##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

|                                             |  |                                                                                         
|-------------------------------------------- |  | ----------------------------------------------------------------------------------------
|x                                            |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|                                            
|For the quarterly period ended June 30, 2002
|                                            
|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 0-29818

LifePoint Hospitals, Inc.
(Exact name of registrant as specified in its charter)

|                                                                               |  |                                             
|------------------------------------------------------------------------------ |  | --------------------------------------------
|Delaware
(State or other jurisdiction
of incorporation or organization)        |  | 52-2165845
(IRS Employer Identification No.)
|                                                                              
|103 Powell Court
Brentwood, Tennessee
(Address of principal executive offices) |  | 37027
(Zip Code)                            

(615) 372-8500
(Registrants telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES   x   NO   o





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##### Table of Contents



Commission file number 333-84755

LifePoint Hospitals Holdings, Inc.
(Exact name of registrant as specified in its charter)

|                                                                               |  |                                             
|------------------------------------------------------------------------------ |  | --------------------------------------------
|Delaware
(State or other jurisdiction
of incorporation or organization)        |  | 52-2167869
(IRS Employer Identification No.)
|                                                                              
|103 Powell Court
Brentwood, Tennessee
(Address of principal executive offices) |  | 37027
(Zip Code)                            

(615) 372-8500
(Registrants telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

YES   x   NO   o

As of July 31, 2002, the number of outstanding shares of Common Stock of
LifePoint Hospitals, Inc. was 39,474,776 and all of the shares of Common Stock
of LifePoint Hospitals Holdings, Inc. were owned by LifePoint Hospitals, Inc.

2



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TABLE OF CONTENTS



|                                     |                                                             |                                                      |  |  |  |  |  | 
|------------------------------------ | ----------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|Part I: Financial Information       
|                                     | Item 1: Financial Statements                               
|                                     |                                                             | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                     |                                                             | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                                     |                                                             | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                     |                                                             | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                     | Item 2: MD&A                                               
|                                     | Item 3: Q&Q Disclosures about Market Risk                  
|Part II: Other Information          
|                                     | Item 4: Submission of Matters to a Vote of Security Holders
|                                     | Item 6: Exhibits and Reports on Form 8-K                   
|SIGNATURES                          
|EXHIBIT INDEX                       
|Section 906 Certification of the CEO
|Section 906 Certification of the CFO



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##### Table of Contents






Part I: Financial Information




Item 1: Financial Statements

LIFEPOINT HOSPITALS, INC.




CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED
(Dollars in millions, except per share amounts)


|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |      |        |  
|--------------------------------------------------------------------------- | ----------------- | ---------------------------------------------- | ----- | ------------------ | ------ | ---------------- | ----- | ---- | ------ | ---- | ----- | ---- | ------ | - | ----- | ---- | ------ | -
|                                                                            |                   |                                                |       | THREE MONTHS ENDED |        | SIX
MONTHS ENDED
|                                                                            |                   |                                                |       | JUNE 30,           |        | JUNE 30,        
|                                                                            |                   |                                                |       |                    |        |                 
|                                                                            |                   |                                                |       | 2002               |        | 2001             |       | 2002 |        | 2001
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |     
|Revenues                                                                    |                   | $                                              | 177.9 |                    |        | $                | 151.6 |      |        | $    | 359.5 |      |        | $ | 305.9 |     
|                                                                           
|Salaries and benefits                                                       |                   |                                                | 70.9  |                    |        |                  | 59.4  |      |        |      | 141.6 |      |        |   | 119.7 |     
|Supplies                                                                    |                   |                                                | 21.9  |                    |        |                  | 18.8  |      |        |      | 44.8  |      |        |   | 38.4  |     
|Other operating expenses                                                    |                   |                                                | 33.3  |                    |        |                  | 31.0  |      |        |      | 65.5  |      |        |   | 59.4  |     
|Provision for doubtful accounts                                             |                   |                                                | 13.1  |                    |        |                  | 10.6  |      |        |      | 26.3  |      |        |   | 22.6  |     
|Depreciation and amortization                                               |                   |                                                | 9.7   |                    |        |                  | 8.5   |      |        |      | 19.1  |      |        |   | 16.6  |     
|Interest expense, net                                                       |                   |                                                | 2.8   |                    |        |                  | 3.7   |      |        |      | 6.9   |      |        |   | 10.2  |     
|ESOP expense                                                                |                   |                                                | 2.7   |                    |        |                  | 2.4   |      |        |      | 5.2   |      |        |   | 5.0   |     
|Gain on previously impaired assets                                          |                   |                                                |      |                    |        |                  |      |      |        |      |      |      |        |   | (0.5  | )   
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|                                                                            |                   |                                                | 154.4 |                    |        |                  | 134.4 |      |        |      | 309.4 |      |        |   | 271.4 |     
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|Income before minority interests,
income taxes and extraordinary item       |                   |                                                | 23.5  |                    |        |                  | 17.2  |      |        |      | 50.1  |      |        |   | 34.5  |     
|Minority interests in earnings of consolidated
entity                       |                   |                                                | 0.8   |                    |        |                  | 0.7   |      |        |      | 1.5   |      |        |   | 1.3   |     
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|Income before income taxes and extraordinary item                           |                   |                                                | 22.7  |                    |        |                  | 16.5  |      |        |      | 48.6  |      |        |   | 33.2  |     
|Provision for income taxes                                                  |                   |                                                | 9.6   |                    |        |                  | 8.0   |      |        |      | 21.0  |      |        |   | 16.1  |     
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|Income before extraordinary item                                            |                   |                                                | 13.1  |                    |        |                  | 8.5   |      |        |      | 27.6  |      |        |   | 17.1  |     
|Extraordinary loss on early retirement of debt,
net of taxes                |                   |                                                | 15.6  |                    |        |                  | 1.6   |      |        |      | 16.4  |      |        |   | 1.6   |     
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|                                                                            | Net income (loss) |                                                | $     | (2.5               | )      |                  | $     | 6.9  |        |      | $     | 11.2 |        |   | $     | 15.5 |       
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|Basic earnings (loss) per share:                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|                                                                            |                   | Income before extraordinary item               |       | $                  | 0.35   |                  |       | $    | 0.23   |      |       | $    | 0.74   |   |       | $    | 0.50   |  
|                                                                            |                   | Extraordinary loss on early retirement of debt |       |                    | (0.42  | )                |       |      | (0.04  | )    |       |      | (0.44  | ) |       |      | (0.05  | )
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|                                                                            |                   | Net income (loss)                              |       | $                  | (0.07  | )                |       | $    | 0.19   |      |       | $    | 0.30   |   |       | $    | 0.45   |  
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|Diluted earnings (loss) per share:                                          |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|                                                                            |                   | Income before extraordinary item               |       | $                  | 0.34   |                  |       | $    | 0.22   |      |       | $    | 0.71   |   |       | $    | 0.47   |  
|                                                                            |                   | Extraordinary loss on early retirement of debt |       |                    | (0.40  | )                |       |      | (0.04  | )    |       |      | (0.41  | ) |       |      | (0.04  | )
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|                                                                            |                   | Net income (loss)                              |       | $                  | (0.06  | )                |       | $    | 0.18   |      |       | $    | 0.30   |   |       | $    | 0.43   |  
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|Weighted average shares and dilutive securities outstanding
(in thousands): |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|                                                                            |                   | Basic                                          |       |                    | 37,485 |                  |       |      | 36,236 |      |       |      | 37,394 |   |       |      | 34,420 |  
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     
|                                                                            |                   | Diluted                                        |       |                    | 38,667 |                  |       |      | 37,662 |      |       |      | 39,728 |   |       |      | 35,875 |  
|                                                                            |                   |                                                |       |                    |        |                  |       |      |        |      |       |      |        |   |       |     

See accompanying notes.

3



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LIFEPOINT HOSPITALS, INC.




CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except per share amounts)


|                                                    |                                                                                                                                                                                  |   |             |        |              |   |       |        |  
|--------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | ------ | ------------ | - | ----- | ------ | -
|                                                    |                                                                                                                                                                                  |   | JUNE 30,    |        | DECEMBER 31,
|                                                    |                                                                                                                                                                                  |   | 2002        |        | 2001        
|                                                    |                                                                                                                                                                                  |   |             |        |             
|                                                    |                                                                                                                                                                                  |   | (unaudited) |        | (1)         
|ASSETS                                              |                                                                                                                                                                                  |   |             |        |              |   |      
|Current assets:                                     |                                                                                                                                                                                  |   |             |        |              |   |       |       
|                                                    | Cash and cash equivalents                                                                                                                                                        |   | $           | 155.1  |              |   | $     | 57.2   |  
|                                                    | Short-term investments                                                                                                                                                           |   |             | 21.5   |              |   |       |       |  
|                                                    | Accounts receivable, less allowances for doubtful accounts of $61.6 at
June 30, 2002 and $59.0 at December 31, 2001                                                              |   |             | 74.9   |              |   |       | 56.7   |  
|                                                    | Inventories                                                                                                                                                                      |   |             | 16.8   |              |   |       | 16.3   |  
|                                                    | Deferred income taxes and other current assets                                                                                                                                   |   |             | 25.3   |              |   |       | 18.7   |  
|                                                    |                                                                                                                                                                                  |   |             |        |              |   |       |       
|                                                    |                                                                                                                                                                                  |   | 293.6       |        |              |   | 148.9 |       
|Property and equipment:                             |                                                                                                                                                                                  |   |             |        |              |   |       |       
|                                                    | Land                                                                                                                                                                             |   |             | 10.7   |              |   |       | 10.7   |  
|                                                    | Buildings and improvements                                                                                                                                                       |   |             | 262.9  |              |   |       | 262.0  |  
|                                                    | Equipment                                                                                                                                                                        |   |             | 277.7  |              |   |       | 263.4  |  
|                                                    | Construction in progress (estimated cost to complete and equip after June
30, 2002 - $56.0)                                                                                      |   |             | 20.2   |              |   |       | 7.2    |  
|                                                    |                                                                                                                                                                                  |   |             |        |              |   |       |       
|                                                    |                                                                                                                                                                                  |   | 571.5       |        |              |   | 543.3 |       
|                                                    | Accumulated depreciation                                                                                                                                                         |   |             | (223.1 | )            |   |       | (204.9 | )
|                                                    |                                                                                                                                                                                  |   |             |        |              |   |       |       
|                                                    |                                                                                                                                                                                  |   | 348.4       |        |              |   | 338.4 |       
|Deferred loan costs, net                            |                                                                                                                                                                                  |   | 9.9         |        |              |   | 7.1   |       
|Goodwill                                            |                                                                                                                                                                                  |   | 47.2        |        |              |   | 47.1  |       
|Other                                               |                                                                                                                                                                                  |   | 12.5        |        |              |   | 12.8  |       
|                                                    |                                                                                                                                                                                  |   |             |        |              |   |       |       
|                                                    |                                                                                                                                                                                  | $ | 711.6       |        |              | $ | 554.3 |       
|                                                    |                                                                                                                                                                                  |   |             |        |              |   |       |       
|LIABILITIES AND EQUITY                              |                                                                                                                                                                                  |   |             |        |              |   |      
|Current liabilities:                                |                                                                                                                                                                                  |   |             |        |              |   |       |       
|                                                    | Accounts payable                                                                                                                                                                 |   | $           | 18.5   |              |   | $     | 19.0   |  
|                                                    | Accrued salaries                                                                                                                                                                 |   |             | 18.4   |              |   |       | 18.6   |  
|                                                    | Other current liabilities                                                                                                                                                        |   |             | 17.7   |              |   |       | 10.7   |  
|                                                    | Estimated third-party payor settlements                                                                                                                                          |   |             | 22.3   |              |   |       | 17.9   |  
|                                                    |                                                                                                                                                                                  |   |             |        |              |   |       |       
|                                                    |                                                                                                                                                                                  |   | 76.9        |        |              |   | 66.2  |       
|Long-term debt                                      |                                                                                                                                                                                  |   | 272.0       |        |              |   | 150.0 |       
|Deferred income taxes                               |                                                                                                                                                                                  |   | 21.7        |        |              |   | 21.0  |       
|Professional liability risks and other liabilities  |                                                                                                                                                                                  |   | 21.5        |        |              |   | 16.9  |       
|                                                   
|Minority interests in equity of consolidated entity |                                                                                                                                                                                  |   | 4.5         |        |              |   | 5.2   |       
|                                                   
|Stockholders equity:                               |                                                                                                                                                                                  |   |             |        |              |   |      
|                                                    | Preferred stock, $0.01 par value; 10,000,000 shares authorized; no shares
issued                                                                                                 |   |             |       |              |   |       |       |  
|                                                    | Common stock, $0.01 par value; 90,000,000 shares authorized; 39,455,339
shares and 39,276,745 shares issued and outstanding at June 30, 2002 and
December 31, 2001, respectively |   |             | 0.4    |              |   |       | 0.4    |  
|                                                    | Capital in excess of par value                                                                                                                                                   |   |             | 292.2  |              |   |       | 285.0  |  
|                                                    | Unearned ESOP compensation                                                                                                                                                       |   |             | (20.9  | )            |   |       | (22.5  | )
|                                                    | Notes receivable for shares sold to employees                                                                                                                                    |   |             | (5.7   | )            |   |       | (5.7   | )
|                                                    | Retained earnings                                                                                                                                                                |   |             | 49.0   |              |   |       | 37.8   |  
|                                                    |                                                                                                                                                                                  |   |             |        |              |   |       |       
|                                                    |                                                                                                                                                                                  |   | 315.0       |        |              |   | 295.0 |       
|                                                    |                                                                                                                                                                                  |   |             |        |              |   |       |        |  
|                                                    |                                                                                                                                                                                  | $ | 711.6       |        |              | $ | 554.3 |       
|                                                    |                                                                                                                                                                                  |   |             |        |              |   |       |        |  



|(1) |  | Derived from audited financial statements.
|--- |  | ------------------------------------------

See accompanying notes.

4



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##### Table of Contents



LIFEPOINT HOSPITALS, INC.




