ended June 30, 2021.

As of June 30, 2021, the Company had approximately $209.5 million in unrecognized compensation expense related to all non-vested awards (RSAs, options and RSUs) that will be recognized over the weighted-average period of 1.39 years.  

Valuation of Stock Options

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

		June 30, 2021
Risk-free interest rate			0.80	%
Volatility			50.00	%
Expected term to expiration (years)			6.25
Expected dividend yield			0.00	%
Estimated fair value	$		28.70

The determination of fair value of stock options on the date of grant using a Black-Scholes option-pricing model is affected by the estimated fair value of the Company’s common stock as well as assumptions regarding a number of variables that are complex, subjective and generally require significant judgement to determine. The valuation assumptions were determined as follows:

Fair Value of Common Stock

The fair value of the Company’s common stock is determined by the closing price, on the date before the grant, of its common stock, which is traded on the NYSE.  

Expected Term

We determine the expected term of awards using the simplified method which is used when there is insufficient historical data about exercise patterns and post-vesting employment termination behavior. The simplified method is based on the vesting period and the contractual term for each grant, or for each vesting-tranche for awards with graded vesting. The mid-point between the vesting date and the maximum contractual expiration date is used as the expected term under this method.

Expected Volatility

We use an average historical stock price volatility of a peer group of comparable publicly traded healthcare companies representative of our expected future stock price volatility, as we do not have sufficient trading history for our common stock. For purposes of identifying these peer companies, we consider the industry, stage of development, size and financial leverage of potential comparable companies. For each grant, we measure historical volatility over a period equivalent to the expected term.

Risk-Free Interest Rate

The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with maturities similar to the expected term of the award.

Expected Dividend Yield

We have not paid and do not anticipate paying any dividends in the foreseeable future. Accordingly, we estimate the dividend yield to be zero.

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Commitments - Litigation And Contingencies

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Commitments Litigation And Contingencies

NOTE 14. COMMITMENTS – LITIGATION AND CONTINGENCIES

Contingencies

The Company is presently, and from time to time, subject to various claims and lawsuits arising in the normal course of business. In the opinion of management, the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial position or results of operations.

Uncertainties

The healthcare industry is subject to numerous laws and regulations of federal, state and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirements, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Recently, government activity has increased with respect to investigations and allegations concerning possible violations of fraud and abuse statues and regulations by

healthcare providers. Violations of these laws and regulations could result in expulsion from government healthcare programs together with imposition of significant fines and penalties, as well as significant repayments for patient services billed.

Management believes that the Company is in compliance with fraud and abuse as well as other applicable government laws and regulations. While no regulatory inquiries have been made, compliance with such laws and regulations is subject to government review and interpretation, as well as regulatory actions unknown at this time.

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Variable Interest Entities

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Variable Interest Entities

NOTE 15. VARIABLE INTEREST ENTITIES

The Physician Groups (as defined in Note 1) were established to employ healthcare providers, contract with managed care payors and to deliver healthcare services to patients in the markets that the Company serves.

The Company evaluated whether it has a variable interest in the Physician Groups, whether the Physician Groups are VIEs and whether the Company has a controlling financial interest in the Physician Groups. The Company concluded that it has variable interests in the Physician Groups on the basis of its Administrative Service Agreement (“ASA”) which provides for reimbursement of costs and a management fee payable to the Company from the Physician Groups in exchange for providing management and administrative services which creates risks and a potential return to the Company. The Physician Group’s equity at risk, as defined by U.S. GAAP, is insufficient to finance its activities without additional support, and, therefore, the Physician Groups are considered VIEs.

In order to determine whether the Company has a controlling financial interest in the Physician Groups, and, thus, is the Physician Group’s primary beneficiary, the Company considered whether it has i) the power to direct the activities of Physician Groups that most significantly impact its economic performance and ii) the obligation to absorb losses of the Physician Groups that could potentially be significant to it or the right to receive benefits from Physician Groups that could potentially be significant to it. The Company concluded that the shareholders and employees of the Physician Groups are structured in a way that neither shareholder, employees nor their designees has the individual power to direct the activities of the Physician Groups that most significantly impact its economic performance. Under the ASA, MSO is responsible for providing management and administrative services related to the growth of the patient population of the Physician Groups, the management of that population’s healthcare needs, and the provision of required healthcare services to those patients. The Company has concluded that the success or failure of MSO in conducting these activities will most significantly impact the economic performance of the Physician Groups. In addition, the Company’s variable interests in the Physician Groups provide the Company with the right to receive benefits that could potentially be significant to it. The single member of the Physician Groups is a member and employee of OSH. As a result of this analysis, the Company concluded that it is the primary beneficiary of the Physician Groups and therefore consolidates the balance sheets, results of operations and cash flows of the Physician Groups. The Company performs a qualitative assessment of the Physician Groups on an ongoing basis to determine if it continues to be the primary beneficiary.

The table below illustrates the VIE assets and liabilities and performance for the Physician Groups as of and for the periods ended ($ in millions):

		June 30, 2021			December 31, 2020
Total assets	$		448.9	$		286.1
Total liabilities			420.4			332.1

		For the three-months ended						For the six-months ended
		June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Total revenues	$		350.5	$		210.3	$		644.9	$		408.8
Medical claims expense			283.0			154.7			481.9			286.0
Cost of care			34.5			14.2			67.4			29.5
Total operating expenses	$		317.5	$		168.9	$		549.3	$		315.5

Physician Group revenues consist of amounts recognized for services provided to patients and includes capitated revenue and a portion of the Company’s other patient service revenue and exclude certain care management services. All capitation arrangements are executed at the Physician Group level.

Operating expenses consist primarily of medical claims expense, a majority of which are third-party medical claims expenses and administrative health plan fees and exclude fees to perform payor delegated activities and provider excess insurance costs, net. Cost of care, excluding depreciation and amortization primarily include provider salaries and benefits and other clinical operating costs which are reported in cost of care, excluding depreciation and amortization in the consolidated statements of operations. These amounts do not

include intercompany revenues and costs, principally management fees between MSO and the Physician Groups, which are eliminated in consolidation.

There are no restrictions on the Physician Groups’ assets or on the settlement of its liabilities. The assets of the Physician Groups can be used to settle obligations of the Company. The Physician Groups are included in the Company’s obligated group; thus, creditors of the Company have recourse to the assets owned by the Physician Groups. There are no liabilities for which creditors of the Physician Groups do not have recourse to the general credit of the Company. There are no restrictions placed on the retained earnings or net income of the Physician Groups with respect to potential dividend payments.

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Related Parties

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Related Parties

NOTE 16. RELATED PARTIES

Humana

          Humana holds over 5% of our common stock and has entered into a Director Nomination Agreement with the Company.  The Company has capitated managed care contracts with Humana which result in capitated revenues and related receivables. Within the Company’s other patient services revenue, revenues from Humana are included in both fee-for-service revenue and care coordination revenue. The unearned portion of the Care Coordination Payments was recorded as contract liabilities in both the short-term and long-term other liabilities accounts.  The Company also incurs medical claims expenses related to the Humana payor contracts which are included in third-party medical expenses. Related unpaid claims are included in the liability for unpaid claims financial statement caption.

The Humana Alliance Provision contains an arrangement for a license fee that is payable by the Company to Humana for the Company’s provision of health care services in certain centers owned or leased by Humana. The license fee is a reimbursement to Humana for its costs of owning or leasing and maintaining the centers, including rental payments, center maintenance or repair expenses, equipment expenses, special assessments, cost of upgrades, taxes, leasehold improvements, and other expenses identified by Humana and is included in cost of care expenses in the consolidated statement of operations. The liability was recorded in both the short-term and long-term other liabilities accounts.

The Company has entered into certain lease arrangements with Humana and recorded rent payments within the cost of care line item. The Company adopted ASC 842 as of January 1, 2021 and recorded an ROU asset and liability related to Humana leases.

The below tables present the balances related to Humana as of June 30, 2021 and December 31, 2020 and for the three and six-months ended June 30, 2021 and 2020.

		June 30, 2021			December 31, 2020
Assets:
Other patient service receivables	$		0.1	$	0.0
Capitated accounts receivables			109.8			65.7
Operating lease right-of-use assets		49.8				-
Liabilities:
Liability for unpaid claims	$		96.6	$		78.5
Other liabilities
Short-term license fees			4.2			0.6
Short-term contract liability			4.7			4.0
Short-term operating lease liability			4.8			-
Long-term operating lease liabilities			46.3			-
Deferred rent			-			0.8
Other long-term liabilities:
Long-term license fees			10.3			7.3
Long-term contract liability			18.0			12.8
Equity:
Additional paid-in capital	$		50.0	$		50.0

		For the three-months ended						For the six-months ended
		June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenues:
Capitated revenue	$		127.1	$		97.4	$		248.5	$		193.9
Other patient service revenue:
Care coordination revenue earned			1.2			0.7			2.3			1.4
Fee-for-service revenue			0.3			0.1			0.4			0.2
Expenses:
Medical claims expense	$		105.7	$		64.0	$		178.7	$		123.8
Cost of care:
License fee expense			0.6			0.7			1.3			1.3
Rent expense			1.7			0.5			3.0			1.1

Blue Cross Blue Shield of Rhode Island

Blue Cross Blue Shield of Rhode Island (“BCBSRI”) owns 49.9% of our joint venture, OSH-RI, LLC, and one of our Board members served as president and CEO of BCBSRI through the year ended December 31, 2020. The Board member has not served in this role in 2021, and as such we have only presented 2020 information herein. Total capitated revenue associated with the BCBSRI payor contract was $2.5 million for the three-months ended June 30, 2020, and $4.8 million for the six-months ended June 30, 2020. Capitated receivables from BCBSRI represented $10.0 million of the capitated accounts receivable balance at December 31, 2020.

