##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-Q


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
|          
|           |  | For the quarterly period ended September 30, 2005                                           
|          
|           |  | or                                                                                          
|          
|o          |  | 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 000-32837


United Surgical Partners International, Inc.


(Exact name of registrant as specified in its charter)


|                                                                                            |  |                                         
|------------------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                                    |  | 75-2749762                              
|(State or other jurisdiction of
    incorporation or organization)                          |  | (IRS Employer
    Identification Number)
|15305 Dallas Parkway, Suite 1600
    Addison, Texas(Address of principal executive offices) |  | 75001(Zip Code)                         

(972) 713-3500


(Registrants telephone number, including area code)


þ o


þ o


o þ












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UNITED SURGICAL PARTNERS INTERNATIONAL, INC. AND
SUBSIDIARIES


INDEX


|                                             |  |                       |  |                                                                                                                                            |  |   
|-------------------------------------------- |  | --------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------ |  | --
|PART I.                                      |  | Financial Information |  |                                                                                                                                           
|                                             |  | Item 1.               |  | Financial Statements                                                                                                                       |  | 2 
|                                             |  |                       |  | Consolidated Balance Sheets as of
    September 30, 2005 (unaudited) and December 31,
    2004                                             |  | 2 
|                                             |  |                       |  | Consolidated Statements of Income for the
    three months and nine months ended September 30, 2005 and
    2004 (unaudited)               |  | 3 
|                                             |  |                       |  | Consolidated Statements of Comprehensive
    Income for the three months and nine months ended
    September 30, 2005 and 2004 (unaudited) |  | 4 
|                                             |  |                       |  | Consolidated Statements of Cash Flows for
    the nine months ended September 30, 2005 and 2004
    (unaudited)                            |  | 5 
|                                             |  |                       |  | Notes to Consolidated Financial Statements
    (unaudited)                                                                                 |  | 6 
|                                             |  | Item 2.               |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                                                  |  | 19
|                                             |  | Item 3.               |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                                             |  | 29
|                                             |  | Item 4.               |  | Controls and Procedures                                                                                                                    |  | 30
|PART II.                                     |  | Other Information     |  |                                                                                                                                           
|                                             |  | Item 1.               |  | Legal Proceedings                                                                                                                          |  | 30
|                                             |  | Item 6.               |  | Exhibits and Reports on Form 8-K                                                                                                           |  | 31
|Signatures                                   |  | 32                   
|Certification of CEO Pursuant to Section 302
|Certification of CFO Pursuant to Section 302
|Certification of CEO Pursuant to Section 906
|Certification of CFO Pursuant to Section 906









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##### Table of Contents






PART I. FINANCIAL INFORMATION







|        |                     
|------- | --------------------
|ITEM 1. | Financial Statements

UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES





Consolidated Balance Sheets


|                                                                                                   |                                                                                                                                                             |                                            |         |         |                   |   |         |         |         | 
|-------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------- | ----------------- | - | ------- | ------- | ------- | 
|                                                                                                   |                                                                                                                                                             | September 30, 2005                         |         |         | December 31, 2004 |  
|                                                                                                   |                                                                                                                                                             |                                            |         |         |                   |  
|                                                                                                   |                                                                                                                                                             | (Unaudited)                                |         |         |                  
|                                                                                                   |                                                                                                                                                             | (In thousands, except per share amounts)   |        
|ASSETS                                                                                            
|Cash and cash equivalents                                                                          |                                                                                                                                                             | $                                          | 121,123 |         |                   | $ | 93,467  |        
|Patient receivables, net of allowance for doubtful accounts of
    $8,590 and $7,277, respectively |                                                                                                                                                             |                                            | 44,354  |         |                   |   | 43,591  |        
|Other receivables                                                                                  |                                                                                                                                                             |                                            | 10,400  |         |                   |   | 20,293  |        
|Inventories of supplies                                                                            |                                                                                                                                                             |                                            | 7,789   |         |                   |   | 7,188   |        
|Deferred tax asset, net                                                                            |                                                                                                                                                             |                                            | 11,396  |         |                   |   | 7,393   |        
|Prepaids and other current assets                                                                  |                                                                                                                                                             |                                            | 5,791   |         |                   |   | 7,035   |        
|                                                                                                   |                                                                                                                                                             |                                            |         |         |                   |  
|                                                                                                   |                                                                                                                                                             | Total current assets                       |         |         | 200,853           |   |         |         | 178,967 | 
|Property and equipment, net                                                                        |                                                                                                                                                             |                                            | 259,447 |         |                   |   | 265,889 |        
|Investments in affiliates                                                                          |                                                                                                                                                             |                                            | 96,630  |         |                   |   | 43,402  |        
|Intangible assets, net                                                                             |                                                                                                                                                             |                                            | 422,447 |         |                   |   | 402,355 |        
|Other assets                                                                                       |                                                                                                                                                             |                                            | 29,062  |         |                   |   | 31,691  |        
|                                                                                                   |                                                                                                                                                             |                                            |         |         |                   |  
|                                                                                                   |                                                                                                                                                             | Total assets                               |         | $       | 1,008,439         |   |         | $       | 922,304 | 
|                                                                                                   |                                                                                                                                                             |                                            |         |         |                   |  
|                                                                                                  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                              
|Accounts payable                                                                                   |                                                                                                                                                             | $                                          | 16,295  |         |                   | $ | 18,048  |        
|Accrued salaries and benefits                                                                      |                                                                                                                                                             |                                            | 21,429  |         |                   |   | 20,582  |        
|Due to affiliates                                                                                  |                                                                                                                                                             |                                            | 29,134  |         |                   |   | 12,805  |        
|Accrued interest                                                                                   |                                                                                                                                                             |                                            | 5,292   |         |                   |   | 1,856   |        
|Current portion of long-term debt                                                                  |                                                                                                                                                             |                                            | 18,343  |         |                   |   | 15,316  |        
|Other accrued expenses                                                                             |                                                                                                                                                             |                                            | 30,471  |         |                   |   | 23,182  |        
|                                                                                                   |                                                                                                                                                             |                                            |         |         |                   |  
|                                                                                                   |                                                                                                                                                             | Total current liabilities                  |         |         | 120,964           |   |         |         | 91,789  | 
|Long-term debt, less current portion                                                               |                                                                                                                                                             |                                            | 267,024 |         |                   |   | 273,169 |        
|Other long-term liabilities                                                                        |                                                                                                                                                             |                                            | 3,668   |         |                   |   | 2,624   |        
|Deferred tax liability, net                                                                        |                                                                                                                                                             |                                            | 36,514  |         |                   |   | 31,846  |        
|                                                                                                   |                                                                                                                                                             |                                            |         |         |                   |  
|                                                                                                   |                                                                                                                                                             | Total liabilities                          |         |         | 428,170           |   |         |         | 399,428 | 
|Minority interests                                                                                 |                                                                                                                                                             |                                            | 61,944  |         |                   |   | 48,267  |        
|Stockholders equity:                                                                              |                                                                                                                                                             |                                            |         |         |                   |   |         |        
|                                                                                                   | Common stock, $0.01 par value; 200,000 shares
    authorized; 44,253 and 42,990 shares issued at
    September 30, 2005 and December 31, 2004, respectively |                                            |         | 443     |                   |   |         | 430     |        
|                                                                                                   | Additional paid-in capital                                                                                                                                  |                                            |         | 373,603 |                   |   |         | 349,048 |        
|                                                                                                   | Treasury stock, at cost, 50 and 21 shares at
    September 30, 2005 and December 31, 2004, respectively                                                     |                                            |         | (1,107  | )                 |   |         | (320    | )      
|                                                                                                   | Deferred compensation                                                                                                                                       |                                            |         | (15,448 | )                 |   |         | (7,689  | )      
|                                                                                                   | Accumulated other comprehensive income, net of tax                                                                                                          |                                            |         | 7,092   |                   |   |         | 14,420  |        
|                                                                                                   | Retained earnings                                                                                                                                           |                                            |         | 153,742 |                   |   |         | 118,720 |        
|                                                                                                   |                                                                                                                                                             |                                            |         |         |                   |  
|                                                                                                   |                                                                                                                                                             | Total stockholders equity                 |         |         | 518,325           |   |         |         | 474,609 | 
|                                                                                                   |                                                                                                                                                             |                                            |         |         |                   |  
|                                                                                                   |                                                                                                                                                             | Total liabilities and stockholders equity |         | $       | 1,008,439         |   |         | $       | 922,304 | 
|                                                                                                   |                                                                                                                                                             |                                            |         |         |                   |  