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED
(In millions)


|                                                 |                                                                                   |                                                                                                    |                                         |                                                     |      |                            |        |                          |      |      |        |        |      |       |       |        |      |      |       |  
|------------------------------------------------ | --------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------- | --------------------------------------------------- | ---- | -------------------------- | ------ | ------------------------ | ---- | ---- | ------ | ------ | ---- | ----- | ----- | ------ | ---- | ---- | ----- | -
|                                                 |                                                                                   |                                                                                                    |                                         |                                                     |      | THREE MONTHS ENDEDJUNE 30, |        | SIX MONTHS ENDEDJUNE 30,
|                                                 |                                                                                   |                                                                                                    |                                         |                                                     |      |                            |        |                         
|                                                 |                                                                                   |                                                                                                    |                                         |                                                     |      | 2002                       |        | 2001                     |      | 2002 |        | 2001  
|                                                 |                                                                                   |                                                                                                    |                                         |                                                     |      |                            |        |                          |      |      |        |       
|Cash flows from operating activities:            |                                                                                   |                                                                                                    |                                         |                                                     |      |                            |        |                          |      |      |        |        |      |       |       |       
|                                                 | Net
income (loss)                                                                 |                                                                                                    | $                                       | (2.5                                                | )    |                            | $      | 6.9                      |      |      | $      | 11.2   |      |       | $     | 15.5   |     
|                                                 | Adjustments to reconcile net income to net cash provided
by operating activities: |                                                                                                    |                                         |                                                     |      |                            |        |                          |      |      |        |        |      |       |       |        |     
|                                                 |                                                                                   | Depreciation and amortization                                                                      |                                         |                                                     | 9.7  |                            |        |                          | 8.5  |      |        |        | 19.1 |       |       |        | 16.6 |     
|                                                 |                                                                                   | ESOP expense                                                                                       |                                         |                                                     | 2.7  |                            |        |                          | 2.4  |      |        |        | 5.2  |       |       |        | 5.0  |     
|                                                 |                                                                                   | Minority interests in earnings of consolidated entity                                              |                                         |                                                     | 0.8  |                            |        |                          | 0.7  |      |        |        | 1.5  |       |       |        | 1.3  |     
|                                                 |                                                                                   | Deferred income taxes (benefit)                                                                    |                                         |                                                     | (1.2 | )                          |        |                          | (0.2 | )    |        |        | (0.8 | )     |       |        | (0.7 | )   
|                                                 |                                                                                   | Reserve for professional liability risks, net                                                      |                                         |                                                     | 2.0  |                            |        |                          | 2.7  |      |        |        | 5.1  |       |       |        | 4.1  |     
|                                                 |                                                                                   | Extraordinary loss on early retirement of debt                                                     |                                         |                                                     | 25.0 |                            |        |                          | 2.6  |      |        |        | 26.3 |       |       |        | 2.6  |     
|                                                 |                                                                                   | Gain on previously impaired assets                                                                 |                                         |                                                     |     |                            |        |                          |     |      |        |        |     |       |       |        | (0.5 | )   
|                                                 |                                                                                   | Tax benefit from stock option exercises                                                            |                                         |                                                     | 0.3  |                            |        |                          | 0.7  |      |        |        | 1.0  |       |       |        | 0.7  |     
|                                                 |                                                                                   | Increase (decrease) in cash from operating assets and
liabilities, net of effects of acquisitions: |                                         |                                                     |      |                            |        |                          |      |      |        |        |      |       |       |        |      |     
|                                                 |                                                                                   |                                                                                                    | Accounts receivable                     |                                                     |      | 2.6                        |        |                          |      | 4.0  |        |        |      | (18.2 | )     |        |      | (9.5 | )    
|                                                 |                                                                                   |                                                                                                    | Inventories and other current assets    |                                                     |      | (1.7                       | )      |                          |      | 0.1  |        |        |      | (3.1  | )     |        |      | 0.2  |      
|                                                 |                                                                                   |                                                                                                    | Accounts payable and accrued expenses   |                                                     |      | 2.6                        |        |                          |      | (4.6 | )      |        |      | 4.1   |       |        |      | 2.8  |      
|                                                 |                                                                                   |                                                                                                    | Income taxes payable                    |                                                     |      | (14.5                      | )      |                          |      | (5.6 | )      |        |      | (2.5  | )     |        |      | 3.1  |      
|                                                 |                                                                                   |                                                                                                    | Estimated third-party payor settlements |                                                     |      | (6.9                       | )      |                          |      | (5.4 | )      |        |      | 4.4   |       |        |      | 8.9  |      
|                                                 |                                                                                   | Other                                                                                              |                                         |                                                     | (0.5 | )                          |        |                          | 0.2  |      |        |        | (0.7 | )     |       |        | 0.5  |     
|                                                 |                                                                                   |                                                                                                    |                                         |                                                     |      |                            |        |                          |      |      |        |        |      |       |       |        |     
|                                                 |                                                                                   |                                                                                                    |                                         | Net cash provided by operating activities           |      |                            | 18.4   |                          |      |      | 13.0   |        |      |       | 52.6  |        |      |      | 50.6  |  
|Cash flows from investing activities:            |                                                                                   |                                                                                                    |                                         |                                                     |      |                            |        |                          |      |      |        |        |      |       |       |       
|                                                 | Purchases of property and equipment, net                                          |                                                                                                    |                                         | (16.8                                               | )    |                            |        | (13.2                    | )    |      |        | (26.8  | )    |       |       | (22.6  | )   
|                                                 | Purchase of facility                                                              |                                                                                                    |                                         |                                                    |      |                            |        | (5.7                     | )    |      |        |       |      |       |       | (5.7   | )   
|                                                 | Purchases of short-term investments                                               |                                                                                                    |                                         | (21.5                                               | )    |                            |        |                         |      |      |        | (21.5  | )    |       |       |       |     
|                                                 | Other                                                                             |                                                                                                    |                                         | (1.2                                                | )    |                            |        | 4.8                      |      |      |        | (1.3   | )    |       |       | 4.8    |     
|                                                 |                                                                                   |                                                                                                    |                                         |                                                     |      |                            |        |                          |      |      |        |        |      |       |       |        |     
|                                                 |                                                                                   |                                                                                                    |                                         | Net cash used in investing activities               |      |                            | (39.5  | )                        |      |      | (14.1  | )      |      |       | (49.6 | )      |      |      | (23.5 | )
|Cash flows from financing activities:            |                                                                                   |                                                                                                    |                                         |                                                     |      |                            |        |                          |      |      |        |        |      |       |       |       
|                                                 | Proceeds from stock offering, net                                                 |                                                                                                    |                                         |                                                    |      |                            |        |                         |      |      |        |       |      |       |       | 100.4  |     
|                                                 | Repayments of bank debt                                                           |                                                                                                    |                                         |                                                    |      |                            |        | (117.1                   | )    |      |        |       |      |       |       | (139.3 | )   
|                                                 | Repurchases of senior subordinated notes                                          |                                                                                                    |                                         | (141.7                                              | )    |                            |        |                         |      |      |        | (150.3 | )    |       |       |       |     
|                                                 | Proceeds from issuance of convertible notes, net                                  |                                                                                                    |                                         | 242.7                                               |      |                            |        |                         |      |      |        | 242.7  |      |       |       |       |     
|                                                 | Proceeds from exercise of stock options                                           |                                                                                                    |                                         | 1.0                                                 |      |                            |        | 1.2                      |      |      |        | 2.2    |      |       |       | 1.5    |     
|                                                 | Other                                                                             |                                                                                                    |                                         | 0.4                                                 |      |                            |        | (0.1                     | )    |      |        | 0.3    |      |       |       | 0.1    |     
|                                                 |                                                                                   |                                                                                                    |                                         |                                                     |      |                            |        |                          |      |      |        |        |      |       |       |        |     
|                                                 |                                                                                   |                                                                                                    |                                         | Net cash provided by (used in) financing activities |      |                            | 102.4  |                          |      |      | (116.0 | )      |      |       | 94.9  |        |      |      | (37.3 | )
|                                                
|Change in cash and cash equivalents              |                                                                                   |                                                                                                    | 81.3                                    |                                                     |      |                            | (117.1 | )                        |      |      | 97.9   |        |      |       | (10.2 | )     
|Cash and cash equivalents at beginning of period |                                                                                   |                                                                                                    | 73.8                                    |                                                     |      |                            | 146.6  |                          |      |      | 57.2   |        |      |       | 39.7  |       
|                                                 |                                                                                   |                                                                                                    |                                         |                                                     |      |                            |        |                          |      |      |        |        |      |       |       |        |     
|Cash and cash equivalents at end of period       |                                                                                   | $                                                                                                  | 155.1                                   |                                                     |      | $                          | 29.5   |                          |      | $    | 155.1  |        |      | $     | 29.5  |       
|                                                 |                                                                                   |                                                                                                    |                                         |                                                     |      |                            |        |                          |      |      |        |        |      |       |       |        |     
|Interest
payments, net                           |                                                                                   | $                                                                                                  | 7.8                                     |                                                     |      | $                          | 9.1    |                          |      | $    | 8.4    |        |      | $     | 12.2  |       
|Income taxes paid , net                          |                                                                                   | $                                                                                                  | 15.4                                    |                                                     |      | $                          | 11.8   |                          |      | $    | 13.2   |        |      | $     | 11.8  |       

See accompanying notes.

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LIFEPOINT HOSPITALS, INC.




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2002
(UNAUDITED)


NOTE 1  ORGANIZATION AND BASIS OF PRESENTATION

At June 30, 2002, the Company was comprised of 23 general, acute care
hospitals and related health care entities located in non-urban areas in the
states of Alabama, Florida, Kansas, Kentucky, Louisiana, Tennessee, Utah and
Wyoming.

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the three months and six months ended June 30, 2002 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2002. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Companys Annual
Report on Form 10-K for the year ended December 31, 2001.

Certain prior year amounts have been reclassified to conform to the
current year presentation.

NOTE 2  EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted
earnings per share for income before extraordinary item (income in millions and
shares in thousands):

|                                                                              |                        |   |                    |       |                  |   |        |       |      |   |        |       |  |   |        |       | 
|----------------------------------------------------------------------------- | ---------------------- | - | ------------------ | ----- | ---------------- | - | ------ | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- | 
|                                                                              |                        |   | Three months ended |       | Six months ended
|                                                                              |                        |   | June 30            |       | June 30         
|                                                                              |                        |   |                    |       |                 
|                                                                              |                        |   | 2002*              |       | 2001             |   | 2002   |       | 2001
|                                                                              |                        |   |                    |       |                  |   |        |       |     
|Numerator:                                                                    |                        |   |                    |       |                  |   |        |       |      |   |        |       |  |   |        |      
|Numerator for basic earnings per share-
Income before extraordinary item      |                        | $ | 13.1               |       |                  | $ | 8.5    |       |      | $ | 27.6   |       |  | $ | 17.1   |      
|Effect of convertible notes                                                   |                        |   |                   |       |                  |   |       |       |      |   | 0.8    |       |  |   |       |      
|                                                                              |                        |   |                    |       |                  |   |        |       |      |   |        |       |  |   |        |      
|Numerator for diluted earnings per share - Income before extraordinary item   |                        | $ | 13.1               |       |                  | $ | 8.5    |       |      | $ | 28.4   |       |  | $ | 17.1   |      
|                                                                              |                        |   |                    |       |                  |   |        |       |      |   |        |       |  |   |        |      
|Denominator:                                                                  |                        |   |                    |       |                  |   |        |       |      |   |        |       |  |   |        |      
|Denominator for basic earnings per share  weighted
average shares            |                        |   | 37,485             |       |                  |   | 36,236 |       |      |   | 37,394 |       |  |   | 34,420 |      
|Effect of dilutive securities:                                                |                        |   |                    |       |                  |   |        |       |      |   |        |       |  |   |        |      
|                                                                              | Employee stock options |   |                    | 1,097 |                  |   |        | 1,426 |      |   |        | 1,079 |  |   |        | 1,455 | 
|                                                                              | Other                  |   |                    | 85    |                  |   |        |      |      |   |        | 88    |  |   |        |      | 
|                                                                              | Convertible notes      |   |                    |      |                  |   |        |      |      |   |        | 1,167 |  |   |        |      | 
|                                                                              |                        |   |                    |       |                  |   |        |       |      |   |        |       |  |   |        |      
|Denominator for diluted earnings per share 
Adjusted weighted average shares |                        |   | 38,667             |       |                  |   | 37,662 |       |      |   | 39,728 |       |  |   | 35,875 |      
|                                                                              |                        |   |                    |       |                  |   |        |       |      |   |        |       |  |   |        |      
|Basic income before extraordinary item per share                              |                        | $ | 0.35               |       |                  | $ | 0.23   |       |      | $ | 0.74   |       |  | $ | 0.50   |      
|                                                                              |                        |   |                    |       |                  |   |        |       |      |   |        |       |  |   |        |      
|Diluted income before extraordinary item per share                            |                        | $ | 0.34               |       |                  | $ | 0.22   |       |      | $ | 0.71   |       |  | $ | 0.47   |      
|                                                                              |                        |   |                    |       |                  |   |        |       |      |   |        |       |  |   |        |      



|* |  | The effect of the convertible notes and related interest expense to purchase
2,320 shares of common stock was not included in the computation of diluted
earnings per share because the effect would have been anti-dilutive.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 3  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for
Asset Retirement Obligations. SFAS 143 is effective for financial statements
issued for fiscal years beginning after June 15, 2002, but earlier application
is encouraged. SFAS 143 establishes accounting standards for recognition and
measurement of a liability for an asset retirement obligation and the
associated retirement costs. SFAS 143 applies to all entities and to legal
obligations associated with the retirement of long-lived assets that result
from the acquisition, construction, development and (or) the normal operation
of a long-lived asset, except for certain obligations of lessees. The Company
does not expect SFAS 143 to have a material effect on its results of operations
or financial position.

6



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##### Table of Contents



In August 2001, the FASB also issued SFAS 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which supersedes SFAS 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of, and the accounting and reporting provisions of APB Opinion No.
30, Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS
144 removes goodwill from its scope and clarifies other implementation issues
related to SFAS 121. SFAS 144 also provides a single framework for evaluating
long-lived assets to be disposed of by sale. The provisions of SFAS 144 are
effective for financial statements issued for fiscal years beginning after
December 15, 2001, and interim periods within those fiscal years and,
generally, are to be applied prospectively. SFAS 144 did not have a material
effect on the Companys results of operations or financial position.

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
Under certain provisions of SFAS 145, gains and losses related to the
extinguishment of debt should no longer be segregated on the income statement
as extraordinary items net of the effects of income taxes. Instead, those gains
and losses should be included as a component of income before income taxes. The
provisions of SFAS 145 are effective for fiscal years beginning after May 15,
2002 with early adoption encouraged. Any gain or loss on extinguishment of debt
that was classified as an extraordinary item in prior periods presented that
does not meet the criteria in Accounting Principles Board Opinion No. 30 for
classifications as an extraordinary item should be reclassified upon adoption.
Had the Company adopted SFAS 145 in the first quarter of fiscal year 2001, the
extraordinary loss on early retirement of debt of $25.0 million and $26.3
million, before the $9.4 million and $9.9 million effect of income taxes, for
the three months and six months ended June 30, 2002, respectively, would have
been reflected in income before income taxes. In addition, the extraordinary
loss on early retirement of debt of $2.6 million, before the $1.0 million
effect of income taxes for the three months and six months ended June 30, 2001,
would also have been reflected in income before income taxes. There would be
no resulting change in net income.

