943061--2/27/2007--US_ONCOLOGY

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{cost, contract, operation}

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Risks Relating to Our Industry Continued efforts by commercial payers to reduce reimbursement levels, change reimbursement methodologies or control the way in which services are provided could adversely affect us. Changes in Medicare reimbursement may continue to adversely affect our results of operations. Continued review of pharmaceutical companies and their pricing and marketing practices could result in lowered reimbursement for pharmaceuticals and adversely affect us. The new reimbursement methodology under Medicare could make it more difficult for us to obtain favorable pricing from pharmaceutical companies. We conduct business in a heavily regulated industry, and changes in regulations or violations of regulations may directly or indirectly, reduce our revenues and harm our business. We face the risk of governmental investigation and qui tam litigation relating to regulations governing billing for medical services. We operate in a highly competitive industry. Risks Relating to Our Business Most of our revenues come from pharmaceuticals, and an adverse impact on the way in which pharmaceuticals are reimbursed or purchased by us would have an adverse impact on our business. We derive a substantial portion of our revenue and profitability from the utilization of pharmaceuticals manufactured and sold by a very limited number of suppliers and any termination or modification of relations with those suppliers could have a material adverse impact on our business. If our affiliated practices terminate their agreements with us, we could be seriously harmed. If a significant number of physicians leave our affiliated practices, we could be seriously harmed. We rely on the ability of our affiliated practices to grow and expand. Our affiliated practices may be unsuccessful in obtaining favorable contracts with third-party payers, which could result in lower operating margins. We may encounter difficulties in managing our network of affiliated practices. Loss of revenues or a decrease in income of our affiliated practices, including as a result of cost containment efforts by third-party payers, could adversely affect our results of operations. The development or operation of cancer centers could cause us to incur unexpected costs, and our existing or future centers may not be profitable. Insourcing of our oncology pharmacy distribution business is subject to daily operational risk and requires significant investment in capital. Our centralized business operations, particularly our distribution operation, may be adversely affected by business interruptions resulting from events that are beyond our control. Our success depends on our ability to attract and retain highly qualified technical staff and other key personnel, and we may not be able to hire enough qualified personnel to meet our hiring needs. Our failure to remain technologically competitive in a declining payment environment for imaging and radiation services could adversely affect our business. Our working capital could be impacted by delays in reimbursement for services. Our services could give rise to liability to clinical trial participants and the parties with whom we contract. We could be subject to malpractice claims and other harmful lawsuits not covered by insurance. Under OPS, our agreements with affiliated practices have shorter terms than our comprehensive services agreements, and we have less input with respect to the business operations of the practices. Risks Relating to our Capitalization Our substantial indebtedness could adversely affect our financial condition and restrict our current and future operations. To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. The terms of our senior secured credit facility and the indentures governing other indebtedness may restrict our current and future operations, particularly our ability to respond to changes or to take certain actions. We may not be able to fulfill our repurchase obligations in the event of a change of control. Our principal stockholder s interests may conflict with the interests of other stakeholders in the Company. We are required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on our cost of financing or ability to obtain financing.

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943061--2/27/2007--US_ONCOLOGY_INC