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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: 001-39203
1LIFE HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
Delaware76-0707204
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
One Embarcadero Center, Suite 1900
San Francisco, CA 94111
(Address of principal executive offices and zip code)

(415) 814-0927
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading
Symbol(s)
 Name of each exchange on which registered
Common Stock, $0.001 par value ONEM The Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer   Accelerated filer 
    
Non-accelerated filer   Smaller reporting company 
       
  Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  ☒
As of July 26, 2021, the registrant had 137,802,443 shares of common stock, $0.001 par value per share, outstanding. 





Table of Contents
 
  Page
PART I. 
Item 1.
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
   
PART II. 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 
Where You Can Find More Information
Investors and others should note that we announce material financial and other information using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We also post supplemental materials on the “Events” section of our investor relations website at investor.onemedical.com. Except as specifically noted herein, information on or accessible through our website is not, and will not be deemed to be, a part of this Quarterly Report on Form 10-Q or incorporated by reference into any other filings we may make with the U.S. Securities and Exchange Commission (the “SEC”).
We also use our Facebook, Twitter and LinkedIn accounts as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these accounts, in addition to following our press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this Quarterly Report on Form 10-Q. These channels may be updated from time to time on our investor relations website.
i


PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
1LIFE HEALTHCARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value amounts)
(unaudited)
June 30, 2021December 31, 2020
Assets  
Current assets:  
Cash and cash equivalents$503,238 $112,975 
Short-term marketable securities150,559 570,023 
Accounts receivable, net55,982 67,895 
Inventories3,950 7,113 
Prepaid expenses and other current assets43,025 16,693 
Total current assets756,754 774,699 
Restricted cash1,895 1,911 
Property and equipment, net144,770 126,037 
Right-of-use assets165,653 138,840 
Goodwill26,866 21,301 
Deferred income taxes2,656 2,656 
Other assets29,047 5,546 
Total assets$1,127,641 $1,070,990 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$12,462 $12,654 
Accrued expenses56,037 46,527 
Deferred revenue, current43,605 35,966 
Operating lease liabilities, current20,656 17,418 
Other current liabilities21,988 4,861 
Total current liabilities154,748 117,426 
Operating lease liabilities, non-current181,952 153,614 
Convertible senior notes308,907 241,233 
Deferred revenue, non-current6,750 7,624 
Other non-current liabilities2,840 2,618 
Total liabilities655,197 522,515 
Commitments and contingencies (Note 13)
Stockholders' Equity:
Common stock, $0.001 par value, 1,000,000 and 1,000,000 shares authorized as of June 30, 2021 and December 31, 2020, respectively; 137,774 and 134,472 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively
138 134 
Additional paid-in capital916,460 918,118 
Accumulated deficit(444,162)(369,785)
Accumulated other comprehensive income8 8 
Total stockholders' equity472,444 548,475 
Total liabilities and stockholders' equity$1,127,641 $1,070,990 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
1


1LIFE HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(unaudited)
 
Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net revenue$120,416 $78,000 $241,768 $156,756 
Operating expenses:
Cost of care, exclusive of depreciation and amortization shown separately below67,922 53,450 138,014 104,999 
Sales and marketing10,570 9,777 23,259 20,933 
General and administrative77,196 38,311 141,541 78,177 
Depreciation and amortization7,292 5,175 13,899 10,388 
Total operating expenses162,980 106,713 316,713 214,497 
Loss from operations(42,564)(28,713)(74,945)(57,741)
Other income (expense), net:
Interest income79 366 184 1,400 
Interest expense(2,842)(1,976)(5,685)(2,029)
Change in fair value of redeemable convertible preferred stock warrant liability   (6,560)
Total other expense, net(2,763)(1,610)(5,501)(7,189)
Loss before income taxes(45,327)(30,323)(80,446)(64,930)
Provision for (benefit from) income taxes(4,040)(22)159 (72)
Net loss(41,287)(30,301)(80,605)(64,858)
Less: Net loss attributable to noncontrolling interest   (704)
Net loss attributable to 1Life Healthcare, Inc. stockholders$(41,287)$(30,301)$(80,605)$(64,154)
Net loss per share attributable to 1Life Healthcare, Inc.  stockholders — basic and diluted$(0.30)$(0.24)$(0.59)$(0.61)
Weighted average common shares outstanding — basic and diluted136,788 126,150 137,045 105,517 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
2