Because of the nature of the earnings per share calculation regarding
antidilution of the convertible securities and the effect of applying SFAS 145,
the computation of basic and diluted earnings (loss) per share would have been as
follows if the Company had adopted SFAS 145 on January 1, 2001 (income in
millions and shares in thousands):

|                                                                                    |                        |   |                    |   |                  |   |        |       |      |   |        |       |  |   |        |       | 
|----------------------------------------------------------------------------------- | ---------------------- | - | ------------------ | - | ---------------- | - | ------ | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- | 
|                                                                                    |                        |   | Three months ended |   | Six months ended
|                                                                                    |                        |   | June 30            |   | June 30         
|                                                                                    |                        |   |                    |   |                 
|                                                                                    |                        |   | 2002a              |   | 2001             |   | 2002b  |       | 2001
|                                                                                    |                        |   |                    |   |                  |   |        |       |     
|Numerator:                                                                          |                        |   |                    |   |                  |   |        |       |      |   |        |       |  |   |        |      
|Numerator for basic earnings (loss) per share 
Net income                          |                        | $ | (2.5               | ) |                  | $ | 6.9    |       |      | $ | 11.2   |       |  | $ | 15.5   |      
|Effect of convertible notes                                                         |                        |   |                   |   |                  |   |       |       |      |   |       |       |  |   |       |      
|                                                                                    |                        |   |                    |   |                  |   |        |       |      |   |        |       |  |   |        |      
|Numerator for diluted earnings (loss) per share                                     |                        | $ | (2.5               | ) |                  | $ | 6.9    |       |      | $ | 11.2   |       |  | $ | 15.5   |      
|                                                                                    |                        |   |                    |   |                  |   |        |       |      |   |        |       |  |   |        |      
|                                                                                   
|Denominator:                                                                        |                        |   |                    |   |                  |   |        |       |      |   |        |       |  |   |        |      
|Denominator for basic earnings (loss) per share-
Weighted average shares            |                        |   | 37,485             |   |                  |   | 36,236 |       |      |   | 37,394 |       |  |   | 34,420 |      
|Effect of dilutive securities:                                                      |                        |   |                    |   |                  |   |        |       |      |   |        |       |  |   |        |      
|                                                                                    | Employee stock options |   |                    |  |                  |   |        | 1,426 |      |   |        | 1,079 |  |   |        | 1,455 | 
|                                                                                    | Other                  |   |                    |  |                  |   |        |      |      |   |        | 88    |  |   |        |      | 
|                                                                                    | Convertible notes      |   |                    |  |                  |   |        |      |      |   |        |      |  |   |        |      | 
|                                                                                    |                        |   |                    |   |                  |   |        |       |      |   |        |       |  |   |        |      
|Denominator for diluted earnings (loss) per share-
Adjusted weighted average shares |                        |   | 37,485             |   |                  |   | 37,662 |       |      |   | 38,561 |       |  |   | 35,875 |      
|                                                                                    |                        |   |                    |   |                  |   |        |       |      |   |        |       |  |   |        |      
|Basic earnings (loss) per share                                                     |                        | $ | (0.07              | ) |                  | $ | 0.19   |       |      | $ | 0.30   |       |  | $ | 0.45   |      
|                                                                                    |                        |   |                    |   |                  |   |        |       |      |   |        |       |  |   |        |      
|Diluted earnings (loss) per share                                                   |                        | $ | (0.07              | ) |                  | $ | 0.18   |       |      | $ | 0.29   |       |  | $ | 0.43   |      
|                                                                                    |                        |   |                    |   |                  |   |        |       |      |   |        |       |  |   |        |      



|a |  | The effect of the convertible notes and related interest expense to
purchase 2,320 shares of common stock and the effect of the employee stock
options and other to purchase 1,182 shares of common stock were not included in
the computation of diluted earnings per share because their
effect would have been anti-dilutive.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|b |  | The effect of the convertible notes and related interest expense to purchase
1,167 shares of common stock was not included in the computation
of diluted earnings per share because the effect would have been
anti-dilutive.                                                                                                   

In July 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities. The
standard requires companies to recognize costs associated with exit
or disposal activities when they are incurred rather than at the date
of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain
employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, or other exit or disposal
activity. The provisions of this Statement are effective for exit or
disposal activities initiated after December 31, 2002. The Company
does not anticipate the adoption of this standard to impact its
results of operations.

NOTE 4  GOODWILL AND INTANGIBLE ASSETS

In July 2001, the FASB issued SFAS 141, Business Combinations, and SFAS
142, Goodwill and Other Intangible Assets, (the Statements). These Statements made significant changes to the accounting for
business combinations, goodwill and intangible assets.

7



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##### Table of Contents



SFAS 141 eliminates the pooling-of-interests method of accounting for
business combinations. In addition, it further clarifies the criteria for
recognition of intangible assets separately from goodwill. SFAS 141 was
effective for transactions completed subsequent to June 30, 2001. The
application of SFAS 141 did not have a material effect on the Companys results
of operations or financial position.

Under SFAS 142, goodwill and intangible assets with indefinite lives are
no longer amortized but are reviewed at least annually for impairment. The
amortization provisions of SFAS 142 apply to goodwill and intangible assets
acquired after June 30, 2001. With respect to goodwill and intangible assets
acquired prior to July 1, 2001, the Company adopted SFAS 142 effective January
1, 2002. Pursuant to SFAS 142, the Company completed its transition impairment
tests of goodwill during the second quarter of 2002 and did not incur an
impairment charge. The Company will perform its initial annual impairment test
later in 2002 in accordance with SFAS 142.

The table below shows the Companys income before extraordinary loss and
net income (loss) for the three months and six months ended June 30, 2002 and
2001 adjusted for the cessation of goodwill amortization required by the new
standard as if it had occurred as of January 1, 2001 (dollars in millions
except per share amounts):

|                                                             |  |                    |       |                  |  |      |      |      |  |   |      |  |  |   |      | 
|------------------------------------------------------------ |  | ------------------ | ----- | ---------------- |  | ---- | ---- | ---- |  | - | ---- |  |  | - | ---- | 
|                                                             |  | Three months ended |       | Six months ended
|                                                             |  | June 30            |       | June 30         
|                                                             |  |                    |       |                 
|                                                             |  | 2002               |       | 2001             |  | 2002 |      | 2001
|                                                             |  |                    |       |                  |  |      |      |     
|Income before extraordinary loss, as reported                |  | $                  | 13.1  |                  |  | $    | 8.5  |      |  | $ | 27.6 |  |  | $ | 17.1 | 
|Goodwill amortization, net of applicable income tax benefits |  |                    |      |                  |  |      | 0.3  |      |  |   |     |  |  |   | 0.6  | 
|                                                             |  |                    |       |                  |  |      |      |      |  |   |      |  |  |   |      | 
|Adjusted income before extraordinary loss                    |  | $                  | 13.1  |                  |  | $    | 8.8  |      |  | $ | 27.6 |  |  | $ | 17.7 | 
|                                                             |  |                    |       |                  |  |      |      |      |  |   |      |  |  |   |      | 
|Net income (loss), as reported                               |  | $                  | (2.5  | )                |  | $    | 6.9  |      |  | $ | 11.2 |  |  | $ | 15.5 | 
|Goodwill amortization, net of applicable income tax benefits |  |                    |      |                  |  |      | 0.3  |      |  |   |     |  |  |   | 0.6  | 
|                                                             |  |                    |       |                  |  |      |      |      |  |   |      |  |  |   |      | 
|Adjusted net income (loss)                                   |  | $                  | (2.5  | )                |  | $    | 7.2  |      |  | $ | 11.2 |  |  | $ | 16.1 | 
|                                                             |  |                    |       |                  |  |      |      |      |  |   |      |  |  |   |      | 
|Diluted earnings per share:                                  |  |                    |       |                  |  |      |      |      |  |   |      |  |  |   |      | 
|Income before extraordinary loss, as reported                |  | $                  | 0.34  |                  |  | $    | 0.22 |      |  | $ | 0.71 |  |  | $ | 0.47 | 
|Goodwill amortization, net of applicable income tax benefits |  |                    |      |                  |  |      | 0.01 |      |  |   |     |  |  |   | 0.02 | 
|                                                             |  |                    |       |                  |  |      |      |      |  |   |      |  |  |   |      | 
|Adjusted income before extraordinary loss                    |  | $                  | 0.34  |                  |  | $    | 0.23 |      |  | $ | 0.71 |  |  | $ | 0.49 | 
|                                                             |  |                    |       |                  |  |      |      |      |  |   |      |  |  |   |      | 
|Diluted
earnings (loss) per share:                           |  |                    |       |                  |  |      |      |      |  |   |      |  |  |   |      | 
|Net income (loss), as reported                               |  | $                  | (0.06 | )                |  | $    | 0.18 |      |  | $ | 0.30 |  |  | $ | 0.43 | 
|Goodwill amortization, net of applicable income tax benefits |  |                    |      |                  |  |      | 0.01 |      |  |   |     |  |  |   | 0.02 | 
|                                                             |  |                    |       |                  |  |      |      |      |  |   |      |  |  |   |      | 
|Adjusted net income (loss)                                   |  | $                  | (0.06 | )                |  | $    | 0.19 |      |  | $ | 0.30 |  |  | $ | 0.45 | 
|                                                             |  |                    |       |                  |  |      |      |      |  |   |      |  |  |   |      | 

NOTE 5  ISSUANCE OF CONVERTIBLE NOTES

Effective May 22, 2002, the Company sold $250 million of Convertible
Subordinated Notes due June 1, 2009 (the Convertible Notes). The net
proceeds were approximately $242.7 million and will be used for general
corporate purposes, which may include capital improvements on the Companys
existing facilities, repurchases of the Companys 10 3/4% senior subordinated
notes and working capital. The Convertible Notes bear interest at the rate of 4 1/2% per year, payable semi-annually on June 1 and
December 1, beginning on December 1, 2002. The Convertible Notes are
convertible at the option of the holder at any time on or prior to maturity
into shares of the Companys common stock at a conversion price of $47.36 per
share. The conversion price is subject to adjustment. The Company may redeem
all or a portion of the Convertible Notes on or after June 3, 2005, at the then
current redemption prices, plus accrued and unpaid interest. Convertible Notes
holders may require the Company to repurchase all of the holders Convertible
Notes at 100% of their principal amount plus accrued and unpaid interest in
some circumstances involving a change of control. The Convertible Notes are
unsecured and subordinated to the Companys existing and future senior
indebtedness and senior subordinated indebtedness. The Convertible Notes rank
junior to the Companys subsidiary liabilities. The indenture does not contain
any financial covenants. A total of 5,278,825 shares of common stock have been
reserved for issuance upon conversion of the Convertible Notes.

NOTE 6  REPURCHASE OF SENIOR SUBORDINATED NOTES

During the six months ended June 30, 2002, the Company repurchased $128.0
million of its 10 3/4% Senior Subordinated Notes due 2009 (the Notes) and
paid a $22.3 million premium on these repurchases. In connection with these
repurchases, the Company recorded an extraordinary charge from early retirement
of debt in the amount of $16.4 million, net of tax benefits of $9.9 million.

Subsequent to June 30, 2002 (after the Companys earnings release date of
July 22, 2002), the Company repurchased an additional $17.8 million of the
Notes and paid $3.3 million in premiums related to these additional
repurchases. The Company will incur an additional extraordinary charge to
income of
$2.4 million, net of tax
benefits of
$1.5 million, during the three
months ended September 30, 2002 as a result of these additional
repurchases. As of August 12, 2002, $4.2 million of the Notes remain
outstanding.

8



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##### Table of Contents



NOTE 7  CONTINGENCIES

HCA Investigations, Litigation and Indemnification Rights

HCA, Inc. is currently the subject of various federal and state investigations,
qui tam actions, shareholder derivative and class action suits, patient/payor
actions and general liability claims. HCA is also the subject of a formal order
of investigation by the SEC. Based on the Companys review of HCAs public
filings, the Company understands that the SECs investigation of HCA includes
the anti-fraud, insider trading, periodic reporting and internal accounting
control provisions of the federal securities laws. These investigations,
actions and claims relate to HCA and its subsidiaries, including subsidiaries
that, before the Companys formation as an independent company, owned the
facilities the Company now owns.

HCA is a defendant in several qui tam actions, or actions brought by
private parties, known as relators, on behalf of the United States of America,
which have been unsealed and served on HCA. The actions allege, in general,
that HCA and certain subsidiaries and/or affiliated partnerships violated the
False Clams Act, 31 U.S.C. ss. 3729 et seq., for improper claims submitted to
the government for reimbursement. The lawsuits generally seek three times the
amount of damages caused to the United States by the submission of any Medicare
or Medicaid false claims presented by the defendants to the federal government,
civil penalties of not less than $5,500 nor more than $11,000 for each such
Medicare or Medicaid claim, attorneys fees and costs. HCA has disclosed that,
on March 15, 2001, the Department of Justice filed a status report setting
forth the governments decisions regarding intervention in existing qui tam
actions against HCA and filed formal complaints for those suits in which the
government has intervened. HCA stated that, of the original 30 qui tam actions,
the Department of Justice remains active and has elected to intervene in eight
actions. HCA has also disclosed that it is aware of additional qui tam actions
that remain under seal and believes that there may be other sealed qui tam
cases of which it is unaware.

Based on the Companys review of HCAs public filings, the Company
understands that, in December 2000, HCA entered into a Plea Agreement with the
Criminal Division of the Department of Justice and various U.S. Attorneys
Offices (which the Company will refer to as the plea agreement) and a Civil and
Administrative Settlement Agreement with the Civil Division of the Department
of Justice (which the Company will refer to as the civil agreement). Based on
the Companys review of HCAs public filings, the Company understands that the
agreements resolve all Federal criminal issues outstanding against HCA and
certain issues involving Federal civil claims by or on behalf of the government
against HCA relating to diagnosis related group, or DRG, coding, outpatient
laboratory billing and home health issues. Pursuant to the plea agreement, HCA
paid the government $95 million during the first quarter of 2001. The civil
agreement was approved by the Federal District Court of the District of
Columbia in August 2001. Pursuant to the civil agreement, HCA agreed to pay the
government $745 million plus interest, which was paid in the third quarter of
2001. Based on the Companys review of HCAs public filings, the Company
understands that certain civil issues are not covered by the civil agreement
and remain outstanding, including claims related to costs reports and physician
relations issues. The plea agreement and the civil agreement announced in
December 2000 relate only to conduct that was the subject of the federal
investigations resolved in the agreements and do not resolve various qui tam
actions filed by private parties against HCA, or pending state actions.

On March 28, 2002, HCA announced that it reached an understanding with the
Centers for Medicare and Medicaid Services (CMS), to resolve all Medicare
cost report, home office cost statement, and appeal issues between HCA and CMS.
The understanding provides that HCA would pay CMS $250 million with respect to
these matters. The resolution is subject to approval by the Department of
Justice and execution of a definitive written agreement.

HCA has agreed to indemnify the Company for any losses, other than
consequential damages, arising from the pending governmental investigations of
HCAs business practices prior to the date of the distribution and losses
arising from legal proceedings, present or future, related to the investigation
or actions engaged in before the distribution that relate to the investigation.
HCA has also agreed that, in the event that any hospital owned by the Company
at the time of the spin-off is permanently excluded from participation in the
Medicare and Medicaid programs as a result of the proceedings described above,
then HCA will make a cash payment to the Company, in an amount (if positive)
equal to five times the excluded hospitals 1998 income from continuing
operations before depreciation and amortization, interest expense, management
fees, minority interests and income taxes, as set forth on a schedule to the
distribution agreement, less the net proceeds of the sale or other disposition
of the excluded hospital. However, the Company could be held responsible for
any claims that are not covered by the agreements reached with the Federal
government or for which HCA is not required to, or fails to, indemnify the
Company. If indemnified matters were asserted successfully against the Company
or any of the Companys facilities, and HCA failed to meet its indemnification
obligations, then this event could have a material adverse effect on the
Companys business, financial condition, results of operations or prospects.

The extent to which the Company may or may not continue to be affected by
the ongoing investigations of HCA and the initiation of additional
investigations, if any, cannot be predicted. These matters could have a
material adverse effect on the Companys business, financial condition, results
of operations or prospects in future periods.

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Americans with Disabilities Act Claim

On January 12, 2001, Access Now, Inc., a disability rights organization,
filed a class action lawsuit against each of the Companys hospitals alleging
non-compliance with the accessibility guidelines under the Americans
with Disabilities Act (the ADA). The lawsuit, filed in the United States
District Court for the Eastern District of Tennessee, seeks injunctive relief
requiring facility modification, where necessary, to meet the ADA guidelines, along with attorneys fees and costs. In January
2002, the District Court certified the class action and issued a scheduling
order that requires the parties to complete discovery and inspection for
approximately six facilities per year. The Company intends to vigorously defend
the lawsuit, recognizing the Companys obligation to correct any deficiencies
in order to comply with the ADA.

Corporate Integrity Agreement

In December 2000, the Company entered into a corporate integrity agreement
with the Office of Inspector General and agreed to maintain its compliance
program in accordance with the corporate integrity agreement. This agreement
was amended in May 2002. Complying with the compliance measures and reporting
and auditing requirements of the corporate integrity agreement will require
additional efforts and costs. Failure to comply with the terms of the corporate
integrity agreement could subject the Company to significant monetary
penalties.

General Liability Claims

The Company is, from time to time, subject to claims and suits arising in
the ordinary course of business, including claims for damages for personal
injuries, breach of management contracts, for wrongful restriction of, or
interference with physicians staff privileges and employment related claims.
In certain of these actions, plaintiffs request punitive or other damages
against the Company, which may not be covered by insurance. The Company is
currently not a party to any proceeding which, in managements opinion, would
have a material adverse effect on the Companys business, financial condition
or results of operations.