Total medical claims expenses related to the BCBSRI payor contract were $2.9 million for the three-months ended June 30, 2020, and  $4.5 million for the six-months ended June 30, 2020. Unpaid claims related to these capitated contracts represented  $11.1 million of the liability for unpaid claims balance at December 31, 2020.

Consulting Arrangement with an Immediate Family Member of Our Chief Executive Officer

Carolyn Rose, the sister of Michael Pykosz, a member of our Board of Directors and our Chief Executive Officer, has provided us contracted legal services. Ms. Rose provided legal services resulting in fees of $0.1 million and $0.1 million for the three-months ended June 30, 2021 and 2020, respectively. For the six-months ended June 30, 2021 and 2020, we incurred legal fees payable to Ms. Rose of $0.1 million and $0.2 million, respectively.

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Segment Financial Information

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Segment Financial Information

NOTE 17. SEGMENT FINANCIAL INFORMATION

The Company has concluded that we have one operating and reportable segment as the chief operating decision maker (“CODM”) regularly reviews financial operating results on a consolidated basis for purposes of allocating resources and evaluating financial performance. While we generate revenues in a number of centers in several geographic regions, we have determined that the centers all have similar economic characteristics, such as the types of services provided and the nature of patients served. The Company evaluates performance and allocates resources as a single operating segment based on revenue growth and pre-tax profit or loss from operations.

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Net Loss Per Share

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Net Loss Per Share

NOTE 18. NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per common share for the three and six-months ended June 30, 2021 and 2020:

		Three months ended June 30, 2021				Six-months ended June 30, 2021
Numerator:
Net loss	$		(100.3	)	$		(164.3	)
Less: Net loss attributable to non-controlling interests			(2.3	)			(2.9	)
Net loss attributable to OSH Inc. stockholders			(98.0	)			(161.4	)
Denominator:
Weighted average common stock outstanding - basic and diluted			221,168,630				221,595,670
Net loss per share – basic and diluted	$		(0.44	)	$		(0.73	)

The Company’s potentially dilutive securities, which included stock options, unvested RSUs, unvested RSAs and shares issuable upon conversion of our Convertible Senior Notes have been excluded from the computation of diluted net loss per share as the

effect would reduce the net loss per share. Therefore, the weighted average number of common shares/units outstanding used to calculate both basic and diluted net loss per share was the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated:

		Six-months ended June 30, 2021
Stock options			15,040,385
RSUs			372,636
RSAs			17,953,768
Employee stock purchase plan			62,575
Convertible Senior Notes	*		11,622,176
			45,051,540

*The Company entered into capped call transactions to mitigate the impact of potential economic dilution to our common stock upon any conversion of our Convertible Senior Notes. The capped call transactions are expected to offset the potential dilution to the Company’s common stock upon any conversion of the Convertible Senior Notes up to a cap price of $138.8750 per share. See Note 10 for further details on the capped call transactions.

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Summary of Significant Accounting Policies - (Policies) - OAK Street Health Inc and Affiliates [Member]

6 Months Ended

Jun. 30, 2021

Significant Accounting Policies [Line Items]

Initial Public Offering and Reorganization Transactions

Initial Public Offering and Reorganization Transactions

On August 10, 2020, we completed our IPO in which we issued and sold 17,968,750 shares of common stock, par value $0.001 per share, at an offering price of $21.00 per share. The share amount included the exercise in full of the underwriters’ option to purchase 2,343,750 additional shares of common stock. We received net proceeds of $351.2 million, after deducting underwriting discounts and commissions of $22.6 million and deferred offering costs of $3.5 million. Deferred, direct offering costs were capitalized and recorded against proceeds from the offering and consisted of fees and expenses incurred in connection with the sale of our common stock in the IPO, including the legal, accounting, printing and other offering related costs.

In conjunction with the IPO, OSH LLC completed a series of transactions that resulted in Oak Street Health, Inc. becoming the ultimate parent company of OSH LLC and subsidiaries. Additionally, immediately prior to the closing of the IPO, unitholders of OSH LLC exchanged their membership interests for common stock in Oak Street Health, Inc. as part of the related IPO reorganization transactions. All 15,928,876 units of our then outstanding redeemable investor units (preferred stock including their respective undeclared and deemed dividends) and members’ capital (former founders’ units and incentive units/profits interests) plus 1,924 of options to purchase incentive units were converted into 200,286,312 shares of common stock of the Company and 22,612,472 shares of restricted common stock subject to service-based vesting (“RSA”) of the Company.

Basis of Presentation and Consolidation

Basis of Presentation and Consolidation

The accompanying unaudited interim consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such regulations. These financial statements have been prepared on a basis consistent with the accounting principles applied for the fiscal year ended December 31, 2020 in the Company’s Form 10-K filed with the SEC. In the opinion of management, all adjustments (consisting of all normal and recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six-months ended June 30, 2021, including the impact of COVID-19, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

The consolidated financial statements of the Company include the financial statements of all wholly owned subsidiaries and majority-owned or controlled companies. For those consolidated subsidiaries where our ownership is less than 100%, the portion of the net income or loss allocable to the non-controlling interests is reported as “Net loss (gain) attributable to non-controlling interests” in the consolidated statements of operations. Intercompany balances and transactions have been eliminated in consolidation.

The Company evaluates its ownership, contractual and other interests in entities to determine if it has any variable interest in a variable interest entity (“variable interest entities” or “VIEs”). These evaluations are complex, involve judgment and the use of estimates and assumptions based on available historical information, among other factors. The Company considers itself to control an entity if it

is the majority owner of or has voting control over such entity. The Company also assesses control through means other than voting rights and determines which business entity is the primary beneficiary of the VIE. The Company consolidates VIEs when it is determined that the Company is the primary beneficiary of the VIE. Management performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change. Changes in consolidation status are applied prospectively.

Upon completion of our IPO, OSH’s sole material asset is its interest in OSH LLC and its affiliates. In accordance with the master structuring agreement dated August 10, 2020, by and among OSH and the other signatories party thereto (the “Master Structuring Agreement”), we have all management powers over the business and affairs of OSH LLC and to conduct, direct and exercise full control over the activities of OSH LLC. Due to our power to control the activities most directly affecting the results of OSH LLC, we are considered the primary beneficiary of the VIE. Accordingly, following the effective date of the IPO, we consolidate the financial results of OSH LLC and its affiliates and the financial statements for the periods prior to the IPO have been adjusted to combine the previously separate entities for presentation purposes.

Oak Street Health MSO LLC (“MSO”), a wholly owned subsidiary of OSH LLC, was formed in 2013 to provide a wide range of management services to the Physician Groups (as defined below). Activities include but are not limited to operational support of the centers, marketing, information technology infrastructure and the sourcing and managing of health plan contracts. Oak Street Health Physicians Group PC, OSH-IN Physicians Group PC, OSH-MI Physicians Group PC, OSH-OH Physicians Group LLC, OSH-PA Physicians Group PC, OSH-RI Physicians Group PC, Oak Street Health of Texas, PLLC, Griffin Myers Medical PC, Oak Street Health Physicians Group of South Carolina LLC, Oak Street Health Physicians Group of Louisiana LLC, Oak Street Health Physicians Group of Mississippi LLC, Oak Street Health Physicians Group of Alabama, LLC, Oak Street Health Physicians Group of Kentucky, LLC, Oak Street Health Physicians Group of Missouri, Oak Street Health Physicians Group of New Mexico, LLC, Oak Street Health Physicians Group of Arizona, PLLC and Oak Street Health Physicians Group of Oklahoma, LLC (collectively, the “Physician Groups”) employ healthcare providers to deliver primary care services to the Medicare covered population of Alabama, Georgia, Illinois, Indiana, Louisiana, Michigan, Mississippi, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee and Texas. These entities are consolidated as each are considered variable interest entities where the Company has a controlling financial interest (see Note 15).

In addition, Oak Street Health is the majority interest owner in three joint ventures: OSH-PCJ Joliet, LLC, OSH-RI, LLC and OSH-ESC Joint Venture, LLC, which are consolidated in the Company’s financial statements. In March 2021, distributions were made from OSH-PCJ Joliet, LLC to Oak Street Health MSO, LLC (50.1% ownership) and Primary Care Physicians of Joliet (49.9% ownership) totaling $1.1 million to each owner.  

Emerging Growth Company Status

Emerging Growth Company Status

We currently meet the definition of an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We elected to use this extended transition period until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period. Based on the aggregate worldwide market value of our shares of common stock held by our non-affiliate stockholders as of June 30, 2021, we expect that we will become a “large accelerated filer” and lose emerging growth status beginning with our Annual Report on Form 10-K for the year ended December 31, 2021. We will also no longer be exempt from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and our independent registered public accounting firm will evaluate and report on the effectiveness of internal control over financial reporting.

Use Of Estimates

Use of Estimates

In accordance with its policy, the Company reviews its estimated liability for unpaid claims on an ongoing basis. During the second quarter of 2021, this review indicated that actual medical claims expense was higher than prior period estimates due to COVID-19 related healthcare costs and a change in historical utilization patterns. As a result, as of the period ended June 30, 2021, the Company updated its estimate of its liability of unpaid claims, primarily based on historical experience of medical claims expense. The result of this updated information was additional medical claims expense for the three-months ended June 30, 2021 of approximately $19.0 million, or ($0.09) per share (basic and diluted) and for the six-months ended June 30, 2021 of approximately $1.4 million, or ($0.01) per share (basic and diluted) related to prior periods.