2



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##### Table of Contents



UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES





Consolidated Statements of Income


|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |         |         |      |        |         |         |      | 
|-------------------------------------------------------- | --------------------------------------------------------- | ---------------------------------------------------- | ------ | ------- | ----------------- | ---- | ------ | ------ | ------ | ---- | ------- | ------- | ------- | ---- | ------ | ------- | ------- | ---- | 
|                                                         |                                                           | Three Months Ended                                   |        |         | Nine Months Ended |     
|                                                         |                                                           | September 30,                                        |        |         | September 30,     |     
|                                                         |                                                           |                                                      |        |         |                   |     
|                                                         |                                                           | 2005                                                 |        |         | 2004              |      |        | 2005   |        |      | 2004    |        
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|                                                         |                                                           | (Unaudited  in thousands, except per share amounts) |       
|Revenues:                                                |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |         |         |      |        |        
|                                                         | Net patient service revenue                               |                                                      | $      | 108,642 |                   |      | $      | 87,179 |        |      | $       | 329,351 |         |      | $      | 251,934 |        
|                                                         | Management and administrative services revenue            |                                                      |        | 8,519   |                   |      |        | 9,089  |        |      |         | 27,388  |         |      |        | 28,296  |        
|                                                         | Other revenue                                             |                                                      |        | 251     |                   |      |        | 289    |        |      |         | 706     |         |      |        | 665     |        
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|                                                         |                                                           | Total revenues                                       |        |         | 117,412           |      |        |        | 96,557 |      |         |         | 357,445 |      |        |         | 280,895 |     
|Equity in earnings of unconsolidated affiliates          |                                                           |                                                      | 5,747  |         |                   |      | 3,622  |        |        |      | 17,221  |         |         |      | 14,081 |        
|Operating expenses:                                      |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |         |         |      |        |        
|                                                         | Salaries, benefits, and other employee costs              |                                                      |        | 29,813  |                   |      |        | 25,304 |        |      |         | 91,249  |         |      |        | 71,973  |        
|                                                         | Medical services and supplies                             |                                                      |        | 21,633  |                   |      |        | 16,144 |        |      |         | 63,403  |         |      |        | 45,875  |        
|                                                         | Other operating expenses                                  |                                                      |        | 21,106  |                   |      |        | 18,292 |        |      |         | 64,771  |         |      |        | 52,477  |        
|                                                         | General and administrative expenses                       |                                                      |        | 7,486   |                   |      |        | 6,402  |        |      |         | 23,248  |         |      |        | 20,351  |        
|                                                         | Provision for doubtful accounts                           |                                                      |        | 2,611   |                   |      |        | 2,226  |        |      |         | 7,708   |         |      |        | 5,824   |        
|                                                         | Depreciation and amortization                             |                                                      |        | 7,504   |                   |      |        | 6,924  |        |      |         | 22,901  |         |      |        | 19,823  |        
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|                                                         |                                                           | Total operating expenses                             |        |         | 90,153            |      |        |        | 75,292 |      |         |         | 273,280 |      |        |         | 216,323 |     
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|Operating income                                         |                                                           |                                                      | 33,006 |         |                   |      | 24,887 |        |        |      | 101,386 |         |         |      | 78,653 |        
|                                                         | Interest income                                           |                                                      |        | 1,090   |                   |      |        | 278    |        |      |         | 2,881   |         |      |        | 662     |        
|                                                         | Interest expense                                          |                                                      |        | (6,642  | )                 |      |        | (6,927 | )      |      |         | (20,441 | )       |      |        | (20,169 | )      
|                                                         | Loss on early termination of credit facility              |                                                      |        |        |                   |      |        | (1,635 | )      |      |         |        |         |      |        | (1,635  | )      
|                                                         | Other                                                     |                                                      |        | 283     |                   |      |        | 175    |        |      |         | 536     |         |      |        | 205     |        
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|                                                         |                                                           | Total other expense, net                             |        |         | (5,269            | )    |        |        | (8,109 | )    |         |         | (17,024 | )    |        |         | (20,937 | )   
|Income before minority interests                         |                                                           |                                                      | 27,737 |         |                   |      | 16,778 |        |        |      | 84,362  |         |         |      | 57,716 |        
|                                                         | Minority interests in income of consolidated subsidiaries |                                                      |        | (9,571  | )                 |      |        | (6,495 | )      |      |         | (29,809 | )       |      |        | (21,556 | )      
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|Income from continuing operations before income taxes    |                                                           |                                                      | 18,166 |         |                   |      | 10,283 |        |        |      | 54,553  |         |         |      | 36,160 |        
|                                                         | Income tax expense                                        |                                                      |        | (6,490  | )                 |      |        | (3,548 | )      |      |         | (19,738 | )       |      |        | (13,003 | )      
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|Income from continuing operations                        |                                                           |                                                      | 11,676 |         |                   |      | 6,735  |        |        |      | 34,815  |         |         |      | 23,157 |        
|Discontinued operations, net of tax                      |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |         |         |      |        |        
|                                                         | Income (loss) from discontinued operations                |                                                      |        |        |                   |      |        | (14    | )      |      |         |        |         |      |        | 4,078   |        
|                                                         | Net gain on disposal of Spanish operations                |                                                      |        | 207     |                   |      |        | 50,263 |        |      |         | 207     |         |      |        | 50,263  |        
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|                                                         | Total earnings from discontinued operations               |                                                      |        | 207     |                   |      |        | 50,249 |        |      |         | 207     |         |      |        | 54,341  |        
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|Net income                                               |                                                           | $                                                    | 11,883 |         |                   | $    | 56,984 |        |        | $    | 35,022  |         |         | $    | 77,498 |        
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|Net income per share attributable to common stockholders |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |         |         |      |        |        
|                                                         | Basic:                                                    |                                                      |        |         |                   |      |        |        |        |      |         |         |         |      |        |         |        
|                                                         |                                                           | Continuing operations                                |        | $       | 0.27              |      |        | $      | 0.16   |      |         | $       | 0.81    |      |        | $       | 0.55    |     
|                                                         |                                                           | Discontinued operations                              |        |         |                  |      |        |        | 1.20   |      |         |         | 0.01    |      |        |         | 1.30    |     
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|                                                         |                                                           |                                                      | Total  |         | $                 | 0.27 |        |        | $      | 1.36 |         |         | $       | 0.82 |        |         | $       | 1.85 | 
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|                                                         | Diluted:                                                  |                                                      |        |         |                   |      |        |        |        |      |         |         |         |      |        |         |        
|                                                         |                                                           | Continuing operations                                |        | $       | 0.26              |      |        | $      | 0.15   |      |         | $       | 0.78    |      |        | $       | 0.53    |     
|                                                         |                                                           | Discontinued operations                              |        |         |                  |      |        |        | 1.15   |      |         |         |        |      |        |         | 1.24    |     
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|                                                         |                                                           |                                                      | Total  |         | $                 | 0.26 |        |        | $      | 1.30 |         |         | $       | 0.78 |        |         | $       | 1.77 | 
|                                                         |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |        
|Weighted average number of common shares                 |                                                           |                                                      |        |         |                   |      |        |        |        |      |         |         |         |      |        |        
|                                                         | Basic                                                     |                                                      |        | 43,221  |                   |      |        | 42,034 |        |      |         | 42,870  |         |      |        | 41,805  |        
|                                                         | Diluted                                                   |                                                      |        | 45,235  |                   |      |        | 43,993 |        |      |         | 44,879  |         |      |        | 43,886  |        



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##### Table of Contents



UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES





Consolidated Statements of Comprehensive Income


|                                                     |                                          |                            |        |        |                   |   |        |         |   |   |        |        |   |   |        |         |  
|---------------------------------------------------- | ---------------------------------------- | -------------------------- | ------ | ------ | ----------------- | - | ------ | ------- | - | - | ------ | ------ | - | - | ------ | ------- | -
|                                                     |                                          | Three Months Ended         |        |        | Nine Months Ended |  
|                                                     |                                          | September 30,              |        |        | September 30,     |  
|                                                     |                                          |                            |        |        |                   |  
|                                                     |                                          | 2005                       |        |        | 2004              |   |        | 2005    |   |   | 2004   |       
|                                                     |                                          |                            |        |        |                   |   |        |         |   |   |        |       
|                                                     |                                          | (Unaudited  in thousands) |       
|Net income                                           |                                          | $                          | 11,883 |        |                   | $ | 56,984 |         |   | $ | 35,022 |        |   | $ | 77,498 |        
|Other comprehensive income (loss), net of taxes:     |                                          |                            |        |        |                   |   |        |         |   |   |        |        |   |   |        |        
|                                                     | Foreign currency translation adjustments |                            |        | (1,198 | )                 |   |        | 591     |   |   |        | (7,328 | ) |   |        | (2,584  | )
|                                                     | Net unrealized gains on securities       |                            |        |       |                   |   |        | 27      |   |   |        |       |   |   |        | 70      |  
|Reclassifications due to sale of Spanish operations: |                                          |                            |        |        |                   |   |        |         |   |   |        |        |   |   |        |        
|                                                     | Foreign currency translation adjustments |                            |        |       |                   |   |        | (20,563 | ) |   |        |       |   |   |        | (20,563 | )
|                                                     | Net unrealized gains on securities       |                            |        |       |                   |   |        | (219    | ) |   |        |       |   |   |        | (219    | )
|                                                     |                                          |                            |        |        |                   |   |        |         |   |   |        |       
|                                                     | Other comprehensive loss                 |                            |        | (1,198 | )                 |   |        | (20,164 | ) |   |        | (7,328 | ) |   |        | (23,296 | )
|                                                     |                                          |                            |        |        |                   |   |        |         |   |   |        |       
|                                                     | Comprehensive income                     |                            | $      | 10,685 |                   |   | $      | 36,820  |   |   | $      | 27,694 |   |   | $      | 54,202  |  
|                                                     |                                          |                            |        |        |                   |   |        |         |   |   |        |       



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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES





Consolidated Statements of Cash Flows


|                                                 |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |        |         |         |         |        |         |  
|------------------------------------------------ | ------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ------------------------------------------------------ | ------- | ------ | ------- | ------- | ------- | ------ | ------- | -
|                                                 |                                                                                       | Nine Months Ended                                                                                                                        |                                                           
|                                                 |                                                                                       | September 30,                                                                                                                            |                                                           
|                                                 |                                                                                       |                                                                                                                                          |                                                           
|                                                 |                                                                                       | 2005                                                                                                                                     |                                                            |                                                        | 2004    |       
|                                                 |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |       
|                                                 |                                                                                       | (Unaudited                                                                                                                              |                                                           
|                                                 |                                                                                       | in thousands)                                                                                                                            |                                                           
|Cash flows from operating activities:            |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |        |         |        
|                                                 | Income from continuing operations                                                     |                                                                                                                                          | $                                                          | 34,815                                                 |         |        | $       | 23,157  |        
|                                                 | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                                                                                                          |                                                            |                                                        |         |        |         |         |        
|                                                 |                                                                                       | Provision for doubtful accounts                                                                                                          |                                                            |                                                        | 7,708   |        |         |         | 5,824   |       
|                                                 |                                                                                       | Depreciation and amortization                                                                                                            |                                                            |                                                        | 22,901  |        |         |         | 19,823  |       
|                                                 |                                                                                       | Amortization of debt issue costs and discount                                                                                            |                                                            |                                                        | 576     |        |         |         | 1,592   |       
|                                                 |                                                                                       | Deferred income tax expense                                                                                                              |                                                            |                                                        | 1,717   |        |         |         | 2,567   |       
|                                                 |                                                                                       | Loss on early termination of credit facility                                                                                             |                                                            |                                                        |        |        |         |         | 1,635   |       
|                                                 |                                                                                       | Equity in earnings of unconsolidated affiliates                                                                                          |                                                            |                                                        | (17,221 | )      |         |         | (14,081 | )     
|                                                 |                                                                                       | Minority interests in income of consolidated subsidiaries                                                                                |                                                            |                                                        | 29,809  |        |         |         | 21,556  |       
|                                                 |                                                                                       | Equity-based compensation                                                                                                                |                                                            |                                                        | 3,300   |        |         |         | 2,567   |       
|                                                 |                                                                                       | Increases (decreases) in cash from changes in operating
    assets and liabilities, net of effects from purchases of new
    businesses: |                                                            |                                                        |         |        |         |         |         |       
|                                                 |                                                                                       |                                                                                                                                          | Patient receivables                                        |                                                        |         | (8,032 | )       |         |         | (5,762 | )      
|                                                 |                                                                                       |                                                                                                                                          | Other receivables                                          |                                                        |         | 10,238 |         |         |         | 3,789  |        
|                                                 |                                                                                       |                                                                                                                                          | Inventories of supplies, prepaids and other current assets |                                                        |         | 1,031  |         |         |         | 1,078  |        
|                                                 |                                                                                       |                                                                                                                                          | Accounts payable and other current liabilities             |                                                        |         | 10,740 |         |         |         | 12,477 |        
|                                                 |                                                                                       |                                                                                                                                          | Long-term liabilities                                      |                                                        |         | 5,817  |         |         |         | 351    |        
|                                                 |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |       
|                                                 |                                                                                       |                                                                                                                                          |                                                            | Net cash provided by operating activities              |         |        | 103,399 |         |         |        | 76,573  |  
|                                                 |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |       
|Cash flows from investing activities:            |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |        |         |        
|                                                 | Purchases of new businesses and equity interests, net of cash
    received            |                                                                                                                                          |                                                            | (60,107                                                | )       |        |         | (40,735 | )      
|                                                 | Proceeds from sale of Spanish operations                                              |                                                                                                                                          |                                                            |                                                       |         |        |         | 163,205 |        
|                                                 | Purchases of property and equipment                                                   |                                                                                                                                          |                                                            | (21,459                                                | )       |        |         | (16,802 | )      
|                                                 | Increase in deposits and notes receivable                                             |                                                                                                                                          |                                                            | (3,498                                                 | )       |        |         | (1,926  | )      
|                                                 |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |       
|                                                 |                                                                                       |                                                                                                                                          |                                                            | Net cash by provided by (used in) investing activities |         |        | (85,064 | )       |         |        | 103,742 |  
|                                                 |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |       
|Cash flows from financing activities:            |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |        |         |        
|                                                 | Proceeds from long-term debt                                                          |                                                                                                                                          |                                                            | 10,332                                                 |         |        |         | 17,923  |        
|                                                 | Payments on long-term debt                                                            |                                                                                                                                          |                                                            | (12,849                                                | )       |        |         | (22,672 | )      
|                                                 | Proceeds from issuances of common stock                                               |                                                                                                                                          |                                                            | 9,593                                                  |         |        |         | 6,473   |        
|                                                 | Increase in cash held on behalf of unconsolidated affiliates                          |                                                                                                                                          |                                                            | 14,075                                                 |         |        |         |        |        
|                                                 | Distributions on investments in affiliates                                            |                                                                                                                                          |                                                            | (11,751                                                | )       |        |         | (7,533  | )      
|                                                 |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |       
|                                                 |                                                                                       |                                                                                                                                          |                                                            | Net cash provided by (used in) financing activities    |         |        | 9,400   |         |         |        | (5,809  | )
|                                                 |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |       
|Net cash provided by discontinued operations     |                                                                                       |                                                                                                                                          |                                                           |                                                        |         |        | 1,516   |        
|                                                 |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |       
|Effect of exchange rate changes on cash          |                                                                                       |                                                                                                                                          | (79                                                        | )                                                      |         |        | 232     |        
|                                                 |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |       
|Net increase in cash and cash equivalents        |                                                                                       |                                                                                                                                          | 27,656                                                     |                                                        |         |        | 176,254 |        
|Cash and cash equivalents at beginning of period |                                                                                       |                                                                                                                                          | 93,467                                                     |                                                        |         |        | 28,519  |        
|                                                 |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |       
|Cash and cash equivalents at end of period       |                                                                                       | $                                                                                                                                        | 121,123                                                    |                                                        |         | $      | 204,773 |        
|                                                 |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |       
|Supplemental information:                        |                                                                                       |                                                                                                                                          |                                                            |                                                        |         |        |         |        
|                                                 | Interest paid                                                                         |                                                                                                                                          | $                                                          | 16,788                                                 |         |        | $       | 18,190  |        
|                                                 | Income taxes paid                                                                     |                                                                                                                                          |                                                            | 13,450                                                 |         |        |         | 6,631   |        
|                                                 | Non-cash transactions:                                                                |                                                                                                                                          |                                                            |                                                        |         |        |         |         |        
|                                                 |                                                                                       | Assets acquired under capital lease obligations                                                                                          |                                                            | $                                                      | 2,138   |        |         | $       | 22,181  |       
|                                                 |                                                                                       | Issuance of common stock to employees                                                                                                    |                                                            |                                                        | 10,609  |        |         |         | 4,711   |       