Physician Commitments

The Company has committed to provide certain financial assistance pursuant
to recruiting agreements with various physicians practicing in the communities
it serves. In consideration for a physician relocating to one of its
communities and agreeing to engage in private practice for the benefit of the
respective community, the Company may loan certain amounts of money to a
physician, normally over a period of one year, to assist in establishing his or
her practice. The Company has committed to advance amounts of approximately
$17.1 million at June 30, 2002. The actual amount of such commitments to be
subsequently advanced to physicians often depends upon the financial results of
a physicians private practice during the guaranteed period. Generally, amounts
advanced under the recruiting agreements may be forgiven pro rata over a period
of 48 months contingent upon the physician continuing to practice in the
respective community.

Unfiled Medicare Cost Reports

Hospitals participating in the Medicare and some Medicaid programs, whether
paid on a reasonable cost basis or under a Prospective Payment System, are
required to meet certain financial reporting requirements. Federal and, where
applicable, state regulations require submission of annual cost reports
identifying medical costs and expenses associated with the services provided by
each hospital to Medicare beneficiaries and Medicaid recipients. Since
implementation of outpatient PPS in August 2000, the due dates of all Medicare
cost reports have been extended due to a delay in receiving certain government
reports. The Company anticipates filing all delayed cost reports with extended due dates
during the later half of 2002. Because of the extensions, the magnitude of
potential adjustments and changes in estimates is significantly greater at June
30, 2002 than in recent periods.

Net adjustments to estimated third-party payor settlements resulted in an
increase to net revenues of $2.1 million for the six months ended June 30, 2002
compared to $0.8 million for the same period last year. Net adjustments of $1.7
million out of the $2.1 million mentioned above relate to
outpatient PPS revenues on 11
cost reports. The Company still has 22 cost reports to file which
include outpatient PPS revenues.

Acquisitions

The Company has acquired and will continue to acquire businesses with
prior operating histories. Acquired companies may have unknown or contingent
liabilities, including liabilities for failure to comply with health care laws
and regulations, such as billing and reimbursement, fraud and abuse and similar
anti-referral laws. Although the Company institutes policies designed to
conform practices to its standards following completion of acquisitions, there
can be no assurance that the Company will not become liable for past activities
that may later be asserted to be improper by private plaintiffs or government
agencies. Although the Company generally seeks to obtain indemnification from
prospective sellers covering such matters, there can be no assurance that any
such matter will be covered by indemnification, or if covered, that such
indemnification will be adequate to cover potential losses and fines.

NOTE 8  RELATED PARTY TRANSACTION

As part of an employees relocation package,
the Company purchased the employees house at the appraised value of
$650,000 in May 2002. The house is currently listed for sale and the
Company does not anticipate a material effect on its financial
statements when it is sold.

NOTE 9  SUBSEQUENT EVENT

On August 12, 2002, the Company entered into a
definitive agreement to acquire 100-bed Russellville Hospital in
Russellville, Alabama for approximately $21 million, including
working capital. The Company anticipates using its available cash to
finance the cost of this transaction. The hospital had revenues of approximately $27
million for the twelve months ended June 30,
2002. This purchase is anticipated to be completed and closed in
early October 2002.

NOTE 10  SENIOR SUBORDINATED NOTES

The Companys senior subordinated notes (the Notes) are guaranteed
jointly and severally on a full and unconditional basis by all of the Companys
operating subsidiaries (Subsidiary Guarantors). The Company is a holding
company with no operations apart from its ownership of the Subsidiary
Guarantors. The aggregate assets, liabilities, equity and earnings of the
Subsidiary Guarantors are substantially equivalent to the total assets,
liabilities, equity and earnings of the Company and its subsidiaries on a
consolidated basis.

At June 30, 2002, all but one of the Subsidiary Guarantors were wholly
owned and fully and unconditionally guaranteed the Notes. Separate financial
statements and other disclosures of the wholly owned Subsidiary Guarantors are
not presented because management believes that such separate financial
statements and disclosures would not provide additional material information to
investors. The Companys only non-wholly owned Subsidiary, Dodge City
Healthcare Group, L.P. is consolidated and all of its assets, liabilities,
equity and earnings of this entity fully and unconditionally, jointly and
severally guarantee the Notes. The Company owns approximately 70% of the
partnership interests in this mostly owned Subsidiary Guarantor.

Presented below is summarized condensed unaudited consolidating financial
information for the Company and its subsidiaries as of June 30, 2002 and
December 31, 2001, and for the three months and six months ended June 30, 2002
and 2001 segregating the parent company, the issuer of the Notes (LifePoint
Hospitals Holdings, Inc.), the combined wholly owned Subsidiary Guarantors, the
mostly owned Subsidiary Guarantor and eliminations.

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LIFEPOINT HOSPITALS, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2002
(IN MILLIONS)

|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       |  
|---------------------------------------------------------------------------- |  | ------ | ---- | -------- |  | ---------- | ----- | ---------- |  | ------------ | ----- | ------------ |  | - | ---- | ------------ |  | - | ----- | - |  | - | ----- | -
|                                                                             |  |        |      |          |  |            |       |            |  | Wholly Owned |       | Mostly Owned |  |   |      |              |  |   |       |  
|                                                                             |  |        |      |          |  | Issuer     |       | Subsidiary |  | Subsidiary   |       |              |  |   |      | Consolidated
|                                                                             |  | Parent |      | of Notes |  | Guarantors |       | Guarantor  |  | Eliminations |       | Total       
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |             
|Revenues                                                                     |  | $      |     |          |  | $          |      |            |  | $            | 169.3 |              |  | $ | 8.6  |              |  | $ |      |   |  | $ | 177.9 |  
|                                                                            
|Salaries and benefits                                                        |  |        |     |          |  |            |      |            |  |              | 68.3  |              |  |   | 2.6  |              |  |   |      |   |  |   | 70.9  |  
|Supplies                                                                     |  |        |     |          |  |            |      |            |  |              | 20.8  |              |  |   | 1.1  |              |  |   |      |   |  |   | 21.9  |  
|Other operating expenses                                                     |  |        |     |          |  |            |      |            |  |              | 32.1  |              |  |   | 1.2  |              |  |   |      |   |  |   | 33.3  |  
|Provision for doubtful accounts                                              |  |        |     |          |  |            |      |            |  |              | 12.5  |              |  |   | 0.6  |              |  |   |      |   |  |   | 13.1  |  
|Depreciation and amortization                                                |  |        |     |          |  |            |      |            |  |              | 9.1   |              |  |   | 0.6  |              |  |   |      |   |  |   | 9.7   |  
|Management fees                                                              |  |        |     |          |  |            |      |            |  |              | (0.1  | )            |  |   | 0.1  |              |  |   |      |   |  |   |      |  
|Interest expense, net                                                        |  |        |     |          |  |            | 3.6   |            |  |              | (0.7  | )            |  |   | (0.1 | )            |  |   |      |   |  |   | 2.8   |  
|ESOP expense                                                                 |  |        |     |          |  |            |      |            |  |              | 2.6   |              |  |   | 0.1  |              |  |   |      |   |  |   | 2.7   |  
|Equity in earnings of affiliates                                             |  |        | 2.5  |          |  |            | (16.7 | )          |  |              |      |              |  |   |     |              |  |   | 14.2  |   |  |   |      |  
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       |  
|                                                                             |  |        | 2.5  |          |  |            | (13.1 | )          |  |              | 144.6 |              |  |   | 6.2  |              |  |   | 14.2  |   |  |   | 154.4 |  
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       |  
|Income (loss) before minority
interests,
income taxes and extraordinary item |  |        | (2.5 | )        |  |            | 13.1  |            |  |              | 24.7  |              |  |   | 2.4  |              |  |   | (14.2 | ) |  |   | 23.5  |  
|Minority interests in earnings of
consolidated entity                        |  |        |     |          |  |            | 0.8   |            |  |              |      |              |  |   |     |              |  |   |      |   |  |   | 0.8   |  
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       |  
|Income (loss) before income taxes and
extraordinary item                     |  |        | (2.5 | )        |  |            | 12.3  |            |  |              | 24.7  |              |  |   | 2.4  |              |  |   | (14.2 | ) |  |   | 22.7  |  
|Provision (benefit) for income taxes                                         |  |        |     |          |  |            | (0.8  | )          |  |              | 10.4  |              |  |   |     |              |  |   |      |   |  |   | 9.6   |  
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       |  
|Income (loss) before extraordinary
item                                      |  |        | (2.5 | )        |  |            | 13.1  |            |  |              | 14.3  |              |  |   | 2.4  |              |  |   | (14.2 | ) |  |   | 13.1  |  
|Extraordinary loss on early retirement
of debt, net                          |  |        |     |          |  |            | 15.6  |            |  |              |      |              |  |   |     |              |  |   |      |   |  |   | 15.6  |  
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       |  
|Net income (loss)                                                            |  | $      | (2.5 | )        |  | $          | (2.5  | )          |  | $            | 14.3  |              |  | $ | 2.4  |              |  | $ | (14.2 | ) |  | $ | (2.5  | )
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       |  

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LIFEPOINT HOSPITALS, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2001
(IN MILLIONS)

|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |     |              |  |   |       |   |  |   |       | 
|---------------------------------------------------------------------------- |  | ------ | ---- | -------- |  | ---------- | ----- | ---------- |  | ------------ | ----- | ------------ |  | - | --- | ------------ |  | - | ----- | - |  | - | ----- | 
|                                                                             |  |        |      |          |  |            |       |            |  | Wholly Owned |       | Mostly Owned |  |   |     |              |  |   |       |  
|                                                                             |  |        |      |          |  | Issuer     |       | Subsidiary |  | Subsidiary   |       |              |  |   |     | Consolidated
|                                                                             |  | Parent |      | of Notes |  | Guarantors |       | Guarantor  |  | Eliminations |       | Total       
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |             
|Revenues                                                                     |  | $      |     |          |  | $          |      |            |  | $            | 143.3 |              |  | $ | 8.3 |              |  | $ |      |   |  | $ | 151.6 | 
|                                                                            
|Salaries and benefits                                                        |  |        |     |          |  |            |      |            |  |              | 56.8  |              |  |   | 2.6 |              |  |   |      |   |  |   | 59.4  | 
|Supplies                                                                     |  |        |     |          |  |            |      |            |  |              | 17.8  |              |  |   | 1.0 |              |  |   |      |   |  |   | 18.8  | 
|Other operating expenses                                                     |  |        |     |          |  |            |      |            |  |              | 29.7  |              |  |   | 1.3 |              |  |   |      |   |  |   | 31.0  | 
|Provision for doubtful accounts                                              |  |        |     |          |  |            |      |            |  |              | 10.3  |              |  |   | 0.3 |              |  |   |      |   |  |   | 10.6  | 
|Depreciation and amortization                                                |  |        |     |          |  |            |      |            |  |              | 8.0   |              |  |   | 0.5 |              |  |   |      |   |  |   | 8.5   | 
|Management fees                                                              |  |        |     |          |  |            |      |            |  |              | (0.1  | )            |  |   | 0.1 |              |  |   |      |   |  |   |      | 
|Interest expense, net                                                        |  |        |     |          |  |            | 4.6   |            |  |              | (0.9  | )            |  |   |    |              |  |   |      |   |  |   | 3.7   | 
|ESOP expense                                                                 |  |        |     |          |  |            |      |            |  |              | 2.3   |              |  |   | 0.1 |              |  |   |      |   |  |   | 2.4   | 
|Equity in earnings of affiliates                                             |  |        | (6.9 | )        |  |            | (12.3 | )          |  |              |      |              |  |   |    |              |  |   | 19.2  |   |  |   |      | 
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |     |              |  |   |       |   |  |   |       | 
|                                                                             |  |        | (6.9 | )        |  |            | (7.7  | )          |  |              | 123.9 |              |  |   | 5.9 |              |  |   | 19.2  |   |  |   | 134.4 | 
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |     |              |  |   |       |   |  |   |       | 
|Income
(loss) before minority interests, income taxes and extraordinary
item |  |        | 6.9  |          |  |            | 7.7   |            |  |              | 19.4  |              |  |   | 2.4 |              |  |   | (19.2 | ) |  |   | 17.2  | 
|Minority interests in earnings of
consolidated entity                        |  |        |     |          |  |            | 0.7   |            |  |              |      |              |  |   |    |              |  |   |      |   |  |   | 0.7   | 
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |     |              |  |   |       |   |  |   |       | 
|Income
(loss) before income taxes and extraordinary item                     |  |        | 6.9  |          |  |            | 7.0   |            |  |              | 19.4  |              |  |   | 2.4 |              |  |   | (19.2 | ) |  |   | 16.5  | 
|Provision (benefit) for income taxes                                         |  |        |     |          |  |            | (1.5  | )          |  |              | 9.5   |              |  |   |    |              |  |   |      |   |  |   | 8.0   | 
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |     |              |  |   |       |   |  |   |       | 
|Income (loss) before extraordinary item                                      |  |        | 6.9  |          |  |            | 8.5   |            |  |              | 9.9   |              |  |   | 2.4 |              |  |   | (19.2 | ) |  |   | 8.5   | 
|Extraordinary loss on early retirement of
debt, net                          |  |        |     |          |  |            | 1.6   |            |  |              |      |              |  |   |    |              |  |   |      |   |  |   | 1.6   | 
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |     |              |  |   |       |   |  |   |       | 
|Net income (loss)                                                            |  | $      | 6.9  |          |  | $          | 6.9   |            |  | $            | 9.9   |              |  | $ | 2.4 |              |  | $ | (19.2 | ) |  | $ | 6.9   | 
|                                                                             |  |        |      |          |  |            |       |            |  |              |       |              |  |   |     |              |  |   |       |   |  |   |       | 