1LIFE HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in thousands)
(unaudited)
 
Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net loss$(41,287)$(30,301)$(80,605)$(64,858)
Other comprehensive loss:
Net unrealized loss on short-term marketable securities(12)(51) (7)
Comprehensive loss(41,299)(30,352)(80,605)(64,865)
Less: Comprehensive loss attributable to noncontrolling interest   (704)
Comprehensive loss attributable to 1Life Healthcare, Inc. stockholders$(41,299)$(30,352)$(80,605)$(64,161)
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

3


1LIFE HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
(Amounts in thousands)
(unaudited)
 
 Redeemable Convertible Preferred StockCommon StockAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity (Deficit) Attributable to 1Life Healthcare, Inc. StockholdersNoncontrolling
Interest
Total Stockholders' Equity (Deficit)
 SharesAmountSharesAmount
Balances at December 31, 2020— $— 134,472 $134 $918,118 $(369,785)$8 $548,475 $— $548,475 
Impact of adoption of ASU 2020-06(73,393)6,656 (66,737)(66,737)
Impact of adoption of ASC 326(428)(428)(428)
Exercise of stock options2,584 3 13,476 13,479 13,479 
Issuance of common stock for settlement of RSUs241 — — 
Stock-based compensation expense26,328 26,328 26,328 
Net unrealized gain on short-term marketable securities12 12 12 
Net loss(39,318)(39,318)— (39,318)
Balances at March 31, 2021— $— 137,297 $137 $884,529 $(402,875)$20 $481,811 $— $481,811 
Exercise of stock options353 1 2,627 2,628 2,628 
Issuance of common stock under the employee stock purchase plan107 2,972 2,972 2,972 
Issuance of common stock for settlement of RSUs17 — — 
Stock-based compensation expense26,332 26,332 26,332 
Net unrealized gain on short-term marketable securities(12)(12)(12)
Net loss(41,287)(41,287)(41,287)
Balance at June 30, 2021— $— 137,774 $138 $916,460 $(444,162)$8 $472,444 $— $472,444 
The accompanying notes are an integral part of these condensed consolidated financial statements.

4



1LIFE HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
(Amounts in thousands)
(unaudited)
Redeemable Convertible Preferred StockCommon StockAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity (Deficit) Attributable to 1Life Healthcare, Inc. StockholdersNoncontrolling InterestTotal Stockholders' Equity (Deficit)
SharesAmountSharesAmount
Balances at December 31, 201986,252 $402,488 18,952 $19 $93,945 $(281,068)$38 $(187,066)$3,035 $(184,031)
Exercise of redeemable convertible preferred stock warrant5 76   
Conversion of redeemable convertible preferred stock into common stock upon closing of initial public offering(86,257)(402,564)86,257 86 402,478 402,564 402,564 
Issuance of common stock upon closing of initial public offering, net of issuance costs and underwriting fees of $23,631
20,125 20 258,099 258,119 258,119 
Fair value adjustment to redeemable convertible preferred stock warrants upon conversion into common stock warrants13,740 13,740 13,740 
Exercise of stock options294 — 1,534 1,534 1,534 
Exercise of common stock warrants11 — 73 73 73 
Cashless exercise of common stock warrants464 1 — 1 1 
Stock-based compensation expense10,325 10,325 10,325 
Net unrealized gain on short-term marketable securities44 44 44 
Net loss(33,853)(33,853)(704)(34,557)
Balances at March 31, 2020 $ 126,103 $126 $780,194 $(314,921)$82 $465,481 $2,331 $467,812 
Reimbursed secondary offering issuance costs784 784 784 
Exercise of stock options103 562 562 562 
Stock-based compensation expense8,363 8,363 8,363 
Net unrealized gain on short-term marketable securities(51)(51)(51)
Equity component of convertible senior notes, net of issuance costs of $2,243
73,370 73,370 73,370 
VIE deconsolidation (2,331)(2,331)
Net loss(30,301)(30,301)(30,301)
Balances at June 30, 2020 $ 126,206 $126 $863,273 $(345,222)$31 $518,208 $ $518,208 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5