Cash and Cash Equivalents

Cash and Cash Equivalents

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 and cash equivalents consisted of cash on deposit and investments in money market funds.

Marketable Debt Securities

Marketable Debt Securities

The Company’s investments in marketable debt securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in total equity (deficit). The

Company determines the appropriate classification of these investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company classifies the available-for-sale investments as current assets under the caption marketable debt securities on the consolidated balance sheets as these investments generally consist of highly marketable securities that are identified to be available to meet near-term cash requirements and fund current operations. Realized gains and losses and declines in value determined to be other-than-temporary are based on the specific identification method and are included as a component of other (expense) income, net in the consolidated statements of operations.

The Company periodically evaluates its investments in marketable debt securities for other-than-temporary impairment. When assessing short-term marketable security investments for other-than-temporary declines in value, the Company considers such factors as, among other things, how significant the decline in value is as a percentage of the original cost, how long the market value of the investment has been less than its original cost, the Company’s ability and intent to retain the short-term marketable security investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general. If any adjustment to fair value reflects a decline in the value of the marketable security that the Company considers to be other-than-temporary, the Company reduces the marketable debt securities through a charge to the consolidated statement of operations. No such adjustments were necessary during the periods presented.

Leases

Leases

The Company leases offices, operating facilities, vehicles and IT equipment, which are accounted for as operating leases. These leases have remaining lease terms of up to 30 years, inclusive of renewal or termination options that the Company is reasonably certain to exercise. The Company determines if an arrangement is a lease at inception and evaluates the lease classification (i.e., operating lease or financing lease) at that time. Lease arrangements with an initial term of 12 months or less are considered short-term leases and are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the term of the lease.

Operating leases are included in operating lease right-of-use assets, operating lease liabilities, current portion (recorded within other current liabilities) and long-term operating lease liabilities on the Company’s consolidated balance sheets. Operating lease right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company has no financing leases.

The Company uses its incremental borrowing rate on the commencement date for determining the present value of lease payments. The Company considers the likelihood of exercising options to extend or terminate the lease when determining the lease term.

The Company has lease agreements with lease and non-lease components. The Company has elected the practical expedient to account for the lease and non-lease components as a single lease component for all leases.

Convertible Debt

Convertible Debt

The Company evaluates all conversion, repurchase and redemption features contained in a debt instrument to determine if there are any embedded features that require bifurcation as a derivative.  In accounting for the issuance of the 0% Convertible Senior Notes due 2026 issued in March 2021 (the “Convertible Senior Notes”), the Company recorded a long-term debt liability equal to the proceeds received from issuance, including the embedded conversion feature, net of the debt issuance and offering costs on the Company’s consolidated balance sheets. The conversion feature is not required to be accounted for separately as an embedded derivative. The Company amortizes debt issuance and offering costs over the term of the Convertible Senior Notes as interest expense utilizing the effective interest method on the Company’s consolidated statements of operations.

Capped Call Transactions

Capped Call Transactions

In connection with the issuance of the Convertible Senior Notes, the Company entered into capped call transactions. The capped call transactions are expected generally to reduce the potential dilution to the holders of the Company’s common stock upon any conversion of the Convertible Senior Notes. The capped call transactions are purchased call options on the issuer’s stock that settle by reference to the Company’s stock with no forced cash payment. The terms of the capped call transactions allow the purchased call options to be classified as an equity instrument and will not be subsequently remeasured as long as the conditions for equity classification continue to be met. The Company recorded the cash used to purchase the capped call transactions as a reduction to additional paid-in

capital within the Company’s consolidated statements of changes in redeemable investor units and stockholders’ equity/members’ (deficit).

Net Income (Loss) Per Share

Net Income (Loss) Per Share

The diluted net income (loss) per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period determined using the treasury stock method or the if-converted method, as appropriate. For purposes of this calculation, stock options, restricted stock units, restricted stock awards and contingently issuable shares under our Convertible Senior Notes are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In 2016, the Financial Accounting Standards Board (“FASB”) issued guidance on leases, Accounting Standards Updates 2016-02, Leases (“ASU 2016-02), with amendments issued in 2018 and 2019 (collectively, “ASC 842”). ASC 842 requires lessees to recognize assets and liabilities related to lease arrangements on the balance sheet; leases are to be recorded as a lease liability (on a discounted basis) with a corresponding right-of-use (“ROU”) asset. Leases will be classified as finance or operating, with the classification affecting the pattern and classification of expense recognition over the lease term. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. This guidance also expands the required quantitative and qualitative disclosures for leasing arrangements and gives rise to other changes impacting certain aspects of lessee and lessor accounting. The two permitted transition methods under the guidance are the modified retrospective transition approach, which requires application of the guidance for all comparative periods, and the cumulative effect adjustment approach, which requires prospective application the adoption date.

The Company adopted ASC 842 effective January 1, 2021 under the modified retrospective transition method. Under this method, financial statements for periods after the adoption date are presented in accordance with ASC 842 and prior-period financial statements continue to be presented in accordance with ASC 840, the accounting standard originally in effect for such periods. The package of practical expedients included that the Company was not required to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. Also, as part of the adoption, the Company elected to not recognize short-term leases (those with lease terms less than a year) on the consolidated balance sheets, not separate lease and non-lease components and did not use hindsight to determine lease term. The most significant impact was the recognition of ROU assets and lease liabilities for our operating leases. The ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent an obligation to make lease payments arising from the lease at lease commencement date. The Company’s operating leases resulted in the recognition of additional assets and the corresponding liabilities on its consolidated balance sheets, however it did not have a material impact on the consolidated statements of operations or cash flows for the three and six- months ended June 30, 2021. The Company recognized ROU assets and lease liabilities for operating leases of $108.1 million and $(126.8) million, respectively, upon adoption as of January 1, 2021. The difference between the lease liability and right-of-use asset mainly related to the reversal of existing deferred rent balances.

The Company utilized a comprehensive approach to assess the impact of this guidance on the consolidated financial statements and related disclosures, including the increase in assets and liabilities on the consolidated balance sheets and the impact on the current lease portfolio.

See Note 7 in this Quarterly Report for our lease accounting policy and the quarterly impact of our adoption of ASC 842.

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06 Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity. Among other changes, ASU 2020-06 removes the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share and updates the disclosure requirements in ASC 470-20, making them easier to understand for financial statement preparers and improving the decision-usefulness and relevance of the information for financial statement users. This ASU was early adopted on January 1, 2021 and applied to the Company’s 0% Convertible Senior Notes due 2026 issued in March 2021 (Refer to Note 10, Convertible Senior Notes, for further information regarding the Company’s Convertible Senior Notes). The guidance was not applied to any other debt arrangements at the Company.  

  In December 2019, the FASB issued ASU 2019-12, “Income Taxes Topic 740-Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application of ASC 740. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods therein. The Company adopted the new guidance on January 1, 2021, noting no impact on its consolidated financial statements and related disclosures.

In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (“ASU 2020-01”). ASU 2020-01 clarifies the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The Company adopted the new guidance on January 1, 2021, noting no impact on its consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

Recent Accounting Pronouncements Not Yet Adopted

In October 2018, the FASB issued ASU 2018-17, Consolidation – Targeted Improvements to Related Party Guidance for Variable Interest Entities (Topic 810) (“ASU 2018-17”). ASU 2018-17 eliminates the requirement that entities consider indirect interests held through related parties under common control in their entirety when assessing whether a decision-making fee is a variable interest. Instead, the reporting entity will consider such indirect interests on a proportionate basis. ASU 2018-17 is effective for a private company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Due to the expected loss of emerging growth status for the year-ended December 31, 2021, this guidance will be effective in our annual filing for the year ended December 31, 2021. All entities are required to apply the adjustments in ASU 2018-17 retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The Company is currently evaluating the impact ASU 2018-17 will have on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The guidance is effective for private companies beginning January 1, 2023. Due to the expected loss of emerging growth status for the year-ended December 31, 2021, this guidance will be effective in our annual filing for the year ended December 31, 2021. The new current expected credit losses (“CECL”) model generally calls for the immediate recognition of all expected credit losses and applies to loans, accounts and trade receivables as well as other financial assets measured at amortized cost, loan commitments and off-balance sheet credit exposures, debt securities and other financial assets measured at fair value through other comprehensive income, and beneficial interests in securitized financial assets. The new guidance replaces the current incurred loss model for measuring expected credit losses, requires expected losses on available for sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities, and provides for additional disclosure requirements. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements.

We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements.