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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES





Notes to Consolidated Financial Statements (Unaudited)




|    |                      
|--- | ---------------------
|(1) | Basis of Presentation



|    |                        
|--- | -----------------------
|(a) | Description of Business













|    |            
|--- | -----------
|(b) | Stock Split



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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)  (Continued)




|    |                          
|--- | -------------------------
|(c) | Equity-Based Compensation



Accounting for Stock Issued to Employees, Accounting for
Stock-Based Compensation, Accounting for Stock-Based
Compensation Transition and Disclosure,


|                           |                                                                                                                                 |                    |   |        |                   |  |   |        |   |  |      |        |   |  |   |        |  
|-------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | ------------------ | - | ------ | ----------------- |  | - | ------ | - |  | ---- | ------ | - |  | - | ------ | -
|                           |                                                                                                                                 | Three Months Ended |   |        | Nine Months Ended | 
|                           |                                                                                                                                 | September 30,      |   |        | September 30,     | 
|                           |                                                                                                                                 |                    |   |        |                   | 
|                           |                                                                                                                                 | 2005               |   |        | 2004              |  |   | 2005   |   |  | 2004 |       
|                           |                                                                                                                                 |                    |   |        |                   |  |   |        |   |  |      |       
|Net income:                |                                                                                                                                 |                    |   |        |                   |  |   |        |   |  |      |        |   |  |   |       
|                           | As reported                                                                                                                     |                    | $ | 11,883 |                   |  | $ | 56,984 |   |  | $    | 35,022 |   |  | $ | 77,498 |  
|                           | Add: Total stock-based employee compensation expense included in
    reported net income, net of taxes                          |                    |   | 696    |                   |  |   | 569    |   |  |      | 2,145  |   |  |   | 1,669  |  
|                           | Less: Total stock-based employee compensation expense determined
    under fair value based method for all awards, net of taxes |                    |   | (1,347 | )                 |  |   | (1,688 | ) |  |      | (4,928 | ) |  |   | (4,985 | )
|                           |                                                                                                                                 |                    |   |        |                   |  |   |        |   |  |      |       
|                           | Pro forma                                                                                                                       |                    | $ | 11,232 |                   |  | $ | 55,865 |   |  | $    | 32,239 |   |  | $ | 74,182 |  
|                           |                                                                                                                                 |                    |   |        |                   |  |   |        |   |  |      |       
|Basic earnings per share   |                                                                                                                                 |                    |   |        |                   |  |   |        |   |  |      |        |   |  |   |       
|                           | As reported                                                                                                                     |                    | $ | 0.27   |                   |  | $ | 1.36   |   |  | $    | 0.82   |   |  | $ | 1.85   |  
|                           | Pro forma                                                                                                                       |                    |   | 0.26   |                   |  |   | 1.33   |   |  |      | 0.75   |   |  |   | 1.77   |  
|Diluted earnings per share |                                                                                                                                 |                    |   |        |                   |  |   |        |   |  |      |        |   |  |   |       
|                           | As reported                                                                                                                     |                    | $ | 0.26   |                   |  | $ | 1.30   |   |  | $    | 0.78   |   |  | $ | 1.77   |  
|                           | Pro forma                                                                                                                       |                    |   | 0.25   |                   |  |   | 1.27   |   |  |      | 0.72   |   |  |   | 1.69   |  



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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)  (Continued)




Accounting for Equity
Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services.




|    |                                           
|--- | ------------------------------------------
|(2) | Acquisitions and Equity Method Investments







|                                                      |  |                    |         |  |                   |   |         |      |  |   |         |  |  |   |         | 
|----------------------------------------------------- |  | ------------------ | ------- |  | ----------------- | - | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                                      |  | Three Months Ended |         |  | Nine Months Ended |  
|                                                      |  | September 30,      |         |  | September 30,     |  
|                                                      |  |                    |         |  |                   |  
|                                                      |  | 2005               |         |  | 2004              |   |         | 2005 |  |   | 2004    | 
|                                                      |  |                    |         |  |                   |   |         |      |  |   |         | 
|Net revenues                                          |  | $                  | 117,412 |  |                   | $ | 100,126 |      |  | $ | 359,187 |  |  | $ | 292,221 | 
|Income from continuing operations                     |  |                    | 11,676  |  |                   |   | 7,192   |      |  |   | 35,186  |  |  |   | 24,833  | 
|Diluted earnings per share from continuing operations |  | $                  | 0.26    |  |                   | $ | 0.16    |      |  | $ | 0.78    |  |  | $ | 0.57    | 





| |   |                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $33.6 million was paid to acquire additional ownership in
    nine facilities the Company operates in the Dallas/
    Fort Worth market, net of proceeds from the sale of a
    portion of three other facilities in this same market,                                                                                                    
|
| |  | $5.2 million was paid for equity method investments in two
    surgery centers near Kansas City, Missouri,                                                                                                                                                                                                                                
|
| |  | $4.7 million was paid for an equity method investment in a
    surgery center in the Sacramento, California area,                                                                                                                                                                                                                         
|
| |  | $5.5 million was paid to acquire additional ownership in a
    facility the Company operates in New Jersey,                                                                                                                                                                                                                               
|
| |  | $12.0 million was received from three not-for-profit
    healthcare systems for noncontrolling interests in facilities
    already operated by the Company. Included in these transactions
    are call options allowing the healthcare systems to acquire
    additional noncontrolling ownership interests in each facility
    in 2006.

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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)  (Continued)




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | With respect to four of the facilities, the approximate sales
    price is $10.2 million and the Company has a put option
    with the same terms. With respect to the other two facilities,
    the systems have call options that, for one facility, fix the
    price at $2.0 million and in the other case base the price
    on a multiple of earnings when the option is exercised. The
    Company has no put options with respect to these two facilities.
    Consistent with the Companys policy regarding sales of
    noncontrolling interests, no gain or loss was recognized on
    these transactions.
|
| |  | $4.8 million was paid for other net purchases of equity
    interests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



|                                                 |                  |                    |    |         |                   |  |    |        |  |  |      |         |  |  |    |         | 
|------------------------------------------------ | ---------------- | ------------------ | -- | ------- | ----------------- |  | -- | ------ |  |  | ---- | ------- |  |  | -- | ------- | 
|                                                 |                  | Three Months Ended |    |         | Nine Months Ended | 
|                                                 |                  | September 30,      |    |         | September 30,     | 
|                                                 |                  |                    |    |         |                   | 
|                                                 |                  | 2005               |    |         | 2004              |  |    | 2005   |  |  | 2004 |        
|                                                 |                  |                    |    |         |                   |  |    |        |  |  |      |        
|Unconsolidated facilities operated at period end |                  |                    | 52 |         |                   |  | 37 |        |  |  | 52   |         |  |  | 37 |        
|Income statement information                     |                  |                    |    |         |                   |  |    |        |  |  |      |         |  |  |    |        
|                                                 | Revenues         |                    | $  | 111,101 |                   |  | $  | 80,251 |  |  | $    | 320,377 |  |  | $  | 241,281 | 
|                                                 | Operating income |                    |    | 27,220  |                   |  |    | 21,104 |  |  |      | 83,142  |  |  |    | 76,662  | 
|                                                 | Net income       |                    |    | 24,535  |                   |  |    | 18,270 |  |  |      | 74,708  |  |  |    | 69,172  | 



|    |                   
|--- | ------------------
|(3) | Earnings Per Share



|                                                |                               |                    |        |        |                   |  |        |        |        |  |        |        |        |  |        |        |        | 
|----------------------------------------------- | ----------------------------- | ------------------ | ------ | ------ | ----------------- |  | ------ | ------ | ------ |  | ------ | ------ | ------ |  | ------ | ------ | ------ | 
|                                                |                               | Three Months Ended |        |        | Nine Months Ended | 
|                                                |                               | September 30,      |        |        | September 30,     | 
|                                                |                               |                    |        |        |                   | 
|                                                |                               | 2005               |        |        | 2004              |  |        | 2005   |        |  | 2004   |       
|                                                |                               |                    |        |        |                   |  |        |        |        |  |        |       
|Net income attributable to common shareholders: |                               |                    |        |        |                   |  |        |        |        |  |        |        |        |  |        |       
|                                                | Continuing operations         |                    | $      | 11,676 |                   |  | $      | 6,735  |        |  | $      | 34,815 |        |  | $      | 23,157 |       
|                                                | Discontinued operations       |                    |        | 207    |                   |  |        | 50,249 |        |  |        | 207    |        |  |        | 54,341 |       
|                                                |                               |                    |        |        |                   |  |        |        |        |  |        |       
|                                                |                               | Total              |        | $      | 11,883            |  |        | $      | 56,984 |  |        | $      | 35,022 |  |        | $      | 77,498 | 
|                                                |                               |                    |        |        |                   |  |        |        |        |  |        |       
|Weighted average common shares outstanding      |                               |                    | 43,221 |        |                   |  | 42,034 |        |        |  | 42,870 |        |        |  | 41,805 |       
|Effect of dilutive securities:                  |                               |                    |        |        |                   |  |        |        |        |  |        |        |        |  |        |       
|                                                | Stock options                 |                    |        | 1,699  |                   |  |        | 1,780  |        |  |        | 1,747  |        |  |        | 1,901  |       
|                                                | Warrants and restricted stock |                    |        | 315    |                   |  |        | 179    |        |  |        | 262    |        |  |        | 180    |       
|                                                |                               |                    |        |        |                   |  |        |        |        |  |        |       
|Shares used for diluted earnings per share      |                               |                    | 45,235 |        |                   |  | 43,993 |        |        |  | 44,879 |        |        |  | 43,886 |       
|                                                |                               |                    |        |        |                   |  |        |        |        |  |        |       