1LIFE HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited) 
Six Months Ended June 30,
 20212020
Cash flows from operating activities:  
Net loss$(80,605)$(64,858)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Provision for bad debts105 213 
Depreciation and amortization13,899 10,388 
Amortization of debt discount and issuance costs937 1,135 
Accretion of discounts and amortization of premiums on short-term investments, net483 (520)
Change in fair value of redeemable convertible preferred stock warrant liability 6,560 
Reduction of operating lease right-of-use assets8,609 6,575 
Stock-based compensation52,660 18,688 
Other non-cash items400 (10)
Changes in operating assets and liabilities:
Accounts receivable, net11,380 (13,591)
Inventories3,216 93 
Prepaid expenses and other current assets(21,261)1,118 
Other assets110 (250)
Accounts payable1,234 (2,110)
Accrued expenses6,772 12,893 
Deferred revenue6,765 16,051 
Operating lease liabilities(8,761)(5,132)
Other liabilities17,128 2,652 
Net cash provided by (used in) operating activities13,071 (10,105)
Cash flows from investing activities:
Purchases of property and equipment(31,172)(39,554)
Purchases of short-term marketable securities(79,984)(367,367)
Proceeds from sales and maturities of short-term marketable securities498,977 123,314 
Acquisitions of businesses(9,695) 
Issuance of note receivable(20,000) 
VIE deconsolidation (810)
Net cash provided by (used in) investing activities358,126 (284,417)
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes 316,250 
Payment of convertible senior notes issuance costs (8,756)
Proceeds from initial public offering 281,750 
Payment of underwriting discount and commissions, and offering costs (21,322)
Proceeds from the exercise of stock options16,107 2,096 
Proceeds from employee stock purchase plan2,972  
Proceeds from the exercise of redeemable convertible preferred and common stock warrants 110 
Repayment of notes payable (2,200)
Payment of principal portion of finance lease liability(29)(29)
Net cash provided by financing activities19,050 567,899 
Net increase in cash, cash equivalents and restricted cash390,247 273,377 
Cash, cash equivalents and restricted cash at beginning of period115,005 29,329 
Cash, cash equivalents and restricted cash at end of period$505,252 $302,706 
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses$5,883 $3,620 
Offering costs included in accounts payable and accrued expenses$ $625 
Reimbursement of secondary offering costs in prepaid expenses and other current assets$ $784 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
6


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(unaudited)