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Revenue Recognition (Tables) - OAK Street Health Inc and Affiliates [Member]

6 Months Ended

Jun. 30, 2021

Capitated Revenue [Member]

Revenue Recognition [Line Items]

Summary of Sources of Revenue in Percentage Terms

The Company had agreements in place with the payors listed below, and payor sources of capitated revenue for each period presented were as follows:

	For the three-months ended						For the six-months ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Humana		37	%		47	%		39	%		48	%
Wellcare/Meridian		17	%		13	%		17	%		13	%
Cigna-HealthSpring		9	%		11	%		9	%		11	%
Other		37	%		29	%		35	%		28	%

Other Patient Service Revenue [Member]

Revenue Recognition [Line Items]

Summary of Sources of Revenue in Percentage Terms

Other patient service revenue is comprised of ancillary fees earned under contracts with certain managed care organizations for the provision of certain care coordination services and care management services and is also comprised of fee-for-service revenue. The composition of other patient service revenue for each period was as follows ($ in millions):

		For the three-months ended					For the six-months ended
		June 30, 2021			June 30, 2020		June 30, 2021			June 30, 2020
Fee for service	$		1.8	$		1.2		3.3	$		2.3
Care coordination and care management services			4.6			5.2		8.6			9.3
Total other patient service revenue	$		6.4	$		6.4		11.9	$		11.6

Fee-For-Service [Member]

Revenue Recognition [Line Items]

Summary of Sources of Revenue in Percentage Terms

The fee-for-service revenue by payor source for each period presented were as follows:

	For the three-months ended						For the six-months ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Medicare		34	%		54	%		35	%		49	%
Humana		12	%		6	%		12	%		8	%
Other		54	%		40	%		53	%		43	%

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Fair value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Schedule of Financial Assets Measured at Fair Value on a Recurring Basis

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, 2021 using:
		Level 1			Level 2			Level 3			Total
Marketable debt securities:
Commercial paper			176.0			-			-			176.0
U.S. Treasury obligations	$		-	$		42.3	$		-	$		42.3
Corporate bonds			-			377.9			-			377.9
Asset-backed securities			-			63.5			-			63.5
Other			-			9.5			-			9.5
Total financial assets	$		176.0	$		493.2	$		-	$		669.2

Schedule of Marketable Debt Securities Classified as Available-for-sale

        At June 30, 2021, the Company’s marketable debt securities classified as available-for-sale were as follows:

		June 30, 2021
		Amortized cost			Net unrealized gains (losses)				Fair value
Marketable debt securities:
Commercial paper	$		176.0	$		(0.0	)	$		176.0
U.S. Treasury obligations			42.3			(0.0	)			42.3
Corporate bonds			378.2			(0.3	)			377.9
Asset-backed securities			63.5			(0.0	)			63.5
Other			9.5			(0.0	)			9.5
Total marketable debt securities	$		669.5	$		(0.3	)	$		669.2

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Property And Equipment (Tables)

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Property, Plant and Equipment [Line Items]

Summary of Property Plant and Equipment

Property and equipment consisted of the following as of June 30, 2021 and December 31, 2020 ($ in millions):

		June 30, 2021				December 31, 2020
Leasehold improvements	$		71.0		$		63.6
Furniture and fixtures			5.1				4.9
Computer equipment			24.6				17.8
Internal use software			8.7				6.1
Office equipment			10.1				9.7
Construction in process			6.8				4.2
Total, at cost			126.3				106.3
Less accumulated depreciation			(34.5	)			(27.5	)
Property and equipment, net	$		91.8		$		78.8

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Leases (Tables) - OAK Street Health Inc and Affiliates [Member]

6 Months Ended

Jun. 30, 2021

Schedule of Components of Lease Expense

The components of lease expense for the Company’s operating leases were as follows for the three and six-months ended June 30, 2021 ($ in millions):

		For the three months ended June 30, 2021			For the six-months ended June 30, 2021
Operating lease cost	$		4.9	$		9.4
Variable lease cost			3.8			8.7
Total lease cost	$		8.7	$		18.1

Schedule of Minimum Lease Payments for Operating Leases

The table below presents the future minimum lease payments under the noncancelable operating leases as of June 30, 2021 ($ in millions):

2021	$	6.9
2022		20.1
2023		19.0
2024		17.3
2025		16.5
2026		16.3
Thereafter		88.8
Total lease payments	$	184.9
Less: imputed interest		(38.5	)
Total operating lease liabilities	$	146.4
Reported as:
Operating lease liabilities, current (1)		11.0
Operating lease liabilities, noncurrent		135.4
Total operating lease liabilities	$	146.4
(1) Included in other liabilities on the consolidated balance sheet

Schedule Of Lessee Operating Lease Weighted Average Remaining Lease Term And Weighted Average Discount Rate

The weighted-average remaining lease term and discount rate for operating lease liabilities included in the consolidated balance sheets are as follows:

	June 30, 2021
Weighted-average remaining lease term (in years)		10.4
Weighted-average discount rate		4.16	%

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Other Current And Long-Term Liabilities (Tables) - OAK Street Health Inc and Affiliates [Member]

6 Months Ended

Jun. 30, 2021

Other Liabilities [Line Items]

Summary of Accrued Liabilities

Accrued compensation and benefits consisted of the following as of ($ in millions):

		June 30, 2021			December 31, 2020
Accrued paid time off	$		6.2	$		5.0
Accrued bonus and commission			13.8			19.1
Employee stock purchase plan contributions			3.3			-
Accrued payroll and taxes			10.4			1.8
CARES Act deferred payroll taxes			3.5			3.5
Other			2.7			2.6
	$		39.9	$		32.0

Summary of Other Current Liabilities

Other current liabilities consisted of the following as of ($ in millions):

		June 30, 2021			December 31, 2020
Humana license fee	$		4.2	$		0.6
Operating lease liabilities			11.0			-
Contract liabilities, current			5.0			4.3
Accrual for goods or services received, not invoiced			2.9			3.6
CARES Act Medicare advances & Provider Relief Funds			0.5			2.3
Other current liabilities			1.9			1.8
	$		25.5	$		12.6

Summary of Other Noncurrent Liabilities

Other long-term liabilities consisted of the following as of ($ in millions):

		June 30, 2021			December 31, 2020
Humana license fee, net of current	$		10.3	$		7.3
Contract liabilities, net of current			18.0			12.8
Lease incentive obligation, net of current			-			5.1
CARES Act deferred payroll taxes			3.5			3.5
Other long-term liabilities			0.8			0.1
	$		32.6	$		28.8

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Liability For Unpaid Claims (Tables)

6 Months Ended

Jun. 30, 2021

Roll Forward In Liability For Unpaid Claims And Claims Adjustment Expense [Abstract]

Summary of Liability for Unpaid Claims and Claims Adjustment Expense

Activity within liabilities for unpaid claims was as follows for the six-months ended ($ in millions):

		June 30, 2021				June 30, 2020
Balance, beginning of period	$		262.1		$		170.6
Incurred health care costs:
Current year			478.0				274.7
Prior years			3.9				11.3
Total claims incurred	$		481.9		$		286.0
Claims paid:
Current year			(155.1	)			(161.0	)
Prior years			(232.5	)			(59.6	)
Total claims paid	$		(387.6	)	$		(220.6	)
Adjustments to other claims-related liabilities			1.0				(0.2	)
Balance, end of period	$		357.4		$		235.8

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Long- Term Debt (Tables)

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Summary of Long-term Debt Instruments

The Convertible Senior Notes and capped call transactions consisted of the following balances reported in the Consolidated Balance Sheet as of June 30, 2021 ($ in millions):

	June 30, 2021
Liability component:
Principal		920.0
Less: debt issuance costs, net of amortization		(20.8	)
Net carrying amount		899.2
Equity component recorded at issuance:
Capped call transactions		123.6

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Stock And Unit-Based Compensation (Tables) - OAK Street Health Inc and Affiliates [Member]

6 Months Ended

Jun. 30, 2021

Summary of Stock Option Activity

The following is a summary of stock option activity transactions as of and for the six-months ended June 30, 2021 ($ in millions):

	Number of Options				Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)			Aggregate Intrinsic Value
Outstanding, December 31, 2020		14,958,969		$		21.01		9.60	$		600.6
Granted		320,937				59.62
Exercised		(174,814	)			21.03
Cancelled		(64,707	)			23.15
Outstanding, June 30, 2021		15,040,385		$		21.83		9.11	$		553.0
Options exercisable as of June 30, 2021		3,818,414		$		21.00		9.10	$		143.5

Schedule of Valuation Of Stock Options

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

		June 30, 2021
Risk-free interest rate			0.80	%
Volatility			50.00	%
Expected term to expiration (years)			6.25
Expected dividend yield			0.00	%
Estimated fair value	$		28.70

Restricted Stock Awards R S A

Summary of Restricted Stock Awards (RSA) Activity

The RSAs were granted as part of the pre-IPO conversion (see Note 12). The following is a summary of RSA transactions as of and for the six-months ended June 30, 2021:

	Unvested Shares				Grant Date Fair Value
Unvested, December 31, 2020		21,599,118		$		11.77
Granted		-
Vested		(3,477,767	)			2.63
Canceled and forfeited		(167,583	)			14.43
Unvested, June 30, 2021		17,953,768		$		13.52

Restricted Stock Units (RSUs)

Summary of Restricted Stock Awards (RSA) Activity

RSUs granted generally vest over four years. RSUs are accounted for as equity using the fair value method, which requires measurement and recognition of compensation expense for all awards granted to our employees, directors and consultants based upon the grant-date fair value. The following is a summary of RSU transactions as of and for the six-months ended June 30, 2021:

	Unvested Shares				Grant Date Fair Value
Unvested, December 31, 2020		216,804		$		32.21
Granted		196,726				59.61
Vested		(22,239	)			50.49
Canceled and forfeited		(18,655	)			28.64
Unvested, June 30, 2021		372,636		$		45.76

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Variable Interest Entities (Tables)

6 Months Ended

Jun. 30, 2021

OAK Street Health Inc and Affiliates [Member]

Summary of VIE Assets and Liabilities and Performance for the Physician Groups

The table below illustrates the VIE assets and liabilities and performance for the Physician Groups as of and for the periods ended ($ in millions):

		June 30, 2021			December 31, 2020
Total assets	$		448.9	$		286.1
Total liabilities			420.4			332.1

		For the three-months ended						For the six-months ended
		June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Total revenues	$		350.5	$		210.3	$		644.9	$		408.8
Medical claims expense			283.0			154.7			481.9			286.0
Cost of care			34.5			14.2			67.4			29.5
Total operating expenses	$		317.5	$		168.9	$		549.3	$		315.5

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Related Parties (Tables)

6 Months Ended

Jun. 30, 2021

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The below tables present the balances related to Humana as of June 30, 2021 and December 31, 2020 and for the three and six-months ended June 30, 2021 and 2020.