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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)  (Continued)


|                            |                         |                    |   |      |                   |  |   |      |      |  |      |      |      |  |   |      |      | 
|--------------------------- | ----------------------- | ------------------ | - | ---- | ----------------- |  | - | ---- | ---- |  | ---- | ---- | ---- |  | - | ---- | ---- | 
|                            |                         | Three Months Ended |   |      | Nine Months Ended | 
|                            |                         | September 30,      |   |      | September 30,     | 
|                            |                         |                    |   |      |                   | 
|                            |                         | 2005               |   |      | 2004              |  |   | 2005 |      |  | 2004 |     
|                            |                         |                    |   |      |                   |  |   |      |      |  |      |     
|Basic earnings per share:   |                         |                    |   |      |                   |  |   |      |      |  |      |      |      |  |   |     
|                            | Continuing operations   |                    | $ | 0.27 |                   |  | $ | 0.16 |      |  | $    | 0.81 |      |  | $ | 0.55 |     
|                            | Discontinued operations |                    |   |     |                   |  |   | 1.20 |      |  |      | 0.01 |      |  |   | 1.30 |     
|                            |                         |                    |   |      |                   |  |   |      |      |  |      |     
|                            |                         | Total              |   | $    | 0.27              |  |   | $    | 1.36 |  |      | $    | 0.82 |  |   | $    | 1.85 | 
|                            |                         |                    |   |      |                   |  |   |      |      |  |      |     
|Diluted earnings per share: |                         |                    |   |      |                   |  |   |      |      |  |      |      |      |  |   |     
|                            | Continuing operations   |                    | $ | 0.26 |                   |  | $ | 0.15 |      |  | $    | 0.78 |      |  | $ | 0.53 |     
|                            | Discontinued operations |                    |   |     |                   |  |   | 1.15 |      |  |      |     |      |  |   | 1.24 |     
|                            |                         |                    |   |      |                   |  |   |      |      |  |      |     
|                            |                         | Total              |   | $    | 0.26              |  |   | $    | 1.30 |  |      | $    | 0.78 |  |   | $    | 1.77 | 
|                            |                         |                    |   |      |                   |  |   |      |      |  |      |     



|    |                    
|--- | -------------------
|(4) | Segment Disclosures

Disclosures About Segments of an Enterprise and Related
Information,


|                                      |  |        |         |   |         |   |         |       |  |   |           |  
|------------------------------------- |  | ------ | ------- | - | ------- | - | ------- | ----- |  | - | --------- | -
|                                      |  | United |         |   | United  |   |         |      
|Three Months Ended September 30, 2005 |  | States |         |   | Kingdom |   |         | Total | 
|                                      |  |        |         |   |         |   |         |       | 
|Net patient service revenue           |  | $      | 86,817  |   |         | $ | 21,825  |       |  | $ | 108,642   |  
|Other revenue                         |  |        | 8,770   |   |         |   |        |       |  |   | 8,770     |  
|                                      |  |        |         |   |         |   |         |       | 
|Total revenues                        |  | $      | 95,587  |   |         | $ | 21,825  |       |  | $ | 117,412   |  
|                                      |  |        |         |   |         |   |         |       | 
|Depreciation and amortization         |  | $      | 5,735   |   |         | $ | 1,769   |       |  | $ | 7,504     |  
|Operating income                      |  |        | 30,064  |   |         |   | 2,942   |       |  |   | 33,006    |  
|Net interest expense                  |  |        | (4,960  | ) |         |   | (592    | )     |  |   | (5,552    | )
|Income tax expense                    |  |        | (5,937  | ) |         |   | (553    | )     |  |   | (6,490    | )
|Total assets                          |  |        | 813,446 |   |         |   | 194,993 |       |  |   | 1,008,439 |  
|Capital expenditures                  |  |        | 4,107   |   |         |   | 5,150   |       |  |   | 9,257     |  

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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)  (Continued)


|                                      |  |        |         |   |         |   |         |       |  |   |         |  
|------------------------------------- |  | ------ | ------- | - | ------- | - | ------- | ----- |  | - | ------- | -
|                                      |  | United |         |   | United  |   |         |      
|Three Months Ended September 30, 2004 |  | States |         |   | Kingdom |   |         | Total | 
|                                      |  |        |         |   |         |   |         |       | 
|Net patient service revenue           |  | $      | 65,860  |   |         | $ | 21,319  |       |  | $ | 87,179  |  
|Other revenue                         |  |        | 9,378   |   |         |   |        |       |  |   | 9,378   |  
|                                      |  |        |         |   |         |   |         |       | 
|Total revenues                        |  | $      | 75,238  |   |         | $ | 21,319  |       |  | $ | 96,557  |  
|                                      |  |        |         |   |         |   |         |       | 
|Depreciation and amortization         |  | $      | 5,186   |   |         | $ | 1,738   |       |  | $ | 6,924   |  
|Operating income                      |  |        | 21,142  |   |         |   | 3,745   |       |  |   | 24,887  |  
|Net interest expense                  |  |        | (5,766  | ) |         |   | (883    | )     |  |   | (6,649  | )
|Income tax expense                    |  |        | (2,957  | ) |         |   | (591    | )     |  |   | (3,548  | )
|Total assets                          |  |        | 706,174 |   |         |   | 187,574 |       |  |   | 893,748 |  
|Capital expenditures                  |  |        | 4,596   |   |         |   | 1,823   |       |  |   | 6,419   |  

|                                     |  |        |         |   |         |   |         |       |  |   |           |  
|------------------------------------ |  | ------ | ------- | - | ------- | - | ------- | ----- |  | - | --------- | -
|                                     |  | United |         |   | United  |   |         |      
|Nine Months Ended September 30, 2005 |  | States |         |   | Kingdom |   |         | Total | 
|                                     |  |        |         |   |         |   |         |       | 
|Net patient service revenue          |  | $      | 261,161 |   |         | $ | 68,190  |       |  | $ | 329,351   |  
|Other revenue                        |  |        | 28,094  |   |         |   |        |       |  |   | 28,094    |  
|                                     |  |        |         |   |         |   |         |       | 
|Total revenues                       |  | $      | 289,255 |   |         | $ | 68,190  |       |  | $ | 357,445   |  
|                                     |  |        |         |   |         |   |         |       | 
|Depreciation and amortization        |  | $      | 17,459  |   |         | $ | 5,442   |       |  | $ | 22,901    |  
|Operating income                     |  |        | 90,120  |   |         |   | 11,266  |       |  |   | 101,386   |  
|Net interest expense                 |  |        | (15,434 | ) |         |   | (2,126  | )     |  |   | (17,560   | )
|Income tax expense                   |  |        | (17,586 | ) |         |   | (2,152  | )     |  |   | (19,738   | )
|Total assets                         |  |        | 813,446 |   |         |   | 194,993 |       |  |   | 1,008,439 |  
|Capital expenditures                 |  |        | 10,372  |   |         |   | 13,225  |       |  |   | 23,597    |  

|                                     |  |        |         |   |         |   |         |       |  |   |         |  
|------------------------------------ |  | ------ | ------- | - | ------- | - | ------- | ----- |  | - | ------- | -
|                                     |  | United |         |   | United  |   |         |      
|Nine Months Ended September 30, 2004 |  | States |         |   | Kingdom |   |         | Total | 
|                                     |  |        |         |   |         |   |         |       | 
|Net patient service revenue          |  | $      | 188,983 |   |         | $ | 62,951  |       |  | $ | 251,934 |  
|Other revenue                        |  |        | 28,961  |   |         |   |        |       |  |   | 28,961  |  
|                                     |  |        |         |   |         |   |         |       | 
|Total revenues                       |  | $      | 217,944 |   |         | $ | 62,951  |       |  | $ | 280,895 |  
|                                     |  |        |         |   |         |   |         |       | 
|Depreciation and amortization        |  | $      | 14,790  |   |         | $ | 5,033   |       |  | $ | 19,823  |  
|Operating income                     |  |        | 67,581  |   |         |   | 11,072  |       |  |   | 78,653  |  
|Net interest expense                 |  |        | (16,525 | ) |         |   | (2,982  | )     |  |   | (19,507 | )
|Income tax expense                   |  |        | (11,216 | ) |         |   | (1,787  | )     |  |   | (13,003 | )
|Total assets                         |  |        | 706,174 |   |         |   | 187,574 |       |  |   | 893,748 |  
|Capital expenditures                 |  |        | 31,646  |   |         |   | 7,337   |       |  |   | 38,983  |  

11



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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)  (Continued)




|    |                                             
|--- | --------------------------------------------
|(5) | Condensed Consolidating Financial Statements