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##### Table of Contents



LIFEPOINT HOSPITALS, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2002

(IN MILLIONS)


|                                                                             |  |        |       |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       | 
|---------------------------------------------------------------------------- |  | ------ | ----- | -------- |  | ---------- | ----- | ---------- |  | ------------ | ----- | ------------ |  | - | ---- | ------------ |  | - | ----- | - |  | - | ----- | 
|                                                                             |  |        |       |          |  |            |       |            |  | Wholly Owned |       | Mostly Owned |  |   |      |              |  |   |       |  
|                                                                             |  |        |       |          |  | Issuer     |       | Subsidiary |  | Subsidiary   |       |              |  |   |      | Consolidated
|                                                                             |  | Parent |       | of Notes |  | Guarantors |       | Guarantor  |  | Eliminations |       | Total       
|                                                                             |  |        |       |          |  |            |       |            |  |              |       |             
|Revenues                                                                     |  | $      |      |          |  | $          |      |            |  | $            | 342.4 |              |  | $ | 17.1 |              |  | $ |      |   |  | $ | 359.5 | 
|                                                                             |  |        |       |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       | 
|Salaries and benefits                                                        |  |        |      |          |  |            |      |            |  |              | 136.4 |              |  |   | 5.2  |              |  |   |      |   |  |   | 141.6 | 
|Supplies                                                                     |  |        |      |          |  |            |      |            |  |              | 42.7  |              |  |   | 2.1  |              |  |   |      |   |  |   | 44.8  | 
|Other operating expenses                                                     |  |        |      |          |  |            |      |            |  |              | 63.1  |              |  |   | 2.4  |              |  |   |      |   |  |   | 65.5  | 
|Provision for doubtful accounts                                              |  |        |      |          |  |            |      |            |  |              | 24.9  |              |  |   | 1.4  |              |  |   |      |   |  |   | 26.3  | 
|Depreciation and amortization                                                |  |        |      |          |  |            |      |            |  |              | 18.2  |              |  |   | 0.9  |              |  |   |      |   |  |   | 19.1  | 
|Management fees                                                              |  |        |      |          |  |            |      |            |  |              | (0.3  | )            |  |   | 0.3  |              |  |   |      |   |  |   |      | 
|Interest expense, net                                                        |  |        |      |          |  |            | 8.0   |            |  |              | (0.9  | )            |  |   | (0.2 | )            |  |   |      |   |  |   | 6.9   | 
|ESOP expense                                                                 |  |        |      |          |  |            |      |            |  |              | 5.0   |              |  |   | 0.2  |              |  |   |      |   |  |   | 5.2   | 
|Equity in earnings of affiliates                                             |  |        | (11.2 | )        |  |            | (35.1 | )          |  |              |      |              |  |   |     |              |  |   | 46.3  |   |  |   |      | 
|                                                                             |  |        |       |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       | 
|                                                                             |  |        | (11.2 | )        |  |            | (27.1 | )          |  |              | 289.1 |              |  |   | 12.3 |              |  |   | 46.3  |   |  |   | 309.4 | 
|                                                                             |  |        |       |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       | 
|Income (loss) before minority
interests,
income taxes and extraordinary item |  |        | 11.2  |          |  |            | 27.1  |            |  |              | 53.3  |              |  |   | 4.8  |              |  |   | (46.3 | ) |  |   | 50.1  | 
|Minority interests in earnings of
consolidated entity                        |  |        |      |          |  |            | 1.5   |            |  |              |      |              |  |   |     |              |  |   |      |   |  |   | 1.5   | 
|                                                                             |  |        |       |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       | 
|Income (loss) before income taxes and
extraordinary item                     |  |        | 11.2  |          |  |            | 25.6  |            |  |              | 53.3  |              |  |   | 4.8  |              |  |   | (46.3 | ) |  |   | 48.6  | 
|Provision (benefit) for income taxes                                         |  |        |      |          |  |            | (2.0  | )          |  |              | 23.0  |              |  |   |     |              |  |   |      |   |  |   | 21.0  | 
|                                                                             |  |        |       |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       | 
|Income (loss) before extraordinary
item                                      |  |        | 11.2  |          |  |            | 27.6  |            |  |              | 30.3  |              |  |   | 4.8  |              |  |   | (46.3 | ) |  |   | 27.6  | 
|Extraordinary loss on early retirement
of debt, net                          |  |        |      |          |  |            | 16.4  |            |  |              |      |              |  |   |     |              |  |   |      |   |  |   | 16.4  | 
|                                                                             |  |        |       |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       | 
|Net income (loss)                                                            |  | $      | 11.2  |          |  | $          | 11.2  |            |  | $            | 30.3  |              |  | $ | 4.8  |              |  | $ | (46.3 | ) |  | $ | 11.2  | 
|                                                                             |  |        |       |          |  |            |       |            |  |              |       |              |  |   |      |              |  |   |       |   |  |   |       | 

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LIFEPOINT HOSPITALS, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001

(IN MILLIONS)


|                                                                             |                   |   |        |      |          |   |            |      |            |   |              |      |              |   |      |     |              |   |       |       |   |   |       |      | 
|---------------------------------------------------------------------------- | ----------------- | - | ------ | ---- | -------- | - | ---------- | ---- | ---------- | - | ------------ | ---- | ------------ | - | ---- | --- | ------------ | - | ----- | ----- | - | - | ----- | ---- | 
|                                                                             |                   |   |        |      |          |   |            |      |            |   | Wholly Owned |      | Mostly Owned |   |      |     |              |   |       |       |  
|                                                                             |                   |   |        |      |          |   | Issuer     |      | Subsidiary |   | Subsidiary   |      |              |   |      |     | Consolidated
|                                                                             |                   |   | Parent |      | of Notes |   | Guarantors |      | Guarantor  |   | Eliminations |      | Total       
|                                                                             |                   |   |        |      |          |   |            |      |            |   |              |      |             
|Revenues                                                                     |                   | $ |       |      |          | $ |           |      |            | $ | 289.7        |      |              | $ | 16.2 |     |              | $ |      |       |   | $ | 305.9 |     
|                                                                             |                   |   |        |      |          |   |            |      |            |   |              |      |              |   |      |     |              |   |       |       |   |   |       |     
|Salaries and benefits                                                        |                   |   |       |      |          |   |           |      |            |   | 114.6        |      |              |   | 5.1  |     |              |   |      |       |   |   | 119.7 |     
|Supplies                                                                     |                   |   |       |      |          |   |           |      |            |   | 36.4         |      |              |   | 2.0  |     |              |   |      |       |   |   | 38.4  |     
|Other operating expenses                                                     |                   |   |       |      |          |   |           |      |            |   | 57.1         |      |              |   | 2.3  |     |              |   |      |       |   |   | 59.4  |     
|Provision for doubtful accounts                                              |                   |   |       |      |          |   |           |      |            |   | 21.7         |      |              |   | 0.9  |     |              |   |      |       |   |   | 22.6  |     
|Depreciation and amortization                                                |                   |   |       |      |          |   |           |      |            |   | 15.7         |      |              |   | 0.9  |     |              |   |      |       |   |   | 16.6  |     
|Management fees                                                              |                   |   |       |      |          |   |           |      |            |   | (0.3         | )    |              |   | 0.3  |     |              |   |      |       |   |   |      |     
|Interest expense, net                                                        |                   |   |       |      |          |   | 12.2       |      |            |   | (2.0         | )    |              |   |     |     |              |   |      |       |   |   | 10.2  |     
|ESOP expense                                                                 |                   |   |       |      |          |   |           |      |            |   | 4.8          |      |              |   | 0.2  |     |              |   |      |       |   |   | 5.0   |     
|Gain on previously impaired assets                                           |                   |   |       |      |          |   |           |      |            |   | (0.5         | )    |              |   |     |     |              |   |      |       |   |   | (0.5  | )   
|Equity in earnings of affiliates                                             |                   |   | (15.5  | )    |          |   | (26.2      | )    |            |   |             |      |              |   |     |     |              |   | 41.7  |       |   |   |      |     
|                                                                             |                   |   |        |      |          |   |            |      |            |   |              |      |              |   |      |     |              |   |       |       |   |   |       |     
|                                                                             |                   |   | (15.5  | )    |          |   | (14.0      | )    |            |   | 247.5        |      |              |   | 11.7 |     |              |   | 41.7  |       |   |   | 271.4 |     
|                                                                             |                   |   |        |      |          |   |            |      |            |   |              |      |              |   |      |     |              |   |       |       |   |   |       |     
|Income
(loss) before minority interests, income taxes and extraordinary
item |                   |   | 15.5   |      |          |   | 14.0       |      |            |   | 42.2         |      |              |   | 4.5  |     |              |   | (41.7 | )     |   |   | 34.5  |     
|Minority interests in earnings of
consolidated entity                        |                   |   |       |      |          |   | 1.3        |      |            |   |             |      |              |   |     |     |              |   |      |       |   |   | 1.3   |     
|                                                                             |                   |   |        |      |          |   |            |      |            |   |              |      |              |   |      |     |              |   |       |       |   |   |       |     
|Income
(loss) before income taxes and extraordinary item                     |                   |   | 15.5   |      |          |   | 12.7       |      |            |   | 42.2         |      |              |   | 4.5  |     |              |   | (41.7 | )     |   |   | 33.2  |     
|Provision (benefit) for income taxes                                         |                   |   |       |      |          |   | (4.4       | )    |            |   | 20.5         |      |              |   |     |     |              |   |      |       |   |   | 16.1  |     
|                                                                             |                   |   |        |      |          |   |            |      |            |   |              |      |              |   |      |     |              |   |       |       |   |   |       |     
|Income (loss) before extraordinary item                                      |                   |   | 15.5   |      |          |   | 17.1       |      |            |   | 21.7         |      |              |   | 4.5  |     |              |   | (41.7 | )     |   |   | 17.1  |     
|Extraordinary loss on early retirement of
debt, net                          |                   |   |       |      |          |   | 1.6        |      |            |   |             |      |              |   |     |     |              |   |      |       |   |   | 1.6   |     
|                                                                             |                   |   |        |      |          |   |            |      |            |   |              |      |              |   |      |     |              |   |       |       |   |   |       |     
|                                                                             | Net income (loss) |   | $      | 15.5 |          |   | $          | 15.5 |            |   | $            | 21.7 |              |   | $    | 4.5 |              |   | $     | (41.7 | ) |   | $     | 15.5 | 
|                                                                             |                   |   |        |      |          |   |            |      |            |   |              |      |              |   |      |     |              |   |       |       |   |   |       |     

14



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##### Table of Contents



LIFEPOINT HOSPITALS, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 2002

(IN MILLIONS)


|                                                    |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |        |  
|--------------------------------------------------- | ---------------------------------------------- | - | ------ | --- | -------- | - | ---------- | --- | ---------- | - | ------------ | ------ | ------------ | - | ---- | ----- | ------------ | - | ------ | - |  | - | ----- | ------ | -
|                                                    |                                                |   |        |     |          |   |            |     |            |   | Wholly Owned |        | Mostly Owned |   |      |       |              |   |        |   | 
|                                                    |                                                |   |        |     |          |   | Issuer     |     | Subsidiary |   | Subsidiary   |        |              |   |      |       | Consolidated
|                                                    |                                                |   | Parent |     | of Notes |   | Guarantors |     | Guarantor  |   | Eliminations |        | Total       
|                                                    |                                                |   |        |     |          |   |            |     |            |   |              |        |             
|ASSETS                                              |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |       
|Current assets:                                     |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |       
|                                                    | Cash and cash equivalents                      |   | $      |    |          |   | $          |    |            |   | $            | 155.1  |              |   | $    |      |              |   | $      |  |  |   | $     | 155.1  |  
|                                                    | Short-term investments                         |   |        |    |          |   |            |    |            |   |              | 21.5   |              |   |      |      |              |   |        |  |  |   |       | 21.5   |  
|                                                    | Accounts receivable, net                       |   |        |    |          |   |            |    |            |   |              | 69.5   |              |   |      | 5.4   |              |   |        |  |  |   |       | 74.9   |  
|                                                    | Inventories                                    |   |        |    |          |   |            |    |            |   |              | 15.7   |              |   |      | 1.1   |              |   |        |  |  |   |       | 16.8   |  
|                                                    | Deferred income taxes and other
current assets |   |        |    |          |   |            |    |            |   |              | 25.2   |              |   |      | 0.1   |              |   |        |  |  |   |       | 25.3   |  
|                                                    |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |       
|                                                    |                                                |   |       |     |          |   |           |     |            |   | 287.0        |        |              |   | 6.6  |       |              |   |       |   |  |   | 293.6 |       
|Property and equipment:                             |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |       
|                                                    | Land                                           |   |        |    |          |   |            |    |            |   |              | 10.4   |              |   |      | 0.3   |              |   |        |  |  |   |       | 10.7   |  
|                                                    | Buildings and improvements                     |   |        |    |          |   |            |    |            |   |              | 253.0  |              |   |      | 9.9   |              |   |        |  |  |   |       | 262.9  |  
|                                                    | Equipment                                      |   |        |    |          |   |            |    |            |   |              | 266.5  |              |   |      | 11.2  |              |   |        |  |  |   |       | 277.7  |  
|                                                    | Construction in progress                       |   |        |    |          |   |            |    |            |   |              | 19.0   |              |   |      | 1.2   |              |   |        |  |  |   |       | 20.2   |  
|                                                    |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |       
|                                                    |                                                |   |       |     |          |   |           |     |            |   | 548.9        |        |              |   | 22.6 |       |              |   |       |   |  |   | 571.5 |       
|                                                    | Accumulated depreciation                       |   |        |    |          |   |            |    |            |   |              | (208.9 | )            |   |      | (14.2 | )            |   |        |  |  |   |       | (223.1 | )
|                                                    |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |        |  
|                                                    |                                                |   |        |     |          |   |            |     |            |   | 340.0        |        |              |   | 8.4  |       |              |   |       |   |  |   | 348.4 |       
|Net investment in and advances to
subsidiaries      |                                                |   | 315.0  |     |          |   | 521.2      |     |            |   |             |        |              |   |     |       |              |   | (836.2 | ) |  |   |      |       
|Deferred loan costs, net                            |                                                |   | 7.3    |     |          |   | 2.6        |     |            |   |             |        |              |   |     |       |              |   |       |   |  |   | 9.9   |       
|Goodwill                                            |                                                |   |       |     |          |   |           |     |            |   | 37.3         |        |              |   | 9.9  |       |              |   |       |   |  |   | 47.2  |       
|Other                                               |                                                |   |       |     |          |   | 0.7        |     |            |   | 11.8         |        |              |   |     |       |              |   |       |   |  |   | 12.5  |       
|                                                    |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |       
|                                                    |                                                | $ | 322.3  |     |          | $ | 524.5      |     |            | $ | 676.1        |        |              | $ | 24.9 |       |              | $ | (836.2 | ) |  | $ | 711.6 |       
|                                                    |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |       
|LIABILITIES AND EQUITY                              |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |       
|Current liabilities                                 |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |       
|                                                    | Accounts payable                               |   | $      |    |          |   | $          |    |            |   | $            | 17.9   |              |   | $    | 0.6   |              |   | $      |  |  |   | $     | 18.5   |  
|                                                    | Accrued salaries                               |   |        |    |          |   |            |    |            |   |              | 18.4   |              |   |      |      |              |   |        |  |  |   |       | 18.4   |  
|                                                    | Other current liabilities                      |   |        | 1.2 |          |   |            | 0.1 |            |   |              | 15.7   |              |   |      | 0.7   |              |   |        |  |  |   |       | 17.7   |  
|                                                    | Estimated
third party payor settlements        |   |        |    |          |   |            |    |            |   |              | 22.4   |              |   |      | (0.1  | )            |   |        |  |  |   |       | 22.3   |  
|                                                    |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |       
|                                                    |                                                |   | 1.2    |     |          |   | 0.1        |     |            |   | 74.4         |        |              |   | 1.2  |       |              |   |       |   |  |   | 76.9  |       
|Intercompany balances to affiliates                 |                                                |   | (243.9 | )   |          |   | 182.9      |     |            |   | 53.8         |        |              |   | 7.2  |       |              |   |       |   |  |   |      |       
|Long-term debt                                      |                                                |   | 250.0  |     |          |   | 22.0       |     |            |   |             |        |              |   |     |       |              |   |       |   |  |   | 272.0 |       
|Deferred income taxes                               |                                                |   |       |     |          |   |           |     |            |   | 21.7         |        |              |   |     |       |              |   |       |   |  |   | 21.7  |       
|Professional liability risks and other liabilities  |                                                |   |       |     |          |   |           |     |            |   | 21.5         |        |              |   |     |       |              |   |       |   |  |   | 21.5  |       
|                                                   
|Minority interests in equity of consolidated entity |                                                |   |       |     |          |   | 4.5        |     |            |   |             |        |              |   |     |       |              |   |       |   |  |   | 4.5   |       
|                                                   
|Stockholders equity                                |                                                |   | 315.0  |     |          |   | 315.0      |     |            |   | 504.7        |        |              |   | 16.5 |       |              |   | (836.2 | ) |  |   | 315.0 |       
|                                                    |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |       
|                                                    |                                                | $ | 322.3  |     |          | $ | 524.5      |     |            | $ | 676.1        |        |              | $ | 24.9 |       |              | $ | (836.2 | ) |  | $ | 711.6 |       
|                                                    |                                                |   |        |     |          |   |            |     |            |   |              |        |              |   |      |       |              |   |        |   |  |   |       |       