		June 30, 2021			December 31, 2020
Assets:
Other patient service receivables	$		0.1	$	0.0
Capitated accounts receivables			109.8			65.7
Operating lease right-of-use assets		49.8				-
Liabilities:
Liability for unpaid claims	$		96.6	$		78.5
Other liabilities
Short-term license fees			4.2			0.6
Short-term contract liability			4.7			4.0
Short-term operating lease liability			4.8			-
Long-term operating lease liabilities			46.3			-
Deferred rent			-			0.8
Other long-term liabilities:
Long-term license fees			10.3			7.3
Long-term contract liability			18.0			12.8
Equity:
Additional paid-in capital	$		50.0	$		50.0

		For the three-months ended						For the six-months ended
		June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenues:
Capitated revenue	$		127.1	$		97.4	$		248.5	$		193.9
Other patient service revenue:
Care coordination revenue earned			1.2			0.7			2.3			1.4
Fee-for-service revenue			0.3			0.1			0.4			0.2
Expenses:
Medical claims expense	$		105.7	$		64.0	$		178.7	$		123.8
Cost of care:
License fee expense			0.6			0.7			1.3			1.3
Rent expense			1.7			0.5			3.0			1.1

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Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2021

Summary of Basic and Diluted Net Loss Per Common Unit

The following table sets forth the computation of basic and diluted net loss per common share for the three and six-months ended June 30, 2021 and 2020:

		Three months ended June 30, 2021				Six-months ended June 30, 2021
Numerator:
Net loss	$		(100.3	)	$		(164.3	)
Less: Net loss attributable to non-controlling interests			(2.3	)			(2.9	)
Net loss attributable to OSH Inc. stockholders			(98.0	)			(161.4	)
Denominator:
Weighted average common stock outstanding - basic and diluted			221,168,630				221,595,670
Net loss per share – basic and diluted	$		(0.44	)	$		(0.73	)

OAK Street Health Inc and Affiliates [Member]

Summary of Potential Common Shares Outstanding Excluded from the Computation of Diluted Net Loss Per Share/Unit

The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated:

		Six-months ended June 30, 2021
Stock options			15,040,385
RSUs			372,636
RSAs			17,953,768
Employee stock purchase plan			62,575
Convertible Senior Notes	*		11,622,176
			45,051,540

*The Company entered into capped call transactions to mitigate the impact of potential economic dilution to our common stock upon any conversion of our Convertible Senior Notes. The capped call transactions are expected to offset the potential dilution to the Company’s common stock upon any conversion of the Convertible Senior Notes up to a cap price of $138.8750 per share. See Note 10 for further details on the capped call transactions.

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Organization and Nature of Business - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions		1 Months Ended			3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 10, 2020	Jun. 30, 2021	Aug. 31, 2020	Mar. 31, 2018	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Organization And Nature Of Business [Line Items]
Organisation incorporated date							Oct. 22, 2019
Common stock, par value		$ 0.001	$ 0.001		$ 0.001		$ 0.001
Number of shares issued upon conversion				38,111,001			12,472,242
Other Current Liabilities [Member]
Organization And Nature Of Business [Line Items]
Deferred payroll taxes		$ 7.0			$ 7.0		$ 7.0
Other Noncurrent Liabilities [Member]
Organization And Nature Of Business [Line Items]
Deferred payroll taxes		$ 3.5			$ 3.5		$ 3.5
Oak Street Health MSO, LLC [Member]
Organization And Nature Of Business [Line Items]
Equity method investment ownership percentage		50.10%			50.10%		50.10%
Primary Care Physicians of Joliet [Member]
Organization And Nature Of Business [Line Items]
Equity method investment ownership percentage		49.90%			49.90%		49.90%
Common Stock Subject To Service-Based Vesting [Member]
Organization And Nature Of Business [Line Items]
Number of shares issued upon conversion				22,612,472
OAK Street Health Inc and Affiliates [Member]
Organization And Nature Of Business [Line Items]
Common stock, par value		$ 0.001			$ 0.001		$ 0.001		$ 0.001
Proceeds from issuance of initial public offering	$ 351.2
Payments for underwriting expense	22.6
Deferred offering costs	$ 3.5
Number of units converted	15,928,876
Number of shares issued upon conversion	200,286,312
Total distribution from joint venture							$ 1.1
Additional Medical Claims Expense					$ 19.0			$ 1.4
Earnings Per Share Basic And Diluted					$ 0.09			$ 0.01
Other liabilities		$ 25.5			$ 25.5		25.5		$ 12.6
Other long-term liabilities (Humana comprised $28.3 and $20.1 as of June 30, 2021 and December 31, 2020, respectively)		32.6			32.6		32.6		28.8
Deferred payroll taxes		3.5			3.5		$ 3.5		3.5
OAK Street Health Inc and Affiliates [Member] | CARES Act [Member] | Medicare Accelerated Advanced Payment Scheme [Member]
Organization And Nature Of Business [Line Items]
Percentage of interest free loans received							100.00%
Period after mediclaim issue when advance payments will begin							1 year
Period after mediclaim issue when advance payments are due							11 months
Proceeds from short term debt									$ 1.5
CMS Payback					0.2		$ 0.2
Other liabilities		0.5			0.5		0.5
Other long-term liabilities (Humana comprised $28.3 and $20.1 as of June 30, 2021 and December 31, 2020, respectively)		0.8			0.8		$ 0.8
OAK Street Health Inc and Affiliates [Member] | CARES Act [Member] | Medicare Accelerated Advanced Payment Scheme [Member] | Repayment Period One [Member]
Organization And Nature Of Business [Line Items]
Recoupment percentage of medicare payments							25.00%
OAK Street Health Inc and Affiliates [Member] | CARES Act [Member] | Medicare Accelerated Advanced Payment Scheme [Member] | Repayment Period Two [Member]
Organization And Nature Of Business [Line Items]
Recoupment percentage of medicare payments							50.00%
OAK Street Health Inc and Affiliates [Member] | Grant [Member]
Organization And Nature Of Business [Line Items]
Grants received							$ 2.6	$ 4.7
OAK Street Health Inc and Affiliates [Member] | Cost of Care [Member] | Grant [Member] | CARES Act [Member]
Organization And Nature Of Business [Line Items]
Grants received					$ 1.6	$ 0.8	$ 3.5	$ 0.8
OAK Street Health Inc and Affiliates [Member] | Other Current Liabilities [Member] | Grant [Member]
Organization And Nature Of Business [Line Items]
Grants received		$ 0.0
OAK Street Health Inc and Affiliates [Member] | Common Stock Option To Purchase [Member]
Organization And Nature Of Business [Line Items]
Number of units converted	1,924
OAK Street Health Inc and Affiliates [Member] | Common Stock Subject To Service-Based Vesting [Member]
Organization And Nature Of Business [Line Items]
Number of shares issued upon conversion	22,612,472
IPO [Member]
Organization And Nature Of Business [Line Items]
Stock issued during period shares			17,968,750
Shares offering, price per share			$ 21.00
IPO [Member] | OAK Street Health Inc and Affiliates [Member]
Organization And Nature Of Business [Line Items]
Stock issued during period shares	17,968,750
Common stock, par value	$ 0.001
Shares offering, price per share	$ 21.00
Over-Allotment Option [Member]
Organization And Nature Of Business [Line Items]
Stock issued during period shares			2,343,750
Over-Allotment Option [Member] | OAK Street Health Inc and Affiliates [Member]
Organization And Nature Of Business [Line Items]
Stock issued during period shares	2,343,750

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Summary of Significant Accounting Policies - Additional Information (Detail)	Jun. 30, 2021
Significant Accounting Policies [Line Items]
Operating lease, Remaining lease term	30 years
ASU 2018-09 [Member]
Significant Accounting Policies [Line Items]
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jan. 01, 2021
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false]	true
ASU 2018-13 [Member]
Significant Accounting Policies [Line Items]
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jan. 01, 2021
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false]	true