1.Nature of the Business and Basis of Presentation
1Life Healthcare, Inc. (“1Life”) was incorporated in Delaware on July 25, 2002. 1Life’s headquarters are located in San Francisco, California. 1Life has developed a modernized healthcare membership model based on direct consumer enrollment as well as employer sponsorship. 1Life is also an administrative and managerial services company that provides services pursuant to contracts with physician-owned professional corporations (“PCs”) or “One Medical Entities” that provide medical services in-office and virtually. 1Life and the One Medical Entities are collectively referred to herein as the “Company” and operate under the brand name One Medical.
Basis of Presentation
The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), which include the accounts of 1Life and variable interest entities (“VIE”) in which 1Life has an interest and is the primary beneficiary. See Note 3, “Variable Interest Entities”. Pursuant to these rules and regulations, the Company has condensed or omitted certain information and footnote disclosures it normally includes in its annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated in consolidation. The noncontrolling interest attributable to the Company’s variable interest entities are presented as a separate component of equity in the condensed consolidated balance sheets. In management’s opinion, the Company has made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly state its condensed consolidated financial position, results of operations, comprehensive loss and cash flows. The Company’s interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed with the SEC on March 17, 2021 (the “Form 10-K”).
Use of Estimates
The preparation of condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP and regulations of the SEC requires management to make estimates and assumptions that affect the amount reported in the condensed consolidated financial statements and accompanying notes. Estimates include, but are not limited to, revenue recognition, determination of useful lives for property and equipment, intangible assets including goodwill, capitalized internal-use software, allowance for doubtful accounts, self-insurance reserves, valuation of common stock, stock options valuations, convertible senior notes fair value, contingent liabilities and income taxes. Actual results could differ materially from those estimates.
Due to the COVID-19 global pandemic, the global economy and financial markets have been disrupted and there continues to be a significant amount of uncertainty about the length and severity of the consequences caused by the pandemic. The Company has considered information available to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or an adjustment to the carrying value of its assets or liabilities. The accounting estimates and other matters assessed include, but were not limited to, revenue recognition, allowance for doubtful accounts and goodwill and other long-lived assets. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates.
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020. Intended to provide economic relief to those impacted by the COVID-19 pandemic, the CARES Act includes various tax and lending provisions, among others. Under the CARES Act, the Company received an income grant from the Provider Relief Fund administered by the Department of Health and Human Services (“HHS”) during the six months ended June 30, 2021. See Note 5, “Revenue Recognition”.
Cash, Cash Equivalents and Restricted Cash
The Company considers all short-term, highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash deposits are all in financial institutions in the United States. Cash and cash equivalents consisted of cash on deposit, investments in money market funds and commercial paper. Restricted cash
7


represents cash held under letters of credit for various leases. The expected duration of restrictions on the Company’s restricted cash generally ranges from 1 to 9 years.
The reconciliation of cash, cash equivalents and restricted cash reported within the applicable balance sheet line items that sum to the total of the same such amount shown in the condensed consolidated statements of cash flows is as follows:
 June 30,December 31,June 30,December 31,
 2021202020202019
Cash and cash equivalents$503,238 $112,975 $300,675 $27,390 
Restricted cash, current (included in prepaid expenses and other current assets)119 119 17 17 
Restricted cash, non-current1,895 1,911 2,014 1,922 
Total cash, cash equivalents, and restricted cash$505,252 $115,005 $302,706 $29,329 
Concentration of Credit Risk and Significant Customers
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents, marketable securities and accounts receivable. The Company’s cash balances with individual banking institutions might be in excess of federally insured limits. Cash equivalents are invested in highly rated money market funds and commercial paper. The Company’s marketable securities are invested in U.S. Treasury obligations, U.S. government agency securities, foreign government bonds and commercial paper. The Company is not exposed to any significant concentrations of credit risk from these financial instruments. The Company has not experienced any losses on its deposits of cash, cash equivalents or marketable securities. The Company grants unsecured credit to patients, most of whom reside in the service area of the One Medical facilities and are largely insured under third-party payer agreements. The Company’s concentration of credit risk is limited by the diversity, geography and number of patients and payers.
The table below presents the customers that individually represented 10% or more of the Company’s accounts receivable, net balance as of June 30, 2021 and December 31, 2020. 
 June 30,December 31,
 20212020
Customer A13 %*
Customer E15 %12 %
Customer F16 %24 %
Customer H14 %16 %
* Represents percentages below 10% of the Company’s accounts receivable in the period.
The table below presents the customers that individually represented 10% or more of the Company’s net revenue for the three and six months ended June 30, 2021 and 2020.
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Customer A12 %*12 %11 %
Customer E*11 %*11 %
Customer F12 %12 %12 %12 %
* Represents percentages below 10% of the Company’s net revenue in the period.
2.Summary of Significant Accounting Policies
Other than items discussed under Recently Adopted Pronouncements as of June 30, 2021, there have been no material changes to the Company’s significant accounting policies as discussed in Note 2 “Summary of Significant Accounting Policies” in Item 15 of its Form 10-K for the fiscal year ended December 31, 2020.
8


Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “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. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The Company will cease to be an emerging growth company, as defined in the JOBS Act, at the end of this fiscal year ending December 31, 2021.
Recently Adopted Pronouncements as of June 30, 2021
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by removing certain separation models in Subtopic 470-20, Debt—Debt with Conversion and Other Options, for convertible instruments and also increases information transparency by making disclosure amendments. The standard is effective for private companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.
The Company early adopted this standard on January 1, 2021 on a modified retrospective basis. Under previous GAAP, instruments that may be partially settled in cash were in the scope of the “cash conversion” model, which required conversion features to be separately reported in equity. Upon the adoption of ASU 2020-06, the cash conversion model was eliminated and the Company no longer separates its convertible senior notes (“the 2025 Notes”) into liability and equity components and instead accounts for the 2025 Notes as a single liability instrument. As a result, there is no longer a debt discount or subsequent amortization to be recognized as interest expense. Further, ASU 2020-06 requires the use of the if-converted method for diluted earnings per share calculation, and no longer allows the use of the treasury stock method for instruments with flexible settlement arrangements. Under the previous treasury stock method, only the excess of the average stock price of the Company’s common stock for the reporting period over the conversion price was used in determining the impact to the diluted earnings per share denominator. Under the current if-converted method, all underlying shares shall be included in the denominator regardless of the average stock price for the reporting period, in addition to adding back to the numerator the related interest expense from the stated coupon and the amortization of issuance costs, if dilutive.
The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. Accordingly, the cumulative-effect adjustment to the opening balance of accumulated deficit as of January 1, 2021 was as follows:
December 31, 2020
As Reported
Effect of the Adoption of ASU 2020-06January 1, 2021
As Adjusted
Liabilities
   Convertible senior notes $241,233 $66,737 $307,970 
Stockholders' Equity
   Additional paid-in capital918,118 (73,393)844,725 
   Accumulated deficit(369,785)6,656 (363,129)
The impact of adoption on the condensed consolidated statements of operations for the three and six months ended June 30, 2021 was primarily a reduction of non-cash interest expense of $3,239 and $6,408, respectively. The reduction in interest expense decreased the net loss attributable to common stockholders and decreased the basic net loss per share. The required use of the if-converted method for earnings per share does not impact the diluted net loss per share as long as the Company is in a net loss position. The adoption had no impact on the condensed consolidated statement of cash flows.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and also issued subsequent amendments to the initial guidance (collectively, Topic 326). Topic 326 replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial
9