Condensed Consolidating Balance Sheets:


|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |          |   |   |         |           | 
|------------------------------------ | ------------------------------------------ | ---------- | ------- | ----------------- | --------- | - | ------------- | ----------- |  | ------------ | -------- | -------- | - | - | ------- | --------- | 
|                                     |                                            |            |         | Non-Participating |           |   | Consolidation |             |  | Consolidated |         
|As of September 30, 2005             |                                            | Guarantors |         |                   | Investees |   |               | Adjustments |  |              | Total    |         
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         
|ASSETS                              
|Current assets:                      |                                            |            |         |                   |           |   |               |             |  |              |          |          |   |   |         |          
|Cash and cash equivalents            |                                            | $          | 112,575 |                   |           | $ | 8,548         |             |  | $            |         |          |   | $ | 121,123 |          
|Patient receivables, net             |                                            |            | 224     |                   |           |   | 44,130        |             |  |              |         |          |   |   | 44,354  |          
|Other receivables                    |                                            |            | 584     |                   |           |   | 16,252        |             |  |              | (6,436   | )        |   |   | 10,400  |          
|Inventories of supplies              |                                            |            | 206     |                   |           |   | 7,583         |             |  |              |         |          |   |   | 7,789   |          
|Other                                |                                            |            | 14,848  |                   |           |   | 2,339         |             |  |              |         |          |   |   | 17,187  |          
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         
|                                     | Total current assets                       |            |         | 128,437           |           |   |               | 78,852      |  |              |          | (6,436   | ) |   |         | 200,853   | 
|Property and equipment, net          |                                            |            | 26,682  |                   |           |   | 232,765       |             |  |              |         |          |   |   | 259,447 |          
|Investments in affiliates            |                                            |            | 110,501 |                   |           |   | 16,291        |             |  |              | (30,162  | )        |   |   | 96,630  |          
|Intangible assets, net               |                                            |            | 333,391 |                   |           |   | 105,092       |             |  |              | (16,036  | )        |   |   | 422,447 |          
|Other                                |                                            |            | 92,997  |                   |           |   | 23,473        |             |  |              | (87,408  | )        |   |   | 29,062  |          
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         
|                                     | Total assets                               |            | $       | 692,008           |           |   | $             | 456,473     |  |              | $        | (140,042 | ) |   | $       | 1,008,439 | 
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY
|Current liabilities:                 |                                            |            |         |                   |           |   |               |             |  |              |          |          |   |   |         |          
|Accounts payable                     |                                            | $          | 1,478   |                   |           | $ | 14,817        |             |  | $            |         |          |   | $ | 16,295  |          
|Accrued expenses and other           |                                            |            | 74,058  |                   |           |   | 11,437        |             |  |              | 831      |          |   |   | 86,326  |          
|Current portion of long-term debt    |                                            |            | 219     |                   |           |   | 19,646        |             |  |              | (1,522   | )        |   |   | 18,343  |          
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         
|                                     | Total current liabilities                  |            |         | 75,755            |           |   |               | 45,900      |  |              |          | (691     | ) |   |         | 120,964   | 
|Long-term debt, less current portion |                                            |            | 151,724 |                   |           |   | 138,998       |             |  |              | (23,698  | )        |   |   | 267,024 |          
|Other long-term liabilities          |                                            |            | 32,002  |                   |           |   | 8,180         |             |  |              |         |          |   |   | 40,182  |          
|Minority interests                   |                                            |            |        |                   |           |   | 14,029        |             |  |              | 47,915   |          |   |   | 61,944  |          
|Stockholders equity                 |                                            |            | 432,527 |                   |           |   | 249,366       |             |  |              | (163,568 | )        |   |   | 518,325 |          
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         
|                                     | Total liabilities and stockholders equity |            | $       | 692,008           |           |   | $             | 456,473     |  |              | $        | (140,042 | ) |   | $       | 1,008,439 | 
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         

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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)  (Continued)


|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |          |   |   |         |         | 
|------------------------------------ | ------------------------------------------ | ---------- | ------- | ----------------- | --------- | - | ------------- | ----------- |  | ------------ | -------- | -------- | - | - | ------- | ------- | 
|                                     |                                            |            |         | Non-Participating |           |   | Consolidation |             |  | Consolidated |         
|As of December 31, 2004              |                                            | Guarantors |         |                   | Investees |   |               | Adjustments |  |              | Total    |         
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         
|ASSETS                              
|Current assets:                      |                                            |            |         |                   |           |   |               |             |  |              |          |          |   |   |         |        
|Cash and cash equivalents            |                                            | $          | 83,905  |                   |           | $ | 9,562         |             |  | $            |         |          |   | $ | 93,467  |        
|Patient receivables, net             |                                            |            | 186     |                   |           |   | 43,405        |             |  |              |         |          |   |   | 43,591  |        
|Other receivables                    |                                            |            | 5,549   |                   |           |   | 22,028        |             |  |              | (7,284   | )        |   |   | 20,293  |        
|Inventories of supplies              |                                            |            | 206     |                   |           |   | 6,982         |             |  |              |         |          |   |   | 7,188   |        
|Other                                |                                            |            | 12,620  |                   |           |   | 1,808         |             |  |              |         |          |   |   | 14,428  |        
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         
|                                     | Total current assets                       |            |         | 102,466           |           |   |               | 83,785      |  |              |          | (7,284   | ) |   |         | 178,967 | 
|Property and equipment, net          |                                            |            | 30,104  |                   |           |   | 235,785       |             |  |              |         |          |   |   | 265,889 |        
|Investments in affiliates            |                                            |            | 107,570 |                   |           |   | 608           |             |  |              | (64,776  | )        |   |   | 43,402  |        
|Intangible assets, net               |                                            |            | 304,764 |                   |           |   | 112,500       |             |  |              | (14,909  | )        |   |   | 402,355 |        
|Other                                |                                            |            | 96,321  |                   |           |   | 25,192        |             |  |              | (89,822  | )        |   |   | 31,691  |        
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         
|                                     | Total assets                               |            | $       | 641,225           |           |   | $             | 457,870     |  |              | $        | (176,791 | ) |   | $       | 922,304 | 
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         
|LIABILITIES AND STOCKHOLDERS EQUITY
|Current liabilities:                 |                                            |            |         |                   |           |   |               |             |  |              |          |          |   |   |         |        
|Accounts payable                     |                                            | $          | 1,741   |                   |           | $ | 16,307        |             |  | $            |         |          |   | $ | 18,048  |        
|Accrued expenses                     |                                            |            | 89,148  |                   |           |   | 35,076        |             |  |              | (65,799  | )        |   |   | 58,425  |        
|Current portion of long-term debt    |                                            |            | 1,302   |                   |           |   | 15,409        |             |  |              | (1,395   | )        |   |   | 15,316  |        
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         
|                                     | Total current liabilities                  |            |         | 92,191            |           |   |               | 66,792      |  |              |          | (67,194  | ) |   |         | 91,789  | 
|Long-term debt, less current portion |                                            |            | 153,675 |                   |           |   | 145,264       |             |  |              | (25,770  | )        |   |   | 273,169 |        
|Other long-term liabilities          |                                            |            | 25,081  |                   |           |   | 9,389         |             |  |              |         |          |   |   | 34,470  |        
|Minority interests                   |                                            |            |        |                   |           |   | 11,444        |             |  |              | 36,823   |          |   |   | 48,267  |        
|Stockholders equity                 |                                            |            | 370,278 |                   |           |   | 224,981       |             |  |              | (120,650 | )        |   |   | 474,609 |        
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         
|                                     | Total liabilities and stockholders equity |            | $       | 641,225           |           |   | $             | 457,870     |  |              | $        | (176,791 | ) |   | $       | 922,304 | 
|                                     |                                            |            |         |                   |           |   |               |             |  |              |          |         

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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)  (Continued)


Condensed Consolidating Statements of Income:


|                                                             |  |            |         |                   |           |   |               |             |  |              |         |   |  |   |         |  
|------------------------------------------------------------ |  | ---------- | ------- | ----------------- | --------- | - | ------------- | ----------- |  | ------------ | ------- | - |  | - | ------- | -
|                                                             |  |            |         | Non-Participating |           |   | Consolidation |             |  | Consolidated |        
|Nine Months Ended September 30, 2005                         |  | Guarantors |         |                   | Investees |   |               | Adjustments |  |              | Total   |  
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  
|Revenues                                                     |  | $          | 56,565  |                   |           | $ | 318,464       |             |  | $            | (17,584 | ) |  | $ | 357,445 |  
|Equity in earnings of unconsolidated affiliates              |  |            | 17,084  |                   |           |   | 137           |             |  |              |        |   |  |   | 17,221  |  
|Operating expenses, excluding depreciation and amortization  |  |            | 45,704  |                   |           |   | 223,244       |             |  |              | (18,569 | ) |  |   | 250,379 |  
|Depreciation and amortization                                |  |            | 7,277   |                   |           |   | 15,624        |             |  |              |        |   |  |   | 22,901  |  
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  
|Operating income                                             |  |            | 20,668  |                   |           |   | 79,733        |             |  |              | 985     |   |  |   | 101,386 |  
|Interest expense, net                                        |  |            | (9,251  | )                 |           |   | (8,314        | )           |  |              | 5       |   |  |   | (17,560 | )
|Other income (expense)                                       |  |            | (434    | )                 |           |   | 1,204         |             |  |              | (234    | ) |  |   | 536     |  
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  
|Income before minority interests                             |  |            | 10,983  |                   |           |   | 72,623        |             |  |              | 756     |   |  |   | 84,362  |  
|Minority interests in income of consolidated subsidiaries    |  |            |        |                   |           |   | (11,534       | )           |  |              | (18,275 | ) |  |   | (29,809 | )
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  
|Income (loss) from continuing operations before income taxes |  |            | 10,983  |                   |           |   | 61,089        |             |  |              | (17,519 | ) |  |   | 54,553  |  
|Income tax expense                                           |  |            | (17,207 | )                 |           |   | (2,531        | )           |  |              |        |   |  |   | (19,738 | )
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  
|Income (loss) from continuing operations                     |  |            | (6,224  | )                 |           |   | 58,558        |             |  |              | (17,519 | ) |  |   | 34,815  |  
|Earnings from discontinued operations, net of tax            |  |            |        |                   |           |   | 207           |             |  |              |        |   |  |   | 207     |  
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  
|Net income (loss)                                            |  | $          | (6,224  | )                 |           | $ | 58,765        |             |  | $            | (17,519 | ) |  | $ | 35,022  |  
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  

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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)  (Continued)


|                                                             |  |            |         |                   |           |   |               |             |  |              |         |   |  |   |         |  
|------------------------------------------------------------ |  | ---------- | ------- | ----------------- | --------- | - | ------------- | ----------- |  | ------------ | ------- | - |  | - | ------- | -
|                                                             |  |            |         | Non-Participating |           |   | Consolidation |             |  | Consolidated |        
|Nine Months Ended September 30, 2004                         |  | Guarantors |         |                   | Investees |   |               | Adjustments |  |              | Total   |  
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  
|Revenues                                                     |  | $          | 54,463  |                   |           | $ | 240,728       |             |  | $            | (14,296 | ) |  | $ | 280,895 |  
|Equity in earnings of unconsolidated affiliates              |  |            | 14,083  |                   |           |   | (2            | )           |  |              |        |   |  |   | 14,081  |  
|Operating expenses, excluding depreciation and amortization  |  |            | 42,332  |                   |           |   | 168,760       |             |  |              | (14,592 | ) |  |   | 196,500 |  
|Depreciation and amortization                                |  |            | 7,895   |                   |           |   | 11,928        |             |  |              |        |   |  |   | 19,823  |  
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  
|Operating income                                             |  |            | 18,319  |                   |           |   | 60,038        |             |  |              | 296     |   |  |   | 78,653  |  
|Interest expense, net                                        |  |            | (12,089 | )                 |           |   | (7,418        | )           |  |              |        |   |  |   | (19,507 | )
|Other expense                                                |  |            | (878    | )                 |           |   | (319          | )           |  |              | (233    | ) |  |   | (1,430  | )
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  
|Income before minority interests                             |  |            | 5,352   |                   |           |   | 52,301        |             |  |              | 63      |   |  |   | 57,716  |  
|Minority interests in income of consolidated subsidiaries    |  |            |        |                   |           |   | (9,353        | )           |  |              | (12,203 | ) |  |   | (21,556 | )
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  
|Income (loss) from continuing operations before income taxes |  |            | 5,352   |                   |           |   | 42,948        |             |  |              | (12,140 | ) |  |   | 36,160  |  
|Income tax expense                                           |  |            | (11,126 | )                 |           |   | (1,877        | )           |  |              |        |   |  |   | (13,003 | )
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  
|Income (loss) from continuing operations                     |  |            | (5,774  | )                 |           |   | 41,071        |             |  |              | (12,140 | ) |  |   | 23,157  |  
|Earnings from discontinued operations, net of tax            |  |            | 2,145   |                   |           |   | 52,196        |             |  |              |        |   |  |   | 54,341  |  
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  
|Net income (loss)                                            |  | $          | (3,629  | )                 |           | $ | 93,267        |             |  | $            | (12,140 | ) |  | $ | 77,498  |  
|                                                             |  |            |         |                   |           |   |               |             |  |              |         |  