15



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##### Table of Contents



LIFEPOINT HOSPITALS, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2001
(IN MILLIONS)

|                                                    |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |        |  
|--------------------------------------------------- | ---------------------------------------------- | - | ------ | ----- | -------- | - | ---------- | ----- | ---------- | - | ------------ | ------ | ------------ | - | ---- | ----- | ------------ | - | ------ | ------ | - | - | ----- | ------ | -
|                                                    |                                                |   |        |       |          |   |            |       |            |   | Wholly Owned |        | Mostly Owned |   |      |       |              |   |        |        |  
|                                                    |                                                |   |        |       |          |   | Issuer     |       | Subsidiary |   | Subsidiary   |        |              |   |      |       | Consolidated
|                                                    |                                                |   | Parent |       | of Notes |   | Guarantors |       | Guarantor  |   | Eliminations |        | Total       
|                                                    |                                                |   |        |       |          |   |            |       |            |   |              |        |             
|ASSETS                                              |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       
|Current assets:                                     |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       
|                                                    | Cash and cash equivalents                      |   | $      |      |          |   | $          |      |            |   | $            | 57.2   |              |   | $    |      |              |   | $      |       |   |   | $     | 57.2   |  
|                                                    | Accounts receivable, net                       |   |        |      |          |   |            |      |            |   |              | 51.7   |              |   |      | 5.0   |              |   |        |       |   |   |       | 56.7   |  
|                                                    | Inventories                                    |   |        |      |          |   |            |      |            |   |              | 15.3   |              |   |      | 1.0   |              |   |        |       |   |   |       | 16.3   |  
|                                                    | Deferred income taxes and
other current assets |   |        |      |          |   |            |      |            |   |              | 18.6   |              |   |      | 0.1   |              |   |        |       |   |   |       | 18.7   |  
|                                                    |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       
|                                                    |                                                |   |       |       |          |   |           |       |            |   | 142.8        |        |              |   | 6.1  |       |              |   |       |        |   |   | 148.9 |       
|Property and equipment:                             |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       
|                                                    | Land                                           |   |        |      |          |   |            |      |            |   |              | 10.4   |              |   |      | 0.3   |              |   |        |       |   |   |       | 10.7   |  
|                                                    | Buildings and improvements                     |   |        |      |          |   |            |      |            |   |              | 252.1  |              |   |      | 9.9   |              |   |        |       |   |   |       | 262.0  |  
|                                                    | Equipment                                      |   |        |      |          |   |            |      |            |   |              | 252.4  |              |   |      | 11.0  |              |   |        |       |   |   |       | 263.4  |  
|                                                    | Construction in progress                       |   |        |      |          |   |            |      |            |   |              | 7.2    |              |   |      |      |              |   |        |       |   |   |       | 7.2    |  
|                                                    |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       
|                                                    |                                                |   |       |       |          |   |           |       |            |   | 522.1        |        |              |   | 21.2 |       |              |   |       |        |   |   | 543.3 |       
|                                                    | Accumulated depreciation                       |   |        |      |          |   |            |      |            |   |              | (191.6 | )            |   |      | (13.3 | )            |   |        |       |   |   |       | (204.9 | )
|                                                    |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       
|                                                    |                                                |   |       |       |          |   |           |       |            |   | 330.5        |        |              |   | 7.9  |       |              |   |       |        |   |   | 338.4 |       
|                                                    | Net investment in and advances to subsidiaries |   |        | 295.0 |          |   |            | 480.9 |            |   |              |       |              |   |      |      |              |   |        | (775.9 | ) |   |       |       |  
|                                                    | Deferred loan costs, net                       |   |        |      |          |   |            | 7.1   |            |   |              |       |              |   |      |      |              |   |        |       |   |   |       | 7.1    |  
|                                                    | Goodwill                                       |   |        |      |          |   |            |      |            |   |              | 37.2   |              |   |      | 9.9   |              |   |        |       |   |   |       | 47.1   |  
|                                                    | Other                                          |   |        |      |          |   |            |      |            |   |              | 12.8   |              |   |      |      |              |   |        |       |   |   |       | 12.8   |  
|                                                    |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       
|                                                    |                                                | $ | 295.0  |       |          | $ | 488.0      |       |            | $ | 523.3        |        |              | $ | 23.9 |       |              | $ | (775.9 | )      |   | $ | 554.3 |       
|                                                    |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       
|LIABILITIES AND EQUITY                              |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       
|Current liabilities                                 |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       
|                                                    | Accounts payable                               |   | $      |      |          |   | $          |      |            |   | $            | 18.3   |              |   | $    | 0.7   |              |   | $      |       |   |   | $     | 19.0   |  
|                                                    | Accrued salaries                               |   |        |      |          |   |            |      |            |   |              | 18.6   |              |   |      |      |              |   |        |       |   |   |       | 18.6   |  
|                                                    | Other current liabilities                      |   |        |      |          |   |            | 2.0   |            |   |              | 8.4    |              |   |      | 0.3   |              |   |        |       |   |   |       | 10.7   |  
|                                                    | Estimated third-party
payor settlements        |   |        |      |          |   |            |      |            |   |              | 17.8   |              |   |      | 0.1   |              |   |        |       |   |   |       | 17.9   |  
|                                                    |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       
|                                                    |                                                |   |       |       |          |   | 2.0        |       |            |   | 63.1         |        |              |   | 1.1  |       |              |   |       |        |   |   | 66.2  |       
|Intercompany balances to
affiliates                 |                                                |   |       |       |          |   | 35.8       |       |            |   | (39.7        | )      |              |   | 3.9  |       |              |   |       |        |   |   |      |       
|Long-term debt                                      |                                                |   |       |       |          |   | 150.0      |       |            |   |             |        |              |   |     |       |              |   |       |        |   |   | 150.0 |       
|Deferred income taxes                               |                                                |   |       |       |          |   |           |       |            |   | 21.0         |        |              |   |     |       |              |   |       |        |   |   | 21.0  |       
|Professional liability risks
and other liabilities  |                                                |   |       |       |          |   |           |       |            |   | 16.9         |        |              |   |     |       |              |   |       |        |   |   | 16.9  |       
|                                                   
|Minority interests in equity
of consolidated entity |                                                |   |       |       |          |   | 5.2        |       |            |   |             |        |              |   |     |       |              |   |       |        |   |   | 5.2   |       
|                                                   
|Stockholders equity                                |                                                |   | 295.0  |       |          |   | 295.0      |       |            |   | 462.0        |        |              |   | 18.9 |       |              |   | (775.9 | )      |   |   | 295.0 |       
|                                                    |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       
|                                                    |                                                | $ | 295.0  |       |          | $ | 488.0      |       |            | $ | 523.3        |        |              | $ | 23.9 |       |              | $ | (775.9 | )      |   | $ | 554.3 |       
|                                                    |                                                |   |        |       |          |   |            |       |            |   |              |        |              |   |      |       |              |   |        |        |   |   |       |       

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LIFEPOINT HOSPITALS, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30, 2002
(IN MILLIONS)

|                                                 |                                                                                             |                                                                                                    |                                                     |        |       |        |   |          |       |            |       |            |      |              |   |              |     |      |   |              |      |   |       |        |      |       |   | 
|------------------------------------------------ | ------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ------ | ----- | ------ | - | -------- | ----- | ---------- | ----- | ---------- | ---- | ------------ | - | ------------ | --- | ---- | - | ------------ | ---- | - | ----- | ------ | ---- | ----- | - | 
|                                                 |                                                                                             |                                                                                                    |                                                     |        |       |        |   |          |       |            |       |            |      | Wholly Owned |   | Mostly Owned |     |      |   |              |      |   |       |       
|                                                 |                                                                                             |                                                                                                    |                                                     |        |       |        |   |          |       | Issuer     |       | Subsidiary |      | Subsidiary   |   |              |     |      |   | Consolidated
|                                                 |                                                                                             |                                                                                                    |                                                     |        |       | Parent |   | of Notes |       | Guarantors |       | Guarantor  |      | Eliminations |   | Total       
|                                                 |                                                                                             |                                                                                                    |                                                     |        |       |        |   |          |       |            |       |            |      |              |   |             
|Cash flows from operating activities:            |                                                                                             |                                                                                                    |                                                     |        |       |        |   |          |       |            |       |            |      |              |   |              |     |      |   |              |      |   |       |       
|                                                 | Net income                                                                                  |                                                                                                    | $                                                   | 11.2   |       |        | $ | 11.2     |       |            | $     | 30.3       |      |              | $ | 4.8          |     |      | $ | (46.3        | )    |   | $     | 11.2   |     
|                                                 | Adjustments to reconcile net
income to net cash provided by
(used in) operating activities: |                                                                                                    |                                                     |        |       |        |   |          |       |            |       |            |      |              |   |              |     |      |   |              |      |   |       |        |     
|                                                 |                                                                                             | Equity in earnings of affiliates                                                                   |                                                     |        | (11.2 | )      |   |          | (35.1 | )          |       |            |     |              |   |              |    |      |   |              | 46.3 |   |       |        |     |      
|                                                 |                                                                                             | Depreciation and amortization                                                                      |                                                     |        |      |        |   |          |      |            |       |            | 18.2 |              |   |              | 0.9 |      |   |              |      |   |       |        | 19.1 |      
|                                                 |                                                                                             | ESOP expense                                                                                       |                                                     |        |      |        |   |          |      |            |       |            | 5.0  |              |   |              | 0.2 |      |   |              |      |   |       |        | 5.2  |      
|                                                 |                                                                                             | Minority interests in earnings of
consolidated entity                                              |                                                     |        |      |        |   |          | 1.5   |            |       |            |     |              |   |              |    |      |   |              |     |   |       |        | 1.5  |      
|                                                 |                                                                                             | Deferred income taxes (benefit)                                                                    |                                                     |        |      |        |   |          |      |            |       |            | (0.8 | )            |   |              |    |      |   |              |     |   |       |        | (0.8 | )    
|                                                 |                                                                                             | Reserve
for professional liability risks, net                                                      |                                                     |        |      |        |   |          |      |            |       |            | 5.1  |              |   |              |    |      |   |              |     |   |       |        | 5.1  |      
|                                                 |                                                                                             | Extraordinary loss on early
retirement of debt                                                     |                                                     |        |      |        |   |          | 26.3  |            |       |            |     |              |   |              |    |      |   |              |     |   |       |        | 26.3 |      
|                                                 |                                                                                             | Tax benefit from stock option
exercises                                                            |                                                     |        |      |        |   |          |      |            |       |            | 1.0  |              |   |              |    |      |   |              |     |   |       |        | 1.0  |      
|                                                 |                                                                                             | Increase (decrease) in cash
from operating assets and
liabilities, net of effects of
acquisitions: |                                                     |        |       |        |   |          |       |            |       |            |      |              |   |              |     |      |   |              |      |   |       |        |      |      
|                                                 |                                                                                             |                                                                                                    | Accounts receivable                                 |        |       |       |   |          |       |           |       |            |      | (17.8        | ) |              |     | (0.4 | ) |              |      |  |       |        |      | (18.2 | )
|                                                 |                                                                                             |                                                                                                    | Inventories and other current assets                |        |       |       |   |          |       |           |       |            |      | (3.0         | ) |              |     | (0.1 | ) |              |      |  |       |        |      | (3.1  | )
|                                                 |                                                                                             |                                                                                                    | Accounts payable and
accrued expenses               |        |       | 1.2    |   |          |       | (1.9       | )     |            |      | 4.5          |   |              |     | 0.3  |   |              |      |  |       |        |      | 4.1   |  
|                                                 |                                                                                             |                                                                                                    | Income taxes payable                                |        |       |       |   |          |       |           |       |            |      | (2.5         | ) |              |     |     |   |              |      |  |       |        |      | (2.5  | )
|                                                 |                                                                                             |                                                                                                    | Estimated third-party
payor
settlements             |        |       |       |   |          |       |           |       |            |      | 4.6          |   |              |     | (0.2 | ) |              |      |  |       |        |      | 4.4   |  
|                                                 |                                                                                             | Other                                                                                              |                                                     |        |      |        |   |          | (5.3  | )          |       |            | 4.6  |              |   |              |    |      |   |              |     |   |       |        | (0.7 | )    
|                                                 |                                                                                             |                                                                                                    |                                                     |        |       |        |   |          |       |            |       |            |      |              |   |              |     |      |   |              |      |   |       |        |     
|                                                 |                                                                                             | Net
cash provided by (used in) operating activities                                                |                                                     |        | 1.2   |        |   |          | (3.3  | )          |       |            | 49.2 |              |   |              | 5.5 |      |   |              |     |   |       |        | 52.6 |      
|Cash flows from investing activities:            |                                                                                             |                                                                                                    |                                                     |        |       |        |   |          |       |            |       |            |      |              |   |              |     |      |   |              |      |   |       |       
|                                                 | Purchases of property and
equipment, net                                                    |                                                                                                    |                                                     |       |       |        |   |         |       |            |       | (25.4      | )    |              |   | (1.4         | )   |      |   |             |      |   |       | (26.8  | )   
|                                                 | Purchases of short-term
investments                                                         |                                                                                                    |                                                     |       |       |        |   |         |       |            |       | (21.5      | )    |              |   |             |     |      |   |             |      |   |       | (21.5  | )   
|                                                 | Other                                                                                       |                                                                                                    |                                                     |       |       |        |   | (0.9     | )     |            |       | (0.4       | )    |              |   |             |     |      |   |             |      |   |       | (1.3   | )   
|                                                 |                                                                                             |                                                                                                    |                                                     |        |       |        |   |          |       |            |       |            |      |              |   |              |     |      |   |              |      |   |       |        |     
|                                                 |                                                                                             |                                                                                                    | Net cash used in investing
activities               |        |       |       |   |          |       | (0.9       | )     |            |      | (47.3        | ) |              |     | (1.4 | ) |              |      |  |       |        |      | (49.6 | )
|Cash flows from financing activities:            |                                                                                             |                                                                                                    |                                                     |        |       |        |   |          |       |            |       |            |      |              |   |              |     |      |   |              |      |   |       |       
|                                                 | Repurchases of senior
subordinated notes                                                    |                                                                                                    |                                                     |       |       |        |   | (150.3   | )     |            |       |           |      |              |   |             |     |      |   |             |      |   |       | (150.3 | )   
|                                                 | Proceeds from issuance of
convertible notes, net                                            |                                                                                                    |                                                     | 242.7  |       |        |   |         |       |            |       |           |      |              |   |             |     |      |   |             |      |   |       | 242.7  |     
|                                                 | Distributions                                                                               |                                                                                                    |                                                     |       |       |        |   |         |       |            |       | 7.4        |      |              |   | (7.4         | )   |      |   |             |      |   |       |       |     
|                                                 | Proceeds from exercise of stock
options                                                     |                                                                                                    |                                                     |       |       |        |   |         |       |            |       | 2.2        |      |              |   |             |     |      |   |             |      |   |       | 2.2    |     
|                                                 | Increase (decrease) in
intercompany balances with
affiliates, net                           |                                                                                                    |                                                     | (243.9 | )     |        |   | 154.2    |       |            |       | 86.4       |      |              |   | 3.3          |     |      |   |             |      |   |       |       |     
|                                                 | Other                                                                                       |                                                                                                    |                                                     |       |       |        |   | 0.3      |       |            |       |           |      |              |   |             |     |      |   |             |      |   |       | 0.3    |     
|                                                 |                                                                                             |                                                                                                    |                                                     |        |       |        |   |          |       |            |       |            |      |              |   |              |     |      |   |              |      |   |       |        |     
|                                                 |                                                                                             |                                                                                                    | Net
cash provided by (used in) financing
activities |        |       | (1.2   | ) |          |       | 4.2        |       |            |      | 96.0         |   |              |     | (4.1 | ) |              |      |  |       |        |      | 94.9  |  
|                                                
|Change in cash and cash equivalents              |                                                                                             |                                                                                                    |                                                    |        |       |        |  |          |       |            | 97.9  |            |      |              |  |              |     |      |  |              |      |   | 97.9  |       
|Cash and cash equivalents at
beginning of period |                                                                                             |                                                                                                    |                                                    |        |       |        |  |          |       |            | 57.2  |            |      |              |  |              |     |      |  |              |      |   | 57.2  |       
|                                                 |                                                                                             |                                                                                                    |                                                     |        |       |        |   |          |       |            |       |            |      |              |   |              |     |      |   |              |      |   |       |        |     
|Cash and cash equivalents at end of
period       |                                                                                             | $                                                                                                  |                                                    |        |       | $      |  |          |       | $          | 155.1 |            |      | $            |  |              |     | $    |  |              |      | $ | 155.1 |       
|                                                 |                                                                                             |                                                                                                    |                                                     |        |       |        |   |          |       |            |       |            |      |              |   |              |     |      |   |              |      |   |       |        |     