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Revenue Recognition - Additional Information (Detail) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Revenue From Contract With Customerline Items [Line Items]
Capitated accounts receivable (Humana comprised $109.8 and $65.7 as of June 30, 2021 and December 31, 2020, respectively)	$ 383.7		$ 383.7		$ 248.9
Cost of care	6.4	$ 0.5	9.9	$ 3.0
Financial Support, Waived Fees [Member] | Cost of Care [Member]
Revenue From Contract With Customerline Items [Line Items]
Revenue offset against cost of care regarding goods and services waived	2.1	$ 0.3	3.3	$ 1.8
Humana [Member]
Revenue From Contract With Customerline Items [Line Items]
Capitated accounts receivable (Humana comprised $109.8 and $65.7 as of June 30, 2021 and December 31, 2020, respectively)	109.8		109.8		65.7
Contract With Customer Liability	$ 22.6		$ 22.6		$ 16.6
Medicare Part D [Member] | Medical Claims Expenditure [Member]
Revenue From Contract With Customerline Items [Line Items]
Concentration risk percentage	3.00%	3.00%	3.00%	3.00%
Medicare Part D [Member] | Capitated Revenue [Member]
Revenue From Contract With Customerline Items [Line Items]
Concentration risk percentage	2.00%	2.00%	2.00%	2.00%
Accounting Standards Update 2014-09 [Member] | Acuity Adjustment [Member]
Revenue From Contract With Customerline Items [Line Items]
Capitated accounts receivable (Humana comprised $109.8 and $65.7 as of June 30, 2021 and December 31, 2020, respectively)	$ 67.1	$ 42.2	$ 67.1	$ 42.2

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Revenue Recognition - Summary of Sources of Capitated Revenue (Detail) - Capitated Revenue [Member] - OAK Street Health Inc and Affiliates [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Humana [Member]
Disclosure Of Sources Of Revenue In Percentage Terms [Line Items]
Concentration risk percentage	37.00%	47.00%	39.00%	48.00%
Wellcare Meridian [Member]
Disclosure Of Sources Of Revenue In Percentage Terms [Line Items]
Concentration risk percentage	17.00%	13.00%	17.00%	13.00%
Cigna-HealthSpring [Member]
Disclosure Of Sources Of Revenue In Percentage Terms [Line Items]
Concentration risk percentage	9.00%	11.00%	9.00%	11.00%
Other [Member]
Disclosure Of Sources Of Revenue In Percentage Terms [Line Items]
Concentration risk percentage	37.00%	29.00%	35.00%	28.00%

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Revenue Recognition - Summary of Composition Of Revenues (Detail) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Disaggregation Of Revenue [Line Items]
Performance obligations revenue recognised	$ 353.1	$ 214.4	$ 649.8	$ 416.2
Total revenues	353.1	214.4	649.8	416.2
Other Patient Service Revenue [Member]
Disaggregation Of Revenue [Line Items]
Performance obligations revenue recognised	6.4	6.4	11.9	11.6
Total revenues	6.4	6.4	11.9	11.6
Other Patient Service Revenue [Member] | Fee-For-Service [Member]
Disaggregation Of Revenue [Line Items]
Performance obligations revenue recognised	1.8	1.2	3.3	2.3
Total revenues	1.8	1.2	3.3	2.3
Other Patient Service Revenue [Member] | Care Coordination And Care Management [Member]
Disaggregation Of Revenue [Line Items]
Performance obligations revenue recognised	4.6	5.2	8.6	9.3
Total revenues	$ 4.6	$ 5.2	$ 8.6	$ 9.3

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Revenue Recognition - Summary of Sources of Fee for Service Revenue (Detail) - OAK Street Health Inc and Affiliates [Member] - Fee-For-Service [Member] - Other Patient Service Revenue [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Medicare [Member]
Disclosure Of Sources Of Revenue In Percentage Terms [Line Items]
Concentration risk percentage	34.00%	54.00%	35.00%	49.00%
Humana [Member]
Disclosure Of Sources Of Revenue In Percentage Terms [Line Items]
Concentration risk percentage	12.00%	6.00%	12.00%	8.00%
Other [Member]
Disclosure Of Sources Of Revenue In Percentage Terms [Line Items]
Concentration risk percentage	54.00%	40.00%	53.00%	43.00%

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Fair Value of Financial Instruments - Schedule of Financial Assets Measured at Fair Value on a Recurring Basis (Details) - Fair Value Measurements, Recurring Basis [Member] - OAK Street Health Inc and Affiliates [Member] $ in Millions	Jun. 30, 2021 USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	$ 669.2
Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	176.0
Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	493.2
Commercial Paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	176.0
Commercial Paper [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	176.0
U.S. Treasury Obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	42.3
U.S. Treasury Obligations [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	42.3
Corporate Bonds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	377.9
Corporate Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	377.9
Asset-backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	63.5
Asset-backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	63.5
Other [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	9.5
Other [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	$ 9.5

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Fair Value of Financial Instruments - Additional Information (Details) - OAK Street Health Inc and Affiliates [Member] - Fair Value, Inputs, Level 2 [Member] $ in Millions	Jun. 30, 2021 USD ($)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of convertible notes	$ 941.9
Carrying value of convertible notes	$ 899.2

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Fair Value of Financial Instruments - Schedule of Marketable Debt Securities Classified as Available-for-sale (Details) - OAK Street Health Inc and Affiliates [Member] $ in Millions	Jun. 30, 2021 USD ($)
Marketable Securities [Line Items]
Amortized cost	$ 669.5
Net unrealized gains (losses)	(0.3)
Fair value	669.2
Commercial Paper [Member]
Marketable Securities [Line Items]
Amortized cost	176.0
Net unrealized gains (losses)	(0.0)
Fair value	176.0
U.S. Treasury Obligations [Member]
Marketable Securities [Line Items]
Amortized cost	42.3
Net unrealized gains (losses)	(0.0)
Fair value	42.3
Corporate Bonds [Member]
Marketable Securities [Line Items]
Amortized cost	378.2
Net unrealized gains (losses)	(0.3)
Fair value	377.9
Asset-backed Securities [Member]
Marketable Securities [Line Items]
Amortized cost	63.5
Net unrealized gains (losses)	(0.0)
Fair value	63.5
Other [Member]
Marketable Securities [Line Items]
Amortized cost	9.5
Net unrealized gains (losses)	(0.0)
Fair value	$ 9.5

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Property And Equipment - Summary of Property Plant and Equipment (Detail) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 126.3	$ 106.3
Less accumulated depreciation	(34.5)	(27.5)
Property, plant and equipment, net	91.8	78.8
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	71.0	63.6
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	5.1	4.9
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	24.6	17.8
Internal Use Software [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	8.7	6.1
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	10.1	9.7
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 6.8	$ 4.2

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Property And Equipment - Additional Information (Detail) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 3.8	$ 2.6	$ 7.0	$ 5.0
Capitalized development costs expensed	$ 0.3	$ 0.1	$ 0.6	$ 0.1

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Goodwill And Intangible Assets - Additional Information (Detail) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Jan. 22, 2021	Dec. 31, 2020
Goodwill and Intangible Assets [Line Items]
Goodwill	$ 11.4		$ 11.4			$ 9.6
Net intangible assets	2.8		2.8			$ 3.0
Amortization of intangible assets	$ 0.1	$ 0.1	$ 0.2	$ 0.2
Medical Practice Related Assets [Member]
Goodwill and Intangible Assets [Line Items]
Goodwill					$ 1.8

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Leases - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Operating lease, Remaining lease term	30 years		30 years
Operating Lease, Right-of-Use Asset	$ 19.1		$ 26.8
Operating lease right-of-use assets (Humana comprised $49.8 and $0.0 as of June 30, 2021 and December 31, 2020, respectively)	$ 0.0		$ 0.0
Lease and rent expense		$ 4.6		$ 9.2
Deferred rent expense (Humana comprised $0.0 and $0.8 as of June 30, 2021 and December 31, 2020, respectively)					$ 13.5
Humana License Fee [Member]
Lease and rent expense		$ 0.9		$ 1.9

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Leases - Summary of Components of Lease Expense (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2021
Leases [Abstract]
Operating lease cost	$ 4.9	$ 9.4
Variable lease cost	3.8	8.7
Total lease cost	$ 8.7	$ 18.1

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Leases - Summary of Weighted Average Remaining Lease Term and Discount Rate (Details)	Jun. 30, 2021
Leases [Abstract]
Weighted-average remaining lease term (in years)	10 years 4 months 24 days
Weighted-average discount rate	4.16%

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Leases - Summary of Future Minimum Lease Payments Under Non Cancelable Operating Leases (Details) $ in Millions	Jun. 30, 2021 USD ($)
Leases [Abstract]
2021	$ 6.9
2022	20.1
2023	19.0
2024	17.3
2025	16.5
2026	16.3
Thereafter	88.8
Total lease payments	184.9
Less: imputed interest	(38.5)
Total operating lease liabilities	146.4
Operating lease liabilities, current	11.0	[1]
Operating lease liabilities, noncurrent	135.4
Total operating lease liabilities	$ 146.4

[1] Included in other liabilities on the consolidated balance sheet

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Other Current And Long -Term Liabilities - Summary of Accrued Liabilities (Detail) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Other Liabilities [Line Items]
Accrued paid time off	$ 6.2	$ 5.0
Accrued bonus and commission	13.8	19.1
Employee stock purchase plan contributions	3.3
Accrued payroll and taxes	10.4	1.8
CARES Act deferred payroll taxes	3.5	3.5
Other	2.7	2.6
Total	$ 39.9	$ 32.0

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Other Current And Long -Term Liabilities - Summary of Other Current Liabilities (Detail) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Other Liabilities [Line Items]
Total operating lease liabilities	$ 146.4
OAK Street Health Inc and Affiliates [Member]
Other Liabilities [Line Items]
Humana license fee	4.2	$ 0.6
Total operating lease liabilities	11.0
Contract liabilities, current	5.0	4.3
Accrual for goods or services received, not invoiced	2.9	3.6
CARES Act Medicare advances & Provider Relief Funds	0.5	2.3
Other current liabilities	1.9	1.8
Total	$ 25.5	$ 12.6