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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)  (Continued)


Condensed Consolidating Statements of Cash Flows:


|                                                                                                                 |                                                        |            |         |                   |           |   |               |             |   |              |         |      |   |   |         |         |  
|---------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | ---------- | ------- | ----------------- | --------- | - | ------------- | ----------- | - | ------------ | ------- | ---- | - | - | ------- | ------- | -
|                                                                                                                 |                                                        |            |         | Non-Participating |           |   | Consolidation |             |   | Consolidated |        
|Nine Months Ended September 30, 2005                                                                             |                                                        | Guarantors |         |                   | Investees |   |               | Adjustments |   |              | Total   |     
|                                                                                                                 |                                                        |            |         |                   |           |   |               |             |   |              |         |     
|Cash flows from operating activities:                                                                            |                                                        |            |         |                   |           |   |               |             |   |              |         |      |   |   |         |        
|Income (loss) from continuing operations                                                                         |                                                        | $          | (6,224  | )                 |           | $ | 58,558        |             |   | $            | (17,519 | )    |   | $ | 34,815  |        
|Changes in operating and intercompany assets and liabilities and
    noncash items included in net income (loss) |                                                        |            | 94,375  |                   |           |   | (42,788       | )           |   |              | 16,997  |      |   |   | 68,584  |        
|                                                                                                                 |                                                        |            |         |                   |           |   |               |             |   |              |         |     
|                                                                                                                 | Net cash provided by (used in) by operating activities |            |         | 88,151            |           |   |               | 15,770      |   |              |         | (522 | ) |   |         | 103,399 |  
|Cash flows from investing activities:                                                                            |                                                        |            |         |                   |           |   |               |             |   |              |         |      |   |   |         |        
|Purchases of property and equipment, net                                                                         |                                                        |            | (4,771  | )                 |           |   | (16,688       | )           |   |              |        |      |   |   | (21,459 | )      
|Purchases of new businesses                                                                                      |                                                        |            | (60,107 | )                 |           |   |              |             |   |              |        |      |   |   | (60,107 | )      
|Other items                                                                                                      |                                                        |            | (4,998  | )                 |           |   | 1,500         |             |   |              |        |      |   |   | (3,498  | )      
|                                                                                                                 |                                                        |            |         |                   |           |   |               |             |   |              |         |     
|                                                                                                                 | Net cash used in investing activities                  |            |         | (69,876           | )         |   |               | (15,188     | ) |              |         |     |   |   |         | (85,064 | )
|Cash flows from financing activities:                                                                            |                                                        |            |         |                   |           |   |               |             |   |              |         |      |   |   |         |        
|Long-term borrowings, net                                                                                        |                                                        |            | (1,522  | )                 |           |   | (995          | )           |   |              |        |      |   |   | (2,517  | )      
|Proceeds from issuance of common stock                                                                           |                                                        |            | 9,593   |                   |           |   |              |             |   |              |        |      |   |   | 9,593   |        
|Other items                                                                                                      |                                                        |            | 2,324   |                   |           |   | (522          | )           |   |              | 522     |      |   |   | 2,324   |        
|                                                                                                                 |                                                        |            |         |                   |           |   |               |             |   |              |         |     
|                                                                                                                 | Net cash provided by (used in) financing activities    |            |         | 10,395            |           |   |               | (1,517      | ) |              |         | 522  |   |   |         | 9,400   |  
|Effect of exchange rate changes on cash                                                                          |                                                        |            |        |                   |           |   | (79           | )           |   |              |        |      |   |   | (79     | )      
|Net increase (decrease) in cash                                                                                  |                                                        |            | 28,670  |                   |           |   | (1,014        | )           |   |              |        |      |   |   | 27,656  |        
|Cash at the beginning of the period                                                                              |                                                        |            | 83,905  |                   |           |   | 9,562         |             |   |              |        |      |   |   | 93,467  |        
|                                                                                                                 |                                                        |            |         |                   |           |   |               |             |   |              |         |     
|Cash at the end of the period                                                                                    |                                                        | $          | 112,575 |                   |           | $ | 8,548         |             |   | $            |        |      |   | $ | 121,123 |        
|                                                                                                                 |                                                        |            |         |                   |           |   |               |             |   |              |         |     

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##### Table of Contents



UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)  (Continued)


|                                                                                                                 |                                                     |            |         |                   |           |   |               |             |   |              |         |         |   |   |         |         |  
|---------------------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ---------- | ------- | ----------------- | --------- | - | ------------- | ----------- | - | ------------ | ------- | ------- | - | - | ------- | ------- | -
|                                                                                                                 |                                                     |            |         | Non-Participating |           |   | Consolidation |             |   | Consolidated |        
|Nine Months Ended September 30, 2004                                                                             |                                                     | Guarantors |         |                   | Investees |   |               | Adjustments |   |              | Total   |        
|                                                                                                                 |                                                     |            |         |                   |           |   |               |             |   |              |         |        
|Cash flows from operating activities:                                                                            |                                                     |            |         |                   |           |   |               |             |   |              |         |         |   |   |         |        
|Income (loss) from continuing operations                                                                         |                                                     | $          | (5,772  | )                 |           | $ | 41,070        |             |   | $            | (12,141 | )       |   | $ | 23,157  |        
|Changes in operating and intercompany assets and liabilities and
    noncash items included in net income (loss) |                                                     |            | 238,300 |                   |           |   | (99,418       | )           |   |              | (85,466 | )       |   |   | 53,416  |        
|                                                                                                                 |                                                     |            |         |                   |           |   |               |             |   |              |         |        
|                                                                                                                 | Net cash provided by (used in) operating activities |            |         | 232,528           |           |   |               | (58,348     | ) |              |         | (97,607 | ) |   |         | 76,573  |  
|Cash flows from investing activities:                                                                            |                                                     |            |         |                   |           |   |               |             |   |              |         |         |   |   |         |        
|Purchases of property and equipment, net                                                                         |                                                     |            | (4,584  | )                 |           |   | (12,218       | )           |   |              |        |         |   |   | (16,802 | )      
|Purchases of new businesses                                                                                      |                                                     |            | (40,717 | )                 |           |   | (18           | )           |   |              |        |         |   |   | (40,735 | )      
|Proceeds from sale of Spanish operations                                                                         |                                                     |            |        |                   |           |   | 229,510       |             |   |              | (66,305 | )       |   |   | 163,205 |        
|Other items                                                                                                      |                                                     |            | (1,926  | )                 |           |   |               |             |   |              |         |         |   |   | (1,926  | )      
|                                                                                                                 |                                                     |            |         |                   |           |   |               |             |   |              |         |        
|                                                                                                                 | Net cash provided by (used in) investing activities |            |         | (47,227           | )         |   |               | 217,274     |   |              |         | (66,305 | ) |   |         | 103,742 |  
|Cash flows from financing activities:                                                                            |                                                     |            |         |                   |           |   |               |             |   |              |         |         |   |   |         |        
|Long-term borrowings, net                                                                                        |                                                     |            | (6,534  | )                 |           |   | 1,785         |             |   |              |        |         |   |   | (4,749  | )      
|Proceeds from issuance of common stock                                                                           |                                                     |            | 6,473   |                   |           |   |              |             |   |              |        |         |   |   | 6,473   |        
|Other items                                                                                                      |                                                     |            | (7,532  | )                 |           |   | (163,913      | )           |   |              | 163,912 |         |   |   | (7,533  | )      
|                                                                                                                 |                                                     |            |         |                   |           |   |               |             |   |              |         |        
|                                                                                                                 | Net cash provided by (used in) financing activities |            |         | (7,593            | )         |   |               | (162,128    | ) |              |         | 163,912 |   |   |         | (5,809  | )
|Net cash provided by discontinued operations                                                                     |                                                     |            |        |                   |           |   | 1,516         |             |   |              |        |         |   |   | 1,516   |        
|Effect of exchange rate changes on cash                                                                          |                                                     |            |        |                   |           |   | 232           |             |   |              |        |         |   |   | 232     |        
|Net increase (decrease) in cash                                                                                  |                                                     |            | 177,708 |                   |           |   | (1,454        | )           |   |              |        |         |   |   | 176,254 |        
|Cash at the beginning of the period                                                                              |                                                     |            | 15,147  |                   |           |   | 13,372        |             |   |              |        |         |   |   | 28,519  |        
|                                                                                                                 |                                                     |            |         |                   |           |   |               |             |   |              |         |        
|Cash at the end of the period                                                                                    |                                                     | $          | 192,855 |                   |           | $ | 11,918        |             |   | $            |        |         |   | $ | 204,773 |        
|                                                                                                                 |                                                     |            |         |                   |           |   |               |             |   |              |         |        



|    |                           
|--- | --------------------------
|(6) | Related Party Transactions





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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.


AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)  (Continued)






|    |                              
|--- | -----------------------------
|(7) | Commitments and Contingencies

Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, ,









|    |                  
|--- | -----------------
|(8) | Subsequent Events



18



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##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 2. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Forward-Looking Statements




Overview






19



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##### Table of Contents







Critical Accounting Policies and Estimates










Acquisitions, Equity Investments and Development Projects








20



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $33.6 million was paid to acquire additional ownership in
    nine facilities we operate in the Dallas/ Fort Worth
    market, net of proceeds from the sale of a portion of three
    other facilities in this same market,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | $5.2 million was paid for equity method investments in two
    surgery centers near Kansas City, Missouri,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | $4.7 million was paid for an equity method investment in a
    surgery center in the Sacramento, California area,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | $5.5 million was paid to acquire additional ownership in a
    facility the we operate in New Jersey, and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | $12.0 million was received from three not-for-profit
    healthcare systems for noncontrolling interests in six
    facilities we already operated. Included in these transactions
    are call options allowing the healthcare systems to acquire
    additional noncontrolling ownership interests in each facility
    in 2006. With respect to four of the facilities, the approximate
    sales price is $10.2 million and we have a put option with
    the same terms. With respect to the other two facilities, the
    systems have call options that, for one facility, fix the price
    at $2.0 million and in the other case base the price on a
    multiple of earnings when the option is exercised. We have no
    put options with respect to these two facilities.
|
| |  | $4.8 million of other net purchases of equity interests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