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##### Table of Contents



LIFEPOINT HOSPITALS, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001

(IN MILLIONS)


|                                                 |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       |              |      |        |      |   |     |              |      |   |       |        |       |   |      |  
|------------------------------------------------ | ------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | - | --------------------------------------- | ----- | ------ | - | ------ | ----- | ---------- | ----- | ---------- | ----- | ------------ | ---- | ------ | ---- | - | --- | ------------ | ---- | - | ----- | ------ | ----- | - | ---- | -
|                                                 |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       | Wholly       |      | Mostly |      |   |     |              |      |   |       |       
|                                                 |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       | Owned        |      | Owned  |      |   |     |              |      |   |       |       
|                                                 |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       | Issuer of  |       | Subsidiary |       | Subsidiary   |      |        |      |   |     | Consolidated
|                                                 |                                                                                             |                                                                                                    |   |                                         |       | Parent |   | Notes  |       | Guarantors |       | Guarantor  |       | Eliminations |      | Total 
|                                                 |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       |              |      |       
|Cash flows from operating activities:            |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       |              |      |        |      |   |     |              |      |   |       |       
|                                                 | Net income                                                                                  |                                                                                                    | $ | 15.5                                    |       |        | $ | 15.5   |       |            | $     | 21.7       |       |              | $    | 4.5    |      |   | $   | (41.7        | )    |   | $     | 15.5   |      
|                                                 | Adjustments to reconcile net income
to net cash provided by (used in)
operating activities: |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       |              |      |        |      |   |     |              |      |   |       |        |      
|                                                 |                                                                                             | Equity in earnings of affiliates                                                                   |   |                                         | (15.5 | )      |   |        | (26.2 | )          |       |            |      |              |      |        |     |   |     |              | 41.7 |   |       |        |      |  
|                                                 |                                                                                             | Depreciation and amortization                                                                      |   |                                         |      |        |   |        |      |            |       |            | 15.7  |              |      |        | 0.9  |   |     |              |     |   |       |        | 16.6  |  
|                                                 |                                                                                             | ESOP expense                                                                                       |   |                                         |      |        |   |        |      |            |       |            | 4.8   |              |      |        | 0.2  |   |     |              |     |   |       |        | 5.0   |  
|                                                 |                                                                                             | Minority interests in earnings of
consolidated entity                                              |   |                                         |      |        |   |        | 1.3   |            |       |            |      |              |      |        |     |   |     |              |     |   |       |        | 1.3   |  
|                                                 |                                                                                             | Deferred income taxes (benefit)                                                                    |   |                                         |      |        |   |        |      |            |       |            | (0.7  | )            |      |        |     |   |     |              |     |   |       |        | (0.7  | )
|                                                 |                                                                                             | Reserve for professional liability
risks, net                                                      |   |                                         |      |        |   |        |      |            |       |            | 4.1   |              |      |        |     |   |     |              |     |   |       |        | 4.1   |  
|                                                 |                                                                                             | Gain on previously impaired
assets                                                                 |   |                                         |      |        |   |        |      |            |       |            | (0.5  | )            |      |        |     |   |     |              |     |   |       |        | (0.5  | )
|                                                 |                                                                                             | Extraordinary loss on early
retirement of debt                                                     |   |                                         |      |        |   |        | 2.6   |            |       |            |      |              |      |        |     |   |     |              |     |   |       |        | 2.6   |  
|                                                 |                                                                                             | Tax benefit from stock option
exercises                                                            |   |                                         |      |        |   |        |      |            |       |            | 0.7   |              |      |        |     |   |     |              |     |   |       |        | 0.7   |  
|                                                 |                                                                                             | Increase (decrease) in cash from
operating assets and liabilities,
net of effects of acquisitions: |   |                                         |       |        |   |        |       |            |       |            |       |              |      |        |      |   |     |              |      |   |       |        |       |  
|                                                 |                                                                                             |                                                                                                    |   | Accounts receivable                     |       |        |  |        |       |            |      |            |       |              | (9.7 | )      |      |   | 0.2 |              |      |   |      |        |       |   | (9.5 | )
|                                                 |                                                                                             |                                                                                                    |   | Inventories and other
current assets    |       |        |  |        |       |            |      |            |       |              | 0.2  |        |      |   |    |              |      |   |      |        |       |   | 0.2  |  
|                                                 |                                                                                             |                                                                                                    |   | Accounts payable and
accrued expenses   |       |        |  |        |       |            | (0.6  | )          |       |              | 3.4  |        |      |   |    |              |      |   |      |        |       |   | 2.8  |  
|                                                 |                                                                                             |                                                                                                    |   | Income taxes payable                    |       |        |  |        |       |            |      |            |       |              | 3.1  |        |      |   |    |              |      |   |      |        |       |   | 3.1  |  
|                                                 |                                                                                             |                                                                                                    |   | Estimated third-party payor
settlements |       |        |  |        |       |            |      |            |       |              | 8.8  |        |      |   | 0.1 |              |      |   |      |        |       |   | 8.9  |  
|                                                 | Other                                                                                       |                                                                                                    |   |                                        |       |        |   | 1.0    |       |            |       | (0.5       | )     |              |      |       |      |   |     |             |      |   |       | 0.5    |      
|                                                 |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       |              |      |        |      |   |     |              |      |   |       |        |      
|                                                 |                                                                                             | Net cash (used in) provided by
operating activities                                                |   |                                         |      |        |   |        | (6.4  | )          |       |            | 51.1  |              |      |        | 5.9  |   |     |              |     |   |       |        | 50.6  |  
|Cash flows from investing activities:            |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       |              |      |        |      |   |     |              |      |   |       |       
|                                                 | Purchases of property and
equipment, net                                                    |                                                                                                    |   |                                        |       |        |   |       |       |            |       | (22.1      | )     |              |      | (0.5   | )    |   |     |             |      |   |       | (22.6  | )    
|                                                 | Purchase of facility                                                                        |                                                                                                    |   |                                        |       |        |   |       |       |            |       | (5.7       | )     |              |      |       |      |   |     |             |      |   |       | (5.7   | )    
|                                                 | Other                                                                                       |                                                                                                    |   |                                        |       |        |   | (1.5   | )     |            |       | 6.3        |       |              |      |       |      |   |     |             |      |   |       | 4.8    |      
|                                                 |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       |              |      |        |      |   |     |              |      |   |       |        |      
|                                                 |                                                                                             | Net cash used in investing
activities                                                              |   |                                         |      |        |   |        | (1.5  | )          |       |            | (21.5 | )            |      |        | (0.5 | ) |     |              |     |   |       |        | (23.5 | )
|Cash flows from financing activities:            |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       |              |      |        |      |   |     |              |      |   |       |       
|                                                 | Proceeds from stock offering, net                                                           |                                                                                                    |   |                                        |       |        |   | 100.4  |       |            |       |           |       |              |      |       |      |   |     |             |      |   |       | 100.4  |      
|                                                 | Repayments of bank debt                                                                     |                                                                                                    |   |                                        |       |        |   | (139.3 | )     |            |       |           |       |              |      |       |      |   |     |             |      |   |       | (139.3 | )    
|                                                 | Distributions                                                                               |                                                                                                    |   |                                        |       |        |   |       |       |            |       | 4.8        |       |              |      | (4.8   | )    |   |     |             |      |   |       |       |      
|                                                 | Proceeds from exercise of stock
options                                                     |                                                                                                    |   |                                        |       |        |   |       |       |            |       | 1.5        |       |              |      |       |      |   |     |             |      |   |       | 1.5    |      
|                                                 | Increase (decrease) in intercompany balances with affiliates, net                           |                                                                                                    |   |                                        |       |        |   | 46.7   |       |            |       | (46.1      | )     |              |      | (0.6   | )    |   |     |             |      |   |       |       |      
|                                                 | Other                                                                                       |                                                                                                    |   |                                        |       |        |   | 0.1    |       |            |       |           |       |              |      |       |      |   |     |             |      |   |       | 0.1    |      
|                                                 |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       |              |      |        |      |   |     |              |      |   |       |        |      
|                                                 |                                                                                             | Net cash provided by (used in) financing activities                                                |   |                                         |      |        |   |        | 7.9   |            |       |            | (39.8 | )            |      |        | (5.4 | ) |     |              |     |   |       |        | (37.3 | )
|                                                
|Change in cash and cash equivalents              |                                                                                             |                                                                                                    |  |                                         |       |        |  |        |       |            | (10.2 | )          |       |              |     |        |      |   |    |              |      |   | (10.2 | )     
|Cash and cash equivalents at beginning
of period |                                                                                             |                                                                                                    |  |                                         |       |        |  |        |       |            | 39.7  |            |       |              |     |        |      |   |    |              |      |   | 39.7  |       
|                                                 |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       |              |      |        |      |   |     |              |      |   |       |        |      
|Cash and cash equivalents at end of
period       |                                                                                             | $                                                                                                  |  |                                         |       | $      |  |        |       | $          | 29.5  |            |       | $            |     |        |      | $ |    |              |      | $ | 29.5  |       
|                                                 |                                                                                             |                                                                                                    |   |                                         |       |        |   |        |       |            |       |            |       |              |      |        |      |   |     |              |      |   |       |        |      

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##### Table of Contents






Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations

You should read this discussion together with our unaudited condensed
consolidated financial statements and related notes included elsewhere in this
report.

Overview

At June 30, 2002, we operated 23 general, acute care hospitals in the states
of Alabama, Florida, Kansas, Kentucky, Louisiana, Tennessee, Utah and Wyoming.

Forward-Looking Statements

This report and other materials we have filed or may file with the
Securities and Exchange Commission, as well as information included in oral
statements or other written statements made, or to be made, by us, contain, or
will contain, disclosures which are forward-looking statements.
Forward-looking statements include all statements that do not relate solely to
historical or current facts and can be identified by the use of words such as
may, believe, will, expect, project, estimate, anticipate, plan
or continue. These forward-looking statements are based on the current plans
and expectations of our management and are subject to a number of uncertainties
and risks that could significantly affect our current plans and expectations and
future financial condition and results. These factors include, but are not
limited to:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the highly competitive nature of the healthcare business including the competition to recruit general and specialized physicians;                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | the efforts of insurers, healthcare providers and others to contain healthcare costs;                                                                                                                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | possible changes in the Medicare program that may further limit reimbursements to healthcare providers and insurers;                                                                                                                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | the ability to attract and retain qualified management and personnel,
including physicians, nurses and technicians, consistent with our
expectations and targets;                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | changes in federal, state or local regulation affecting the healthcare industry;                                                                                                                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | the possible enactment of federal or state healthcare reform;                                                                                                                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | the possibility that any favorable governmental reimbursement changes will
be delayed or abandoned because of the focus of Congress on the recent
terrorist attacks and the resulting reallocation of governmental resources;                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | our ability to acquire hospitals on favorable terms and to successfully complete budgeted capital improvements of our existing
facilities;                                                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | liabilities and other claims asserted against us;                                                                                                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | uncertainty associated with the HIPAA regulations;                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | the ability to enter into, renegotiate and renew payor arrangements on acceptable terms;                                                                                                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | the availability and terms of capital to fund our business strategy;                                                                                                                                                                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | the availability, cost and terms of insurance coverage for our
hospitals and physicians who practice at our hospitals;                                                                                                                                                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | implementation of our business strategy and development plans;                                                                                                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | our ongoing efforts to monitor, maintain and comply with applicable laws,
regulations, policies and procedures, including those required by the
corporate integrity agreement that we entered into with the government in
December 2000 (as amended in May 2002) and those that, if violated, could
cause any of our facilities to lose its state license or its ability to
receive payments under the Medicare, Medicaid or TRICARE programs;
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | the ability to increase patient volumes and control the costs of providing services and supply costs;                                                                                                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | claims and legal actions relating to professional liabilities and other matters;                                                                                                                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | successful development (or license) of software and management information systems used for effective claims processing;                                                                                                                                                                                                                                                                                                                      

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| |  |                                                                                                         
| |  | --------------------------------------------------------------------------------------------------------
| |  |  fluctuations in the market value of our common stock and resulting costs to us to administer our ESOP;
| |  |                                                                                                         
| |  |  changes in accounting practices;                                                                      
| |  |                                                                                                         
| |  |  changes in general economic conditions; and                                                           
| |  |                                                                                                         
| |  |  other risk factors described in this report.                                                          

As a consequence, current plans, anticipated actions and future financial
conditions and results may differ from those expressed in any forward-looking
statements made by or on behalf of our company. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise. You are cautioned not to
place undue reliance on such forward-looking statements when evaluating the information
presented in this report.

Results of Operations

Revenue/Volume Trends

We anticipate our patient volumes and related revenues to continue to
increase as a result of the following factors:



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Expanding Service Offerings. We believe our efforts to improve the quality
and broaden the scope of healthcare services available at our facilities
will lead to increased patient volumes. Recruiting and retaining both
general practitioners and specialists for our non-urban communities is a
key to the success of these efforts. Between January 1, 1998 and June 30,
2002, we recruited 302 physicians, of which 233 have been retained by
us. Adding new physicians should help increase both inpatient and
outpatient volumes which, in turn, should increase revenues.
Approximately 62% of our retained physicians are specialists. Continuing to
add specialists should also allow us to grow by offering new services. In
addition, increases in capital expenditures in our hospitals should
increase local market share and help persuade patients to obtain
healthcare services within their
communities.
| 
| | Aging U.S. Population. In general, the population of the United States and of the communities that we serve is aging. At the end of
2001, approximately 13% of the U.S. population was 65 years old or older compared to 11% of the population at the end of 1980. This
aging trend is projected to continue so that by 2025, approximately 18% of the U.S. population is expected to be older than 65.
Generally, the older population tends to use healthcare services more frequently than the younger population.                                                                                                                                                                                                                                                                                                                                                                                                     
| 
| | Medicare Rate Increases. The Medicare, Medicaid and SCHIP Benefit
Improvement and Protection Act of 2000 (BIPA) was enacted in December 2000.
Under BIPA, we have experienced Medicare rate increases that began in April
2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

Although we anticipate our patient volumes to increase, the resulting
revenues will likely be impacted in part by the following factors:



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Revenues from Medicare, Medicaid and managed care plans. We derive a
significant portion of our business from Medicare, Medicaid and managed
care plans. Admissions related to Medicare, Medicaid and managed care plan
patients were 92.2% and 91.1% of total admissions for the six months ended
June 30, 2002 and 2001, respectively. These payors receive significant
discounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| 
| | Our revenue is heavily concentrated in Kentucky and Tennessee, which makes
us particularly sensitive to regulatory and economic changes in those
states. As of June 30, 2002, we operated 23 hospitals with seven located in
the Commonwealth of Kentucky and seven located in the State of Tennessee.
Based on those 23 hospitals, we generated 37.3% of our revenue from our
Kentucky hospitals (including 3.7% from state-sponsored Medicaid programs)
and 24.0% from our Tennessee hospitals (including 3.3% from state-sponsored
TennCare programs) for the six months ended June 30, 2002. Some managed
care organizations that participate in the Medicaid programs of Tennessee
and Kentucky have been placed in receivership or encountered other
financial difficulties in the past. Other managed care organizations in
these states may encounter similar difficulties in paying claims in the
future.
| 
| | Efforts to Reduce Payments. Other third-party payors also negotiate
discounted fees rather than paying standard prices. In addition, an
increasing proportion of our services are reimbursed under predetermined
payment amounts regardless of the cost incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| 
| | Growth in Outpatient Services. We anticipate that the growth trend in
outpatient services will continue. A number of procedures once performed
only on an inpatient basis have been, and will likely continue to be,
converted to outpatient procedures. This conversion has occurred through
continuing advances in pharmaceutical and medical technologies and as a
result of efforts made by payors to                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

20



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | control costs. Generally, the payments
we receive for outpatient procedures are less than those for similar
procedures performed in an inpatient setting. Net outpatient revenues as a
percentage of total revenues were 49.4% and 46.8% for the six months
ended June 30, 2002 and 2001, respectively. On a same facility basis, net
outpatient revenues as a percentage of total revenues was 48.6% and
46.8% for the six months ended June 30, 2002 and 2001, respectively.