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Other Current And Long -Term Liabilities - Summary of Other Noncurrent Liabilities (Detail) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Humana license fee, net of current	$ 10.3	$ 7.3
Contract liabilities, net of current	18.0	12.8
Lease incentive obligation, net of current		5.1
Deferred payroll taxes	3.5	3.5
Other long-term liabilities	0.8	0.1
Total	$ 32.6	$ 28.8

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Liability For Unpaid Claims- Additional Information (Detail) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Liability For Claims And Claims Adjustment Expense [Line Items]
Mediclaim expenses			$ 387.6	$ 220.6
Provider Excess Insurance Scheme [Member]
Liability For Claims And Claims Adjustment Expense [Line Items]
Insurance premium expenditure incurred	$ 1.0	$ 0.9	1.9	1.7
Insurance premium expenditure reimbursed	$ 3.0	$ 0.5	3.4	$ 0.8
Providers excess insurance deductible per member			0.3
Provider Excess Insurance Scheme [Member] | Maximum [Member]
Liability For Claims And Claims Adjustment Expense [Line Items]
Providers excess insurance deductible per member			$ 5.0

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Liability For Unpaid Claims - Summary of Liability for Unpaid Claims and Claims Adjustment Expense (Detail) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Balance, beginning of period	$ 262.1	$ 170.6
Incurred health care costs:
Cost of providing patient care in relation to revenue waived	387.6	220.6
Total claims incurred	481.9	286.0
Claims paid:
Current year	155.1	161.0
Prior years	232.5	59.6
Adjustments to other claims-related liabilities	1.0	(0.2)
Balance, end of period	357.4	235.8
Current year [Member]
Incurred health care costs:
Cost of providing patient care in relation to revenue waived	478.0	274.7
Prior years [Member]
Incurred health care costs:
Cost of providing patient care in relation to revenue waived	$ 3.9	$ 11.3

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Long- Term Debt - Additional Information (Detail) $ / shares in Units, $ in Millions		1 Months Ended	3 Months Ended	6 Months Ended
	Mar. 16, 2021 USD ($)	Jun. 30, 2021 USD ($) $ / shares shares	Jun. 30, 2021 USD ($) $ / shares shares	Jun. 30, 2021 USD ($) Day $ / shares shares	Dec. 31, 2020 $ / shares	Aug. 31, 2020 $ / shares
Debt Instrument [Line Items]
Capped call transactions expiry date				Mar. 12, 2026
Number of share subject to anti-dilution adjustments | shares		11,622,176	11,622,176	11,622,176
Common stock, par value | $ / shares		$ 0.001	$ 0.001	$ 0.001		$ 0.001
Debt Issuance Costs			$ 1.1
Interest Expense, Debt				$ 1.3
Notes Payable, Other Payables [Member]
Debt Instrument [Line Items]
Conversion price per share | $ / shares		$ 79.16	$ 79.16	$ 79.16
Closing stock price				130.00%
Consecutive trading days | Day				10
Redemption price equal to principal amount				100.00%
Aggregate principal amount				$ 150.0
Capped call transactions		$ 123.6	$ 123.6	$ 123.6
Conversion price cap initially equal | $ / shares				$ 138.8750
Notes Payable, Other Payables [Member] | Maximum [Member]
Debt Instrument [Line Items]
Closing stock price				130.00%
Notes Payable, Other Payables [Member] | Minimum [Member]
Debt Instrument [Line Items]
Closing stock price				98.00%
Conversion price trading days | Day				20
Consecutive trading days | Day				30
OAK Street Health Inc and Affiliates [Member]
Debt Instrument [Line Items]
Net proceeds to pay capped call transaction		$ 899.2	$ 899.2	$ 899.2
Common stock, par value | $ / shares		$ 0.001	$ 0.001	$ 0.001	$ 0.001
OAK Street Health Inc and Affiliates [Member] | Notes Payable, Other Payables [Member]
Debt Instrument [Line Items]
Debt instrument face value	$ 920.0
Long term debt variable interest rate percentage	0.00%
Option to purchase additional convertible senior notes	$ 120.0
Debt issuance cost	22.1
Total proceeds received	897.9
Net proceeds to pay capped call transaction	$ 123.6
Convertible notes unsecured obligation mature date		Mar. 15, 2026
Convertible notes special interest		0.50%	0.50%	0.50%
Debt instrument frequency of periodic payment		365 days
OAK Street Health Inc and Affiliates [Member] | Notes Payable, Other Payables [Member] | Notes Payable, Other Payables [Member]
Debt Instrument [Line Items]
Debt instrument frequency of periodic payment				40 trading-day
Conversion rate				12.6328
Debt conversion principal amount				$ 1,000.0
Conversion price per share | $ / shares		$ 79.16	$ 79.16	$ 79.16
OAK Street Health Inc and Affiliates [Member] | Notes Payable, Other Payables [Member] | Maximum [Member] | Notes Payable, Other Payables [Member]
Debt Instrument [Line Items]
Number of shares issuable subject to increase in conversion rate | shares				16,561,656

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Long- Term Debt - Summary of Long-term Debt Instruments (Detail) - OAK Street Health Inc and Affiliates [Member] $ in Millions	Jun. 30, 2021 USD ($)
Principal	$ 920.0
Less: debt issuance costs, net of amortization	(20.8)
Net carrying amount	899.2
Capped Call Transactions [Member]
Capped call transactions	$ 123.6

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Income Tax - Additional Information (Detail) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Net deferred tax assets	$ 0		$ 0
Effective income tax rate	0.00%	0.00%	0.00%	0.00%

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Stockholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended		6 Months Ended
	Aug. 31, 2020	Mar. 31, 2018	Jun. 30, 2021	Dec. 31, 2020	Dec. 31, 2019
Stockholders Equity [Line Items]
OSH Inc stockholders' equity par value or stated value per unit	$ 0.001		$ 0.001
OSH Inc stockholders' equity, shares authorized	500,000,000				1,000
Number of shares issued upon conversion		38,111,001	12,472,242
Undeclared and deemed dividends			$ 103.6
Conversion of redeemable preferred stock into common stock upon closing of initial public offering			184,787,783
Total carrying value			$ 545.0
Redeemable preferred stock issued			0	0
Redeemable preferred stock outstanding			0	0
Number of units converted		3,456,634
Reclassification of members capital		$ 7.0
Number of units issued			0	0
Number of units outstanding			0	0
Common Stock Subject To Service-Based Vesting [Member]
Stockholders Equity [Line Items]
Number of shares issued upon conversion		22,612,472
IPO [Member]
Stockholders Equity [Line Items]
Issuance of common units	17,968,750
Shares offering, price per share	$ 21.00
Preferred stock authorized			50,000,000
Preferred stock, par value			$ 0.001
Preferred stock, shares outstanding			0
Over-Allotment Option [Member]
Stockholders Equity [Line Items]
Issuance of common units	2,343,750

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Stock And Unit-Based Compensation- Additional Information (Detail) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
	Aug. 05, 2020	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award, expiration period				10 years
Percentage of option vest per year				25.00%
Aggregate intrinsic value of options exercised		$ 4.8	$ 0.0	$ 6.6	$ 0.0
Fair value of options		0.4	0.0	9.2	0.0
Non-vested Awards (RSAs, Options and RSUs) [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized compensation expense		209.5		$ 209.5
Unrecognized compensation expense, period of recognition				1 year 4 months 20 days
OAK Street Health Inc and Affiliates [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock and Unit-based compensation expense		41.5	3.5	$ 84.0	5.3
OAK Street Health Inc and Affiliates [Member] | General and Administrative Expense
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock and Unit-based compensation expense		39.7		80.9
OAK Street Health Inc and Affiliates [Member] | Selling and Marketing Expense
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock and Unit-based compensation expense		0.9		1.7
OAK Street Health Inc and Affiliates [Member] | Cost of Care [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock and Unit-based compensation expense		0.3		0.6
OAK Street Health Inc and Affiliates [Member] | Profits Interest Award [Member] | General and Administrative Expense
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock and Unit-based compensation expense		0.0	3.5	0.0	5.3
OAK Street Health Inc and Affiliates [Member] | Restricted Stock Units (RSUs) | RSAs and Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock and Unit-based compensation expense		40.8	$ 0.0	83.2	$ 0.0
OAK Street Health Inc and Affiliates [Member] | Sponsors Exit Service-based Vesting [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock and Unit-based compensation expense		$ 29.0		$ 58.3
Twenty Twenty Omnibus Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award, number of shares available for issuance	48,138,967
Share-based compensation arrangement by share-based payment award, effective date	Aug. 05, 2020
Twenty Twenty Employee Stock Purchase Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award, number of shares available for issuance	2,386,875
Percentage increase in stock that can potentially occur related to ESPP	1.00%
Share based compensation arrangement by share based payment award payroll deduction percentage on employee subscription	15.00%
Share based compensation arrangement by share based payment award purchase price percentage applied on lower market price	85.00%
Twenty Twenty Employee Stock Purchase Plan [Member] | Common Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Purchase of common stock shares				62,575
Twenty Twenty Employee Stock Purchase Plan [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award, number of shares available for issuance	30,000,000