asset measured at amortized cost to be presented at the net amount expected to be collected. Upon adoption of the standard, the Company regularly reviews the adequacy of the allowance for credit losses based on a combination of factors, including historical losses adjusted for current market conditions, the Company's customers' financial condition, delinquency trends, aging behaviors of receivables and credit and liquidity indicators for industry groups, and future market and economic conditions. For available-for-sale debt securities with unrealized losses, the standard limits the amount of credit losses to be recognized to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases. The Company early adopted the standard on January 1, 2021 using a modified retrospective approach with no material impact to the condensed consolidated financial statements. The adoption of the standard did not significantly change the Company's approach to the valuation of trade receivables, available-for-sale debt securities or other note receivables.
In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use-software. The Company adopted the standard on January 1, 2021 on a prospective basis. The adoption did not have a material impact on the Company’s condensed consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted as of June 30, 2021
There have been no recent accounting pronouncements or changes in accounting pronouncements that are of significance or potential significance to the Company as of June 30, 2021.
3.Variable Interest Entities
1Life’s agreements with the PCs generally consist of both Administrative Services Agreements (“ASAs”), which provide for various administrative and management services to be provided by 1Life to the PCs, and Succession Agreements, which provide for transition of ownership of the PCs under certain conditions.
The ASAs typically provide that the term of the arrangements is ten years with automatic renewal for successive one-year terms, subject to termination by 1Life or the PC in certain specified circumstances. The outstanding voting equity instruments of the PCs are owned by nominee shareholders appointed by 1Life (or the PC in one instance) under the terms of the Succession Agreements or other shareholders who are also subject to the terms of the Succession Agreements. 1Life has the right to receive income as an ongoing administrative fee in an amount that represents the fair value of services rendered and has provided all financial support through loans to the PCs. 1Life has exclusive responsibility for the provision of all nonmedical services including facilities, technology and intellectual property required for the day-to-day operation and management of each of the PCs, and makes recommendations to the PC in establishing the guidelines for the employment and compensation of the physicians and other employees of the PCs. In addition, the agreements provide that 1Life has the right to designate a person(s) to purchase the stock of the PCs for a nominal amount in the event of a succession event. Based upon the provisions of these agreements, 1Life determined that the PCs are variable interest entities due to its equity holder having insufficient capital at risk, and 1Life has a variable interest in the PCs.
The contractual arrangement to provide management services allows 1Life to direct the economic activities that most significantly affect the PC. Accordingly, 1Life is the primary beneficiary of the PCs and consolidates the PCs under the VIE model. Furthermore, as a direct result of nominal initial equity contributions by the physicians, the financial support 1Life provides to the PCs (e.g. loans) and the provisions of the nominee shareholder succession arrangements described above, the interests held by noncontrolling interest holders lack economic substance and do not provide them with the ability to participate in the residual profits or losses generated by the PCs. Therefore, all income and expenses recognized by the PCs are allocated to 1Life stockholders. The aggregate carrying value of the current assets and liabilities included in the condensed consolidated balance sheets for the PCs after elimination of intercompany transactions and balances were $50,843 and $42,792, respectively, as of June 30, 2021 and $48,182 and $31,462, respectively, as of December 31, 2020. The PCs did not have noncurrent assets or liabilities.
10


4.Fair Value Measurements and Investments
Fair Value Measurements
The following tables present information about the Company’s financial assets measured at fair value on a recurring basis:
 Fair Value Measurements as of June 30, 2021 Using:
 Level 1Level 2Level 3Total
Assets:    
Cash equivalents:
Money market fund$470,384 $ $ $470,384 
Short-term investments:
U.S. Treasury obligations60,563   60,563 
Foreign government bonds 5,055  5,055 
Commercial paper 84,941  84,941 
 Total financial assets$530,947 $89,996 $ $620,943 
 Fair Value Measurements as of December 31, 2020 Using:
 Level 1Level 2Level 3Total
Assets:    
Cash equivalents:
Money market fund$50,761 $ $ $50,761 
Commercial paper 19,999  19,999 
Short-term investments:
U.S. Treasury obligations416,158   416,158 
U.S. government agency securities20,000   20,000 
Commercial paper 133,865  133,865 
 Total financial assets$486,919 $153,864 $ $640,783 
During the three and six months ended June 30, 2021 and 2020, there were no transfers between Level 1, Level 2 and Level 3.
Valuation of Convertible Senior Notes
The Company has $316,250 aggregate principal amount outstanding of 3.0% convertible senior notes due in 2025 (the “2025 Notes”). Please refer to Note 9, “Convertible Senior Notes” for further details on the 2025 Notes.
The fair value of the 2025 Notes was $351,003 and $397,472 as of June 30, 2021 and December 31, 2020, respectively. The fair value was determined based on the closing trading price of the 2025 Notes as of the last day of trading for the period. The fair value of the 2025 Notes is primarily affected by the trading price of the Company's common stock and market interest rates. The fair value of the 2025 Notes is considered a Level 2 measurement as they are not actively traded.
11