Sources of Revenue






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | net patient service revenue of the facilities that we
    consolidate for financial reporting purposes, which are
    typically those facilities in which we have ownership interests
    of greater than 50% or otherwise maintain effective control.                                                                                                                                                                                                                                                                                                            
|
| |  | management and administrative services revenue, consisting of
    the fees that we earn from managing the facilities that we do
    not consolidate for financial reporting purposes and the fees we
    earn from providing certain consulting and administrative
    services to physicians. Our consolidated revenues and expenses
    do not include the management fees we earn from operating the
    facilities that we consolidate for financial reporting purposes
    as those fees are charged to subsidiaries and thus eliminate in
    consolidation.



|                                               |                |               |    |     |               |  |    |      |   |  |      |     |   |  |    |     |  
|---------------------------------------------- | -------------- | ------------- | -- | --- | ------------- |  | -- | ---- | - |  | ---- | --- | - |  | -- | --- | -
|                                               |                | Three Months  |    |     | Nine Months   | 
|                                               |                | Ended         |    |     | Ended         | 
|                                               |                | September 30, |    |     | September 30, | 
|                                               |                |               |    |     |               | 
|                                               |                | 2005          |    |     | 2004          |  |    | 2005 |   |  | 2004 |    
|                                               |                |               |    |     |               |  |    |      |   |  |      |    
|Net patient service revenue                    |                |               | 93 | %   |               |  | 90 | %    |   |  | 92   | %   |   |  | 90 | %  
|Management and administrative services revenue |                |               | 7  |     |               |  | 10 |      |   |  | 8    |     |   |  | 10 |    
|                                               |                |               |    |     |               |  |    |      |   |  |      |    
|                                               | Total revenues |               |    | 100 | %             |  |    | 100  | % |  |      | 100 | % |  |    | 100 | %
|                                               |                |               |    |     |               |  |    |      |   |  |      |    



21



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|                                                                              |                                                      |               |       |       |                     |   |       |       |  |   |        |        |  |   |        |        | 
|----------------------------------------------------------------------------- | ---------------------------------------------------- | ------------- | ----- | ----- | ------------------- | - | ----- | ----- |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                                                              |                                                      | Three Months  |       |       |                    
|                                                                              |                                                      | Ended         |       |       | Nine Months         |  
|                                                                              |                                                      | September 30, |       |       | Ended September 30, |  
|                                                                              |                                                      |               |       |       |                     |  
|                                                                              |                                                      | 2005          |       |       | 2004                |   |       | 2005  |  |   | 2004   |       
|                                                                              |                                                      |               |       |       |                     |   |       |       |  |   |        |       
|Management of surgical facilities                                             |                                                      | $             | 4,932 |       |                     | $ | 4,248 |       |  | $ | 15,072 |        |  | $ | 13,435 |       
|Consulting and other services provided to physicians and related
    entities |                                                      |               | 3,587 |       |                     |   | 4,841 |       |  |   | 12,316 |        |  |   | 14,861 |       
|                                                                              |                                                      |               |       |       |                     |   |       |       |  |   |        |       
|                                                                              | Total management and administrative service revenues |               | $     | 8,519 |                     |   | $     | 9,089 |  |   | $      | 27,388 |  |   | $      | 28,296 | 
|                                                                              |                                                      |               |       |       |                     |   |       |       |  |   |        |       



|               |       |               |    |     |               |  |    |      |   |  |      |     |   |  |    |     |  
|-------------- | ----- | ------------- | -- | --- | ------------- |  | -- | ---- | - |  | ---- | --- | - |  | -- | --- | -
|               |       | Three Months  |    |     | Nine Months   | 
|               |       | Ended         |    |     | Ended         | 
|               |       | September 30, |    |     | September 30, | 
|               |       |               |    |     |               | 
|               |       | 2005          |    |     | 2004          |  |    | 2005 |   |  | 2004 |    
|               |       |               |    |     |               |  |    |      |   |  |      |    
|United States  |       |               | 81 | %   |               |  | 78 | %    |   |  | 81   | %   |   |  | 76 | %  
|United Kingdom |       |               | 19 |     |               |  | 22 |      |   |  | 19   |     |   |  | 24 |    
|               |       |               |    |     |               |  |    |      |   |  |      |    
|               | Total |               |    | 100 | %             |  |    | 100  | % |  |      | 100 | % |  |    | 100 | %





|                                                                                            |  |                    |         |   |                   |   |        |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                            |  | Three Months Ended |         |   | Nine Months Ended |  
|                                                                                            |  | September 30,      |         |   | September 30,     |  
|                                                                                            |  |                    |         |   |                   |  
|                                                                                            |  | 2005               |         |   | 2004              |   |        | 2005 |  |   | 2004    |  
|                                                                                            |  |                    |         |   |                   |   |        |      |  |   |         |  
|Total revenues                                                                              |  | $                  | 111,101 |   |                   | $ | 80,251 |      |  | $ | 320,377 |   |  | $ | 241,281 |  
|Depreciation and amortization                                                               |  |                    | 5,306   |   |                   |   | 4,015  |      |  |   | 14,500  |   |  |   | 10,948  |  
|Operating income                                                                            |  |                    | 27,220  |   |                   |   | 21,104 |      |  |   | 83,142  |   |  |   | 76,662  |  
|Interest expense, net                                                                       |  |                    | 2,759   |   |                   |   | 2,486  |      |  |   | 7,853   |   |  |   | 6,436   |  
|Net income                                                                                  |  |                    | 24,535  |   |                   |   | 18,270 |      |  |   | 74,708  |   |  |   | 69,172  |  
|Long-term debt                                                                              |  |                    | 112,401 |   |                   |   | 90,999 |      |  |   | 112,401 |   |  |   | 90,999  |  
|USPIs equity in earnings of unconsolidated affiliates                                      |  |                    | 5,747   |   |                   |   | 3,622  |      |  |   | 17,221  |   |  |   | 14,081  |  
|USPIs imputed weighted average ownership percentage based
    on affiliates net income(1) |  |                    | 23.4    | % |                   |   | 19.8   | %    |  |   | 23.1    | % |  |   | 20.4    | %
|USPIs imputed weighted average ownership percentage based
    on affiliates debt(2)       |  |                    | 27.2    | % |                   |   | 22.7   | %    |  |   | 27.2    | % |  |   | 22.7    | %
|Unconsolidated facilities operated at period end                                            |  |                    | 52      |   |                   |   | 37     |      |  |   | 52      |   |  |   | 37      |  






|    |                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Calculated as USPIs equity in earnings of unconsolidated
    affiliates divided by the total net income of unconsolidated
    affiliates for each respective period. This percentage is higher
    in 2005 due primarily to our acquisition of additional ownership
    in facilities we account for under the equity method.

22



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Calculated as the total debt of each unconsolidated affiliate,
    multiplied by the percentage ownership USPI held in the
    affiliate as of the end of each respective period, divided by
    the total debt of all of the unconsolidated affiliates as of the
    end of each respective period. This percentage is higher in 2005
    due primarily to our acquisition of additional ownership in
    facilities we account for under the equity method.

Results of Operations




|                                                            |  |               |       |   |               |  |       |      |  |  |       |   |  |  |       |  
|----------------------------------------------------------- |  | ------------- | ----- | - | ------------- |  | ----- | ---- |  |  | ----- | - |  |  | ----- | -
|                                                            |  | Three Months  |       |   | Nine Months   | 
|                                                            |  | Ended         |       |   | Ended         | 
|                                                            |  | September 30, |       |   | September 30, | 
|                                                            |  |               |       |   |               | 
|                                                            |  | 2005          |       |   | 2004          |  |       | 2005 |  |  | 2004  |  
|                                                            |  |               |       |   |               |  |       |      |  |  |       |  
|Total revenues                                              |  |               | 100.0 | % |               |  | 100.0 | %    |  |  | 100.0 | % |  |  | 100.0 | %
|Equity in earnings of unconsolidated affiliates             |  |               | 4.9   |   |               |  | 3.8   |      |  |  | 4.8   |   |  |  | 5.0   |  
|Operating expenses, excluding depreciation and amortization |  |               | (70.4 | ) |               |  | (70.8 | )    |  |  | (70.0 | ) |  |  | (69.9 | )
|Depreciation and amortization                               |  |               | (6.4  | ) |               |  | (7.2  | )    |  |  | (6.4  | ) |  |  | (7.1  | )
|                                                            |  |               |       |   |               |  |       |      |  |  |       |  
|Operating income                                            |  |               | 28.1  |   |               |  | 25.8  |      |  |  | 28.4  |   |  |  | 28.0  |  
|Minority interests in income of consolidated entities       |  |               | (8.2  | ) |               |  | (6.7  | )    |  |  | (8.3  | ) |  |  | (7.7  | )
|Interest and other expense, net                             |  |               | (4.4  | ) |               |  | (6.7  | )    |  |  | (4.8  | ) |  |  | (6.9  | )
|Loss on early termination of credit facility                |  |               |      |   |               |  | (1.7  | )    |  |  |      |   |  |  | (0.6  | )
|                                                            |  |               |       |   |               |  |       |      |  |  |       |  
|Income from continuing operations before income taxes       |  |               | 15.5  |   |               |  | 10.7  |      |  |  | 15.3  |   |  |  | 12.8  |  
|Income tax expense                                          |  |               | (5.6  | ) |               |  | (3.7  | )    |  |  | (5.6  | ) |  |  | (4.6  | )
|                                                            |  |               |       |   |               |  |       |      |  |  |       |  
|Income from continuing operations                           |  |               | 9.9   |   |               |  | 7.0   |      |  |  | 9.7   |   |  |  | 8.2   |  
|Earnings from discontinued operations                       |  |               | 0.2   |   |               |  | 52.0  |      |  |  | 0.1   |   |  |  | 19.4  |  
|                                                            |  |               |       |   |               |  |       |      |  |  |       |  
|Net income                                                  |  |               | 10.1  | % |               |  | 59.0  | %    |  |  | 9.8   | % |  |  | 27.6  | %
|                                                            |  |               |       |   |               |  |       |      |  |  |       |  

Executive Summary










23



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##### Table of Contents





Revenues










|                           |                                              |                         |  |    |                    |   |  |    |   |  
|-------------------------- | -------------------------------------------- | ----------------------- |  | -- | ------------------ | - |  | -- | - | -
|                           |                                              | Three Months Ended      |  |    | Nine Months Ended  |  
|                           |                                              | September 30, 2005      |  |    | September 30, 2005 |  
|                           |                                              |                         |  |    |                    |  
|United States facilities:  |                                              |                         |  |    |                    |   |  |   
|                           | Net revenue                                  |                         |  | 13 | %                  |   |  | 10 | %
|                           |                                              | Surgical cases          |  |    | 5                  | % |  |    | 5 | %
|                           |                                              | Net revenue per case(1) |  |    | 7                  | % |  |    | 5 | %
|United Kingdom facilities: |                                              |                         |  |    |                    |   |  |   
|                           | Net revenue using actual exchange rates      |                         |  | 3  | %                  |   |  | 8  | %
|                           | Net revenue using constant exchange rates(2) |                         |  | 5  | %                  |   |  | 7  | %
|All same store facilities: |                                              |                         |  |    |                    |   |  |   
|                           | Net revenue using actual exchange rates      |                         |  | 12 | %                  |   |  | 10 | %