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Stock And Unit-Based Compensation - Summary of Stock Option Activity (Detail) $ / shares in Units, $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2021 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares	$ 21.01
Weighted Average Exercise Price, Granted | $ / shares	59.62
Weighted Average Exercise Price, Exercised | $ / shares	21.03
Weighted Average Exercise Price, Cancelled | $ / shares	23.15
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares	21.83	$ 21.01
Weighted Average Exercise Price, June 30, 2021 | $ / shares	$ 21.00
OAK Street Health Inc and Affiliates [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options, Outstanding Beginning Balance | shares	14,958,969
Granted | shares	320,937
Exercised | shares	(174,814)
Cancelled | shares	(64,707)
Options, Outstanding Ending Balance | shares	15,040,385	14,958,969
Options, Exercisable as of June 30,2021 | shares	3,818,414
Weighted Average Contractual Term Remaining (in years)	9 years 1 month 9 days	9 years 7 months 6 days
Weighted Average Contractual Term Remaining (in years) Exercisable as of June 30, 2021	9 years 1 month 6 days
Aggregate Intrinsic Value | $	$ 600.6
Aggregate Intrinsic Value | $	553.0	$ 600.6
Aggregate Intrinsic Value, Option Exercisable as of June 30, 2021 | $	$ 143.5

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Stock And Unit-Based Compensation - Summary of Restricted Stock Awards (RSA) (Detail) - Restricted Stock Awards R S A	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning balance | shares	21,599,118
Vested | shares	(3,477,767)
Canceled and forfeited | shares	(167,583)
Ending balance | shares	17,953,768
Beginning balance | $ / shares	$ 11.77
Vested | $ / shares	2.63
Canceled and forfeited | $ / shares	14.43
Ending balance | $ / shares	$ 13.52

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Stock And Unit-Based Compensation - Summary of Restricted Stock Unit (RSU) (Detail) - Restricted Stock Units (RSUs)	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning balance | shares	216,804
Granted | shares	196,726
Vested | shares	(22,239)
Canceled and forfeited | shares	(18,655)
Ending balance | shares	372,636
Beginning balance | $ / shares	$ 32.21
Granted | $ / shares	59.61
Vested | $ / shares	50.49
Canceled and forfeited | $ / shares	28.64
Ending balance | $ / shares	$ 45.76

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Stock And Unit-Based Compensation - Summary of Valuation Of Stock Options (Detail) - OAK Street Health Inc and Affiliates [Member] - Black Sholes [Member]	6 Months Ended
	Jun. 30, 2021 $ / shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Risk-free interest rate	0.80%
Volatility	50.00%
Expected term to expiration (years)	6 years 3 months
Expected dividend yield	0.00%
Estimated fair value	$ 28.70

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Variable Interest Entities - Summary of VIE Assets and Liabilities and Performance for the Physician Groups (Detail) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Variable Interest Entity [Line Items]
Total assets	$ 1,726.0		$ 1,726.0		$ 781.0
Total liabilities	1,505.2		1,505.2		357.8
Total revenues	353.1	$ 214.4	649.8	$ 416.2
Cost of providing patient care in relation to revenue waived			387.6	220.6
Total operating expenses	452.4	238.8	812.9	453.6
Variable Interest Entity, Primary Beneficiary [Member]
Variable Interest Entity [Line Items]
Total assets	448.9		448.9		286.1
Total liabilities	420.4		420.4		$ 332.1
Total revenues	350.5	210.3	644.9	408.8
Total operating expenses	317.5	168.9	549.3	315.5
Variable Interest Entity, Primary Beneficiary [Member] | Medical Claims Expense [Member]
Variable Interest Entity [Line Items]
Cost of providing patient care in relation to revenue waived	283.0	154.7	481.9	286.0
Variable Interest Entity, Primary Beneficiary [Member] | Cost of Care, Excluding Depreciation and Amortization [Member]
Variable Interest Entity [Line Items]
Cost of providing patient care in relation to revenue waived	$ 34.5	$ 14.2	$ 67.4	$ 29.5

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Related Parties - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020	Dec. 31, 2019
Related Party Transaction [Line Items]
Related party transactions, medical claims expenses	$ 0.1	$ 0.1	$ 0.1	$ 0.2
OAK Street Health Inc and Affiliates [Member]
Related Party Transaction [Line Items]
Liability for unpaid claims	357.4	235.8	$ 357.4	235.8	$ 262.1	$ 170.6
Humana [Member]
Related Party Transaction [Line Items]
Percentage Of Common Stock Hold By Related Parties			5.00%
Humana [Member] | OAK Street Health Inc and Affiliates [Member]
Related Party Transaction [Line Items]
Liability for unpaid claims	$ 96.6		$ 96.6		$ 78.5
Corporate Joint Venture [Member] | OAK Street Health Inc and Affiliates [Member]
Related Party Transaction [Line Items]
Equity method investment ownership percentage					49.90%
Revenue from related parties		2.5		4.8
Due from related parties					$ 10.0
Related party transactions, medical claims expenses		$ 2.9		$ 4.5
Liability for unpaid claims					$ 11.1

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Related Parties - Schedule of Related Party Transactions (Detail) - USD ($) $ in Millions		Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
Assets:
Operating lease right-of-use assets		$ 0.0
Liabilities:
Short-term operating lease liability	[1]	11.0
Operating lease liabilities, noncurrent		135.4
Deferred rent			$ 13.5
OAK Street Health Inc and Affiliates [Member]
Assets:
Other patient service receivables		0.5	7.6
Capitated accounts receivables		383.7	248.9
Operating lease right-of-use assets		127.4
Liabilities:
Liability for unpaid claims		357.4	262.1	$ 235.8	$ 170.6
Other liabilities		25.5	12.6
Short-term contract liability		5.0	4.3
Operating lease liabilities, noncurrent		135.4
Deferred rent			13.5
Other long-term liabilities:		32.6	28.8
Long-term contract liability		18.0	12.8
Equity:
Additional paid-in capital		935.0	971.8
OAK Street Health Inc and Affiliates [Member] | Humana [Member]
Assets:
Other patient service receivables		0.1	0.0
Capitated accounts receivables		109.8	65.7
Operating lease right-of-use assets		49.8
Liabilities:
Liability for unpaid claims		96.6	78.5
Short-term license fees		4.2	0.6
Short-term contract liability		4.7	4.0
Short-term operating lease liability		4.8
Operating lease liabilities, noncurrent		46.3
Deferred rent			0.8
Long-term license fees		10.3	7.3
Long-term contract liability		18.0	12.8
Equity:
Additional paid-in capital		$ 50.0	$ 50.0

[1] Included in other liabilities on the consolidated balance sheet

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Related Parties - Schedule of Related Party Transactions (Detail 1) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Related Party Transaction [Line Items]
Performance obligations revenue recognised	$ 353.1	$ 214.4	$ 649.8	$ 416.2
Expenses:
Mediclaim expenses			387.6	220.6
Humana [Member]
Expenses:
Mediclaim expenses	105.7	64.0	178.7	123.8
Cost of care:
License fee expense	0.6	0.7	1.3	1.3
Rent expense	1.7	0.5	3.0	1.1
Capitated Revenue [Member]
Related Party Transaction [Line Items]
Performance obligations revenue recognised	346.7	208.0	637.9	404.6
Capitated Revenue [Member] | Humana [Member]
Related Party Transaction [Line Items]
Performance obligations revenue recognised	127.1	97.4	248.5	193.9
Other Patient Service Revenue [Member]
Related Party Transaction [Line Items]
Performance obligations revenue recognised	6.4	6.4	11.9	11.6
Care Coordination Revenue Earned [Member] | Humana [Member]
Related Party Transaction [Line Items]
Performance obligations revenue recognised	1.2	0.7	2.3	1.4
Fee For Service Revenue [Member] | Humana [Member]
Related Party Transaction [Line Items]
Performance obligations revenue recognised	$ 0.3	$ 0.1	$ 0.4	$ 0.2

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Net Loss Per Share - Summary of Basic and Diluted Net Loss Per Common Unit (Detail) - OAK Street Health Inc and Affiliates [Member] - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Numerator:
Net loss	$ (100.3)		$ (164.3)
Less: Net loss attributable to non-controlling interests	(2.3)	$ (0.1)	(2.9)	$ (0.4)
Net loss attributable to Oak Street Health, Inc.	$ (98.0)	$ (26.7)	$ (161.4)	$ (41.8)
Denominator:
Weighted average common stock outstanding - basic and diluted	221,168,630		221,595,670
Net loss per share – basic and diluted	$ (0.44)		$ (0.73)

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Net Loss Per Share - Summary of Potential Common Shares Outstanding from the Computation of Diluted Net Loss Per Share/Unit (Detail) - OAK Street Health Inc and Affiliates [Member]	6 Months Ended
	Jun. 30, 2021 shares
Total	45,051,540
Stock Options [Member]
Stock options	15,040,385
Employee Stock Purchase Plan [Member]
Employee stock purchase plan	62,575
Convertible Senior Notes [Member]
Senior Convertible Notes	11,622,176	[1]
Restricted Stock Units (RSUs)
RSUs	372,636
Restricted Stock Awards R S A
RSAs	17,953,768

[1] The Company entered into capped call transactions to mitigate the impact of potential economic dilution to our common stock upon any conversion of our Convertible Senior Notes. The capped call transactions are expected to offset the potential dilution to the Company’s common stock upon any conversion of the Convertible Senior Notes up to a cap price of $138.8750 per share. See Note 10 for further details on the capped call transactions.

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Net Loss Per Share - Summary of Potential Common Shares Outstanding from the Computation of Diluted Net Loss Per Share/Unit (Parenthetical) (Detail)	6 Months Ended
	Jun. 30, 2021 $ / shares
Earnings Per Share [Abstract]
Conversion price cap initially equa	$ 138.8750