Investments
At June 30, 2021 and December 31, 2020, the Company’s cash equivalents and short-term marketable securities were as follows:
 June 30, 2021
Amortized
cost
Gross
unrealized
gains (losses)
Fair value
Cash equivalents:
Money market fund$470,384 $— $470,384 
Short-term marketable securities:
U.S. Treasury obligations60,553 10 60,563 
Foreign government bonds5,056 (1)5,055 
Commercial paper84,941  84,941 
Total short-term marketable securities150,550 9 150,559 
Total cash equivalents and short-term marketable securities$620,934 $9 $620,943 
 December 31, 2020
Amortized
cost
Gross
unrealized
gains (losses)
Fair value
Cash equivalents:
Money market fund$50,761 $— $50,761 
Commercial paper19,999 — 19,999 
Total cash equivalents70,760 — 70,760 
Short-term marketable securities:
U.S. Treasury obligations416,150 8 416,158 
U.S. government agency securities20,000  20,000 
Commercial paper133,865  133,865 
Total short-term marketable securities570,015 8 570,023 
Total cash equivalents and short-term marketable securities$640,775 $8 $640,783 
5.Revenue Recognition
The following table summarizes the Company’s net revenue by primary source:
Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net revenue:    
Net patient service revenue$43,416 $23,927 $87,878 $58,013 
Partnership revenue56,126 33,993 111,057 63,448 
Total net patient service and partnership revenue99,542 57,920 198,935 121,461 
Membership revenue20,874 17,680 41,070 32,895 
Grant income 2,400 1,763 2,400 
Net revenue$120,416 $78,000 $241,768 $156,756 
12


Net patient service revenue is primarily generated from commercial third-party payers with which the One Medical entities have established contractual billing arrangements. The following table summarizes net patient service revenue by source:
Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net patient service revenue:    
Commercial and government third-party payers$39,608 $20,985 $81,843 $50,876 
Patients, including self-pay, insurance co-pays and deductibles3,808 2,942 6,035 7,137 
Net patient service revenue$43,416 $23,927 $87,878 $58,013 
The CARES Act was enacted on March 27, 2020 to provide economic relief to those impacted by the COVID-19 pandemic. The CARES Act includes various tax and lending provisions, among others. Under the CARES Act, the Company received an income grant of $1,763 from the Provider Relief Fund administered by the Health and Human Services ("HHS") during the six months ended June 30, 2021. The Company received an income grant of $2,400 during the three and six months ended June 30, 2020. The Company did not receive any income grants from the HHS for the three months ended June 30, 2021. Management has concluded that the Company met conditions of the grant funds and has recognized it as Grant income for the six months ended June 30, 2021 and June 30, 2020, respectively.
During the three and six months ended June 30, 2021, the Company recognized revenue of $20,041 and $26,187 respectively, which was included in the beginning deferred revenue balances as of April 1, 2021 and January 1, 2021, respectively. During the three and six months ended June 30, 2020, the Company recognized revenue of $15,995 and $17,458, respectively, which was included in the beginning deferred revenue balances as of April 1, 2020 and January 1, 2020, respectively.
As of June 30, 2021, a total of $6,356 is included within deferred revenue related to variable consideration, of which $5,351 is classified as non-current as it will not be recognized within the next twelve months. The estimate of variable consideration is based on the Company’s assessment of historical, current, and forecasted performance.
As summarized in the table below, the Company recorded contract assets and deferred revenue as a result of timing differences between the Company’s performance and the customer’s payment.
 June 30,December 31,
 20212020
Balances from contracts with customers:  
Accounts receivable$55,982 $67,895 
Contract asset (included in prepaid expenses and other current assets)788 513 
Deferred revenue50,355 43,590 
The Company does not disclose the value of remaining performance obligations for (i) contracts with an original contract term of one year or less, (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice when that amount corresponds directly with the value of services performed, and (iii) variable consideration allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied distinct service that forms part of a single performance obligation. For those contracts that do not meet the above criteria, the Company’s remaining performance obligation as of June 30, 2021, is expected to be recognized as follows:
Less than
or equal to
12 months
Greater
than
12 months
Total
As of June 30, 2021$4,676