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Our overall domestic same store growth in net revenue per case
    was favorably impacted by the growth at our nine same store
    surgical hospitals, which on average perform more complex cases
    and thus earn a higher average net revenue per case than
    ambulatory surgery centers. Net revenue per case of our same
    store ambulatory surgery centers increased 3% for the three
    months ended September 30, 2005, as compared to the
    corresponding prior year period. On a year-to-date basis, the
    net revenue per case of our same store ambulatory surgery
    centers remained flat as compared to the corresponding prior
    year period.
|   
|(2) | Measures current year using prior year exchange rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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##### Table of Contents



Joint Ventures With Not-For-Profit Hospitals




|                                |                             |                                        |    |     |      |  |    |    |  | 
|------------------------------- | --------------------------- | -------------------------------------- | -- | --- | ---- |  | -- | -- |  | 
|                                |                             | September 30,                          |   
|                                |                             |                                        |   
|                                |                             | 2005                                   |    |     | 2004 | 
|                                |                             |                                        |    |     |      | 
|United States facilities(1):    |                             |                                        |    |     |      |  |    |   
|                                | With a hospital partner     |                                        |    | 62  |      |  |    | 43 | 
|                                | Without a hospital partner  |                                        |    | 29  |      |  |    | 28 | 
|                                |                             |                                        |    |     |      | 
|Total U.S. facilities           |                             |                                        | 91 |     |      |  | 71 |   
|United Kingdom facilities       |                             |                                        | 3  |     |      |  | 3  |   
|                                |                             |                                        |    |     |      | 
|Total facilities operated       |                             |                                        | 94 |     |      |  | 74 |   
|                                |                             |                                        |    |     |      | 
|Change from September 30, 2004: |                             |                                        |    |     |      |  |    |   
|                                | De novo (newly constructed) |                                        |    | 7   |      |  |    |    | 
|                                | Acquisition                 |                                        |    | 14  |      |  |    |    | 
|                                | Disposals(2)                |                                        |    | (1) |      |  |    |    | 
|                                |                             | Total increase in number of facilities |    |     | 20   |  |    |    |  | 






|    |                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------
|(1) | At September 30, 2005, physicians own a portion of all of
    these facilities.                          
|   
|(2) | We sold our ownership interest in a facility in Cottonwood,
    Arizona during the first quarter of 2005.

Facility Operating Margins






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##### Table of Contents





|                          |                            |                    |       |       |            |  |             |                    |  |  |            |       |  |  |           |           | 
|------------------------- | -------------------------- | ------------------ | ----- | ----- | ---------- |  | ----------- | ------------------ |  |  | ---------- | ----- |  |  | --------- | --------- | 
|                          |                            | Three Months       |       |       |            |  | Nine Months |                    |  | 
|                          |                            | Ended              |       |       | Increase   |  |             | Ended              |  |  | Increase   |      
|                          |                            | September 30, 2005 |       |       | (decrease) |  |             | September 30, 2005 |  |  | (decrease) |      
|                          |                            |                    |       |       |            |  |             |                    |  |  |            |      
|United States facilities: |                            |                    |       |       |            |  |             |                    |  |  |            |       |  |  |           |          
|                          | With a hospital partner    |                    |       | 27.4% |            |  |             | (50) bps           |  |  |            | 30.1% |  |  |           | (280) bps | 
|                          | Without a hospital partner |                    |       | 28.2  |            |  |             | 100 bps            |  |  |            | 28.1  |  |  |           | 10 bps    | 
|Total U.S. facilities     |                            |                    | 27.6  |       |            |  | (10) bps    |                    |  |  | 29.6       |       |  |  | (200) bps |          
|United Kingdom facilities |                            |                    | 21.5% |       |            |  | (280) bps   |                    |  |  | 24.2%      |       |  |  | (120) bps |          






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Operating margin is calculated as operating income divided by
    total revenues. This table aggregates all of the same store
    facilities we operate using 100% of their results. This does not
    represent the overall margin for USPIs operations in
    either the U.S. or the U.K. because we have a variety of
    ownership levels in the facilities we operate, and facilities
    open for less than a year are excluded from same store
    calculations.

Three Months Ended September 30, 2005 Compared to Three
Months Ended September 30, 2004












26



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##### Table of Contents











Nine Months Ended September 30, 2005 Compared to Nine
Months Ended September 30, 2004










27



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##### Table of Contents











Liquidity and Capital Resources










28



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##### Table of Contents







|                                                         |                                      |                        |         |          |      |   |        |        |  |        |        |        |          |       |         |        |  |   |         |         | 
|-------------------------------------------------------- | ------------------------------------ | ---------------------- | ------- | -------- | ---- | - | ------ | ------ |  | ------ | ------ | ------ | -------- | ----- | ------- | ------ |  | - | ------- | ------- | 
|                                                         |                                      | Payments Due by Period |        
|                                                         |                                      |                        |        
|                                                         |                                      |                        |         | Within 1 |      |   | 1 to 3 |        |  | 4 to 5 |        |        | Beyond 5 |      
|Contractual Cash Obligations                             |                                      | Total                  |         |          | Year |   |        | Years  |  |        | Years  |        |          | Years |        
|                                                         |                                      |                        |         |          |      |   |        |        |  |        |        |        |          |       |        
|                                                         |                                      | (In thousands)         |        
|Long term debt obligations (principal plus interest)(1): |                                      |                        |         |          |      |   |        |        |  |        |        |        |          |       |         |        |  |   |         |        
|                                                         | Senior Subordinated Notes            |                        | $       | 247,500  |      |   | $      | 15,000 |  |        | $      | 30,000 |          |       | $       | 30,000 |  |   | $       | 172,500 | 
|                                                         | U.K. credit facility                 |                        |         | 78,184   |      |   |        | 10,101 |  |        |        | 23,988 |          |       |         | 44,095 |  |   |         |        | 
|                                                         | Other debt at operating subsidiaries |                        |         | 24,718   |      |   |        | 5,709  |  |        |        | 10,149 |          |       |         | 6,514  |  |   |         | 2,346   | 
|Capitalized lease obligations                            |                                      |                        | 102,198 |          |      |   | 10,045 |        |  |        | 15,869 |        |          |       | 12,183  |        |  |   | 64,101  |        
|Operating lease obligations                              |                                      |                        | 53,645  |          |      |   | 9,636  |        |  |        | 16,776 |        |          |       | 12,073  |        |  |   | 15,160  |        
|                                                         |                                      |                        |         |          |      |   |        |        |  |        |        |        |          |       |        
|Total contractual cash obligations                       |                                      | $                      | 506,245 |          |      | $ | 50,491 |        |  | $      | 96,782 |        |          | $     | 104,865 |        |  | $ | 254,107 |        
|                                                         |                                      |                        |         |          |      |   |        |        |  |        |        |        |          |       |        






|    |                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts shown for long-term debt obligations and capital lease
    obligations include the associated interest. For variable rate
    debt, the interest is calculated using the September 30,
    2005 rates applicable to each debt instrument.











|        |                                                               
|------- | --------------------------------------------------------------
|ITEM 3. | Quantitative and Qualitative Disclosures About Market
    Risk



29



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##### Table of Contents

















|        |                        
|------- | -----------------------
|ITEM 4. | Controls and Procedures






PART II  OTHER INFORMATION







|        |                  
|------- | -----------------
|ITEM 1. | Legal Proceedings



30



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##### Table of Contents








|        |                                 
|------- | --------------------------------
|ITEM 6. | Exhibits and Reports on Form 8-K

Exhibits:


| |    |     |  |                                                                                                                                                                                                                                                                                                                                          
| | -- | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3  | .1  |  | Second Amended and Restated Certificate of Incorporation
    (previously filed as an exhibit to the Companys
    Registration Statement on Form S-1 (No. 333-55442) and
    incorporated herein by reference).                                                                                                                          
| | 3  | .2  |  | Amended and Restated Bylaws (previously filed as an exhibit to
    the Companys Registration Statement on Form S-1 (No.
    333-55442) and incorporated herein by reference).                                                                                                                                                           
| | 4  | .1  |  | Form of Common Stock Certificate (previously filed as an exhibit
    to the Companys Registration Statement on Form S-1
    (No. 333-55442) and incorporated herein by reference).                                                                                                                                                      
| | 4  | .2  |  | Indenture, dated as of December 19, 2001, among United
    Surgical Partners Holdings, Inc., the guarantor parties thereto
    and U.S. Trust Company of Texas, N.A. (previously filed as
    Exhibit 4.2 to the Companys Annual Report on
    Form 10-K for the year ended December 31, 2001 and
    incorporated herein by reference).
| | 31 | .1* |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                  
| | 31 | .2* |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                  
| | 32 | .1* |  | Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                  
| | 32 | .2* |  | Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                  






|  |                
|- | ---------------
|* | Filed herewith.





| |                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company furnished a report on Form 8-K dated
    July 29, 2005, pursuant to Item 2.02 of Form 8-K,
    containing a news release announcing the Companys results
    of operations for the quarter and six months ended June 30,
    2005.                                              
|
| | The Company filed a report on Form 8-K dated July 29,
    2005, pursuant to Item 1.01 of Form 8-K, announcing
    the Companys entry into various employment agreements.                                                                                                                    
|
| | The Company filed a report on Form 8-K dated
    September 7, 2005, pursuant to Item 7.01 of
    Form 8-K, containing a copy of materials dated September
    2005 and prepared with respect to presentations to investors and
    others that may be made by senior officers of the Company.

31



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##### Table of Contents






SIGNATURES






| |                                             
| | --------------------------------------------
| | United Surgical Partners International, Inc.



| |     |                   
| | --- | ------------------
| | By: | /s/ Mark A. Kopser

| |                                                  
| | -------------------------------------------------
| |                                                  
| | Mark A. Kopser                                   
| | Senior Vice President and Chief Financial Officer
| | (Principal Financial Officer)                    



| |     |                   
| | --- | ------------------
| | By: | /s/ John J. Wellik

| |                                      
| | -------------------------------------
| |                                      
| | John J. Wellik                       
| | Senior Vice President, Accounting and
| | Administration, and Secretary        
| | (Principal Accounting Officer)       



32



---



##### Table of Contents



Exhibit Index


| |    |     |  |                                                                                                                                                                                                                                                                                                                                          
| | -- | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3  | .1  |  | Second Amended and Restated Certificate of Incorporation
    (previously filed as an exhibit to the Companys
    Registration Statement on Form S-1 (No. 333-55442) and
    incorporated herein by reference).                                                                                                                          
| | 3  | .2  |  | Amended and Restated Bylaws (previously filed as an exhibit to
    the Companys Registration Statement on Form S-1 (No.
    333-55442) and incorporated herein by reference).                                                                                                                                                           
| | 4  | .1  |  | Form of Common Stock Certificate (previously filed as an exhibit
    to the Companys Registration Statement on Form S-1
    (No. 333-55442) and incorporated herein by reference).                                                                                                                                                      
| | 4  | .2  |  | Indenture, dated as of December 19, 2001, among United
    Surgical Partners Holdings, Inc., the guarantor parties thereto
    and U.S. Trust Company of Texas, N.A. (previously filed as
    Exhibit 4.2 to the Companys Annual report on
    Form 10-K for the year ended December 31, 2001 and
    incorporated herein be reference).
| | 31 | .1* |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                  
| | 31 | .2* |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                  
| | 32 | .1* |  | Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                  
| | 32 | .2* |  | Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                  






|  |                
|- | ---------------
|* | Filed herewith.

33