Cost Containment

We seek to control costs by, among other things, reducing labor costs by
improving labor productivity and decreasing the use of contracted labor,
controlling supply expenses through the use of a group purchasing organization
and reducing uncollectible revenues. We have implemented cost control
initiatives including adjusting staffing levels according to patient volumes,
modifying supply purchases according to usage patterns and providing training to
hospital staff in more efficient billing and collection processes. For the six
months ended June 30, 2002 compared to the six months ended June 30, 2001, total
operating expenses decreased as a percentage of revenue to 77.4% from 78.5%. We
believe that as our company grows, we will likely benefit from our ability to
spread fixed administrative costs over a larger base of operations.

While we were able to control our costs during the six months ended June 30,
2002, there is no guarantee that we can contain certain costs in the
future. As a result of the general shortage of nurses and technicians in the industry, we may
experience an increase in salaries and benefits expense as we may be forced to
hire additional contract health professionals.

In addition, the healthcare industry has experienced an increase in
the cost of all insurance lines, especially professional and general liability
insurance. We have mitigated a portion of these increases for fiscal 2002 by
increasing our self-insured retention levels for professional and general
liabilities. We currently have no information that would lead us to believe that
this trend is only temporary in nature and thus there is no assurance that these
costs will not have a material adverse affect on our future operating results.

Pressure on payment levels, the increase in outpatient services and the
large number of our patients who participate in managed care plans will present
ongoing challenges for us. These challenges are exacerbated by our inability to
control these trends and the associated risks. To maintain or improve operating
margins in the future, we must, among other things, increase patient volumes
while controlling the costs of providing services.

Impact Of Acquisitions

Because of the relatively small number of hospitals we own, each hospital
acquisition can materially affect our overall operating margin. We typically
take a number of steps to lower operating costs when we acquire a hospital. The
impact of our actions may be offset by other cost increases to expand services,
strengthen medical staff and attract additional patients to our facilities. The
benefits of our investments and of other activities to improve operating margins
generally do not occur immediately. Consequently, the financial performance of a
newly acquired hospital may adversely affect our overall operating margins in
the short term. As we acquire additional hospitals, this effect should be
mitigated by the expanded financial base of our existing hospitals and the
allocation of corporate overhead among a larger number of hospitals.

21



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Operating Results Summary

The following is a summary of results of operations for the three months and
six months ended June 30, 2002 and 2001 (dollars in millions except for revenues
per equivalent admission):

|                                                                      |  |                             |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|--------------------------------------------------------------------- |  | --------------------------- | ----- | -------- |  | ------ | ----- | -------- |  | - | ----- | ---- |  |  | ----- | -
|                                                                      |  | THREE MONTHS ENDED JUNE 30,
|                                                                      |  |                            
|                                                                      |  | 2002                        |       | 2001    
|                                                                      |  |                             |       |         
|                                                                      |  |                             |       |          |  | % OF   |       |          |  |   |       | % OF
|                                                                      |  | AMOUNTS                     |       | REVENUES |  | AMOUNT |       | REVENUES
|                                                                      |  |                             |       |          |  |        |       |         
|Revenues                                                              |  | $                           | 177.9 |          |  |        | 100.0 | %        |  | $ | 151.6 |      |  |  | 100.0 | %
|                                                                     
|Salaries and benefits (a)                                             |  |                             | 70.9  |          |  |        | 39.8  |          |  |   | 59.4  |      |  |  | 39.2  |  
|Supplies (b)                                                          |  |                             | 21.9  |          |  |        | 12.3  |          |  |   | 18.8  |      |  |  | 12.4  |  
|Other operating expenses (c)                                          |  |                             | 33.3  |          |  |        | 18.7  |          |  |   | 31.0  |      |  |  | 20.4  |  
|Provision for doubtful accounts                                       |  |                             | 13.1  |          |  |        | 7.4   |          |  |   | 10.6  |      |  |  | 7.0   |  
|                                                                      |  |                             |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|                                                                      |  |                             | 139.2 |          |  |        | 78.2  |          |  |   | 119.8 |      |  |  | 79.0  |  
|                                                                      |  |                             |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|EBITDA (d)                                                            |  |                             | 38.7  |          |  |        | 21.8  |          |  |   | 31.8  |      |  |  | 21.0  |  
|                                                                     
|Depreciation and amortization                                         |  |                             | 9.7   |          |  |        | 5.5   |          |  |   | 8.5   |      |  |  | 5.7   |  
|Interest expense, net                                                 |  |                             | 2.8   |          |  |        | 1.6   |          |  |   | 3.7   |      |  |  | 2.4   |  
|ESOP expense                                                          |  |                             | 2.7   |          |  |        | 1.5   |          |  |   | 2.4   |      |  |  | 1.6   |  
|                                                                      |  |                             |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|Income before minority interests, income taxes and
extraordinary item |  |                             | 23.5  |          |  |        | 13.2  |          |  |   | 17.2  |      |  |  | 11.3  |  
|Minority interests in earnings of consolidated entity                 |  |                             | 0.8   |          |  |        | 0.4   |          |  |   | 0.7   |      |  |  | 0.4   |  
|                                                                      |  |                             |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|Income before income taxes and extraordinary item                     |  |                             | 22.7  |          |  |        | 12.8  |          |  |   | 16.5  |      |  |  | 10.9  |  
|Provision for income taxes                                            |  |                             | 9.6   |          |  |        | 5.4   |          |  |   | 8.0   |      |  |  | 5.3   |  
|                                                                      |  |                             |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|Income before extraordinary item                                      |  |                             | 13.1  |          |  |        | 7.4   |          |  |   | 8.5   |      |  |  | 5.6   |  
|Extraordinary loss on early retirement of debt, net                   |  |                             | 15.6  |          |  |        | 8.8   |          |  |   | 1.6   |      |  |  | 1.0   |  
|                                                                      |  |                             |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|Net income (loss)                                                     |  | $                           | (2.5  | )        |  |        | (1.4  | )%       |  | $ | 6.9   |      |  |  | 4.6   | %
|                                                                      |  |                             |       |          |  |        |       |          |  |   |       |      |  |  |       |  

|                                  |  |                             |        |        |  |                 |        |  |  |  |      |  
|--------------------------------- |  | --------------------------- | ------ | ------ |  | --------------- | ------ |  |  |  | ---- | -
|                                  |  | THREE MONTHS ENDED JUNE 30,
|                                  |  |                            
|                                  |  | 2002                        |        | 2001   |  | % CHANGES      
|                                  |  | AMOUNT                      |        | AMOUNT |  | FROM PRIOR YEAR
|                                  |  |                             |        |        |  |                
|Revenues                          |  | $                           | 177.9  |        |  | $               | 151.6  |  |  |  | 17.3 | %
|Admissions(e)                     |  |                             | 18,548 |        |  |                 | 17,128 |  |  |  | 8.3  |  
|Equivalent admissions(f)          |  |                             | 36,114 |        |  |                 | 31,379 |  |  |  | 15.1 |  
|Revenues per equivalent admission |  | $                           | 4,924  |        |  | $               | 4,833  |  |  |  | 1.9  |  
|Outpatient factor (f)             |  |                             | 1.95   |        |  |                 | 1.83   |  |  |  | 6.6  |  
|Emergency room visits (g)         |  |                             | 88,103 |        |  |                 | 76,201 |  |  |  | 15.6 |  
|Inpatient
surgeries               |  |                             | 5,732  |        |  |                 | 4,859  |  |  |  | 18.0 |  
|Outpatient surgeries (h)          |  |                             | 16,079 |        |  |                 | 14,250 |  |  |  | 12.8 |  
|Total surgeries                   |  |                             | 21,811 |        |  |                 | 19,109 |  |  |  | 14.1 |  
|Average
daily census              |  |                             | 826    |        |  |                 | 755    |  |  |  | 9.4  |  
|Average length of stay (days) (i) |  |                             | 4.1    |        |  |                 | 4.0    |  |  |  | 2.5  |  
|                                 
|Same hospital(j):                 |  |                             |        |        |  |                 |        |  |  |  |      |  
|Revenues                          |  | $                           | 163.1  |        |  | $               | 151.6  |  |  |  | 7.6  | %
|Admissions (e)                    |  |                             | 17,123 |        |  |                 | 17,128 |  |  |  |     |  
|Equivalent admissions(f)          |  |                             | 32,792 |        |  |                 | 31,379 |  |  |  | 4.5  |  
|Revenues per equivalent admission |  | $                           | 4,974  |        |  | $               | 4,833  |  |  |  | 2.9  |  
|Outpatient factor (f)             |  |                             | 1.91   |        |  |                 | 1.83   |  |  |  | 4.4  |  
|Emergency room visits (g)         |  |                             | 79,918 |        |  |                 | 76,201 |  |  |  | 4.9  |  
|Inpatient
surgeries               |  |                             | 5,326  |        |  |                 | 4,859  |  |  |  | 9.6  |  
|Outpatient surgeries (h)          |  |                             | 15,066 |        |  |                 | 14,250 |  |  |  | 5.7  |  
|Total surgeries                   |  |                             | 20,392 |        |  |                 | 19,109 |  |  |  | 6.7  |  
|Average
daily census              |  |                             | 759    |        |  |                 | 755    |  |  |  | 0.5  |  
|Average length of stay (days) (i) |  |                             | 4.0    |        |  |                 | 4.0    |  |  |  |     |  

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|                                                                      |  |                           |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|--------------------------------------------------------------------- |  | ------------------------- | ----- | -------- |  | ------ | ----- | -------- |  | - | ----- | ---- |  |  | ----- | -
|                                                                      |  | SIX MONTHS ENDED JUNE 30,
|                                                                      |  |                          
|                                                                      |  | 2002                      |       | 2001    
|                                                                      |  |                           |       |         
|                                                                      |  |                           |       |          |  | % OF   |       |          |  |   |       | % OF
|                                                                      |  | AMOUNTS                   |       | REVENUES |  | AMOUNT |       | REVENUES
|                                                                      |  |                           |       |          |  |        |       |         
|Revenues                                                              |  | $                         | 359.5 |          |  |        | 100.0 | %        |  | $ | 305.9 |      |  |  | 100.0 | %
|                                                                     
|Salaries and benefits (a)                                             |  |                           | 141.6 |          |  |        | 39.4  |          |  |   | 119.7 |      |  |  | 39.1  |  
|Supplies (b)                                                          |  |                           | 44.8  |          |  |        | 12.5  |          |  |   | 38.4  |      |  |  | 12.5  |  
|Other operating expenses (c)                                          |  |                           | 65.5  |          |  |        | 18.2  |          |  |   | 59.4  |      |  |  | 19.5  |  
|Provision for doubtful accounts                                       |  |                           | 26.3  |          |  |        | 7.3   |          |  |   | 22.6  |      |  |  | 7.4   |  
|                                                                      |  |                           |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|                                                                      |  |                           | 278.2 |          |  |        | 77.4  |          |  |   | 240.1 |      |  |  | 78.5  |  
|                                                                      |  |                           |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|EBITDA (d)                                                            |  |                           | 81.3  |          |  |        | 22.6  |          |  |   | 65.8  |      |  |  | 21.5  |  
|                                                                     
|Depreciation and amortization                                         |  |                           | 19.1  |          |  |        | 5.4   |          |  |   | 16.6  |      |  |  | 5.4   |  
|Interest expense, net                                                 |  |                           | 6.9   |          |  |        | 1.9   |          |  |   | 10.2  |      |  |  | 3.3   |  
|Gain
on previously impaired assets                                    |  |                           |      |          |  |        |      |          |  |   | (0.5  | )    |  |  | (0.2  | )
|ESOP expense                                                          |  |                           | 5.2   |          |  |        | 1.4   |          |  |   | 5.0   |      |  |  | 1.7   |  
|                                                                      |  |                           |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|Income before minority interests, income taxes and
extraordinary item |  |                           | 50.1  |          |  |        | 13.9  |          |  |   | 34.5  |      |  |  | 11.3  |  
|Minority interests in earnings of consolidated entity                 |  |                           | 1.5   |          |  |        | 0.4   |          |  |   | 1.3   |      |  |  | 0.5   |  
|                                                                      |  |                           |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|Income before income taxes and extraordinary item                     |  |                           | 48.6  |          |  |        | 13.5  |          |  |   | 33.2  |      |  |  | 10.8  |  
|Provision for income taxes                                            |  |                           | 21.0  |          |  |        | 5.8   |          |  |   | 16.1  |      |  |  | 5.2   |  
|                                                                      |  |                           |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|Income before extraordinary item                                      |  |                           | 27.6  |          |  |        | 7.7   |          |  |   | 17.1  |      |  |  | 5.6   |  
|Extraordinary loss on early retirement of debt, net                   |  |                           | 16.4  |          |  |        | 4.6   |          |  |   | 1.6   |      |  |  | 0.5   |  
|                                                                      |  |                           |       |          |  |        |       |          |  |   |       |      |  |  |       |  
|Net income                                                            |  | $                         | 11.2  |          |  |        | 3.1   | %        |  | $ | 15.5  |      |  |  | 5.1   | %
|                                                                      |  |                           |       |          |  |        |       |          |  |   |       |      |  |  |       |  

|                                  |  |                           |         |        |  |                 |         |  |  |  |      |  
|--------------------------------- |  | ------------------------- | ------- | ------ |  | --------------- | ------- |  |  |  | ---- | -
|                                  |  | SIX MONTHS ENDED JUNE 30,
|                                  |  |                          
|                                  |  | 2002                      |         | 2001   |  | % CHANGES      
|                                  |  | AMOUNT                    |         | AMOUNT |  | FROM PRIOR YEAR
|                                  |  |                           |         |        |  |                
|Revenues                          |  | $                         | 359.5   |        |  | $               | 305.9   |  |  |  | 17.5 | %
|Admissions(e)                     |  |                           | 39,099  |        |  |                 | 36,028  |  |  |  | 8.5  |  
|Equivalent admissions(f)          |  |                           | 73,702  |        |  |                 | 64,454  |  |  |  | 14.3 |  
|Revenues per equivalent admission |  | $                         | 4,877   |        |  | $               | 4,746   |  |  |  | 2.8  |  
|Outpatient factor (f)             |  |                           | 1.89    |        |  |                 | 1.79    |  |  |  | 5.6  |  
|Emergency room visits (g)         |  |                           | 173,090 |        |  |                 | 153,774 |  |  |  | 12.6 |  
|Inpatient
surgeries               |  |                           | 11,384  |        |  |                 | 9,901   |  |  |  | 15.0 |  
|Outpatient surgeries (h)          |  |                           | 32,245  |        |  |                 | 27,805  |  |  |  | 16.0 |  
|Total surgeries                   |  |                           | 43,629  |        |  |                 | 37,706  |  |  |  | 15.7 |  
|Average
daily census              |  |                           | 880     |        |  |                 | 805     |  |  |  | 9.3  |  
|Average length of stay (days) (i) |  |                           | 4.1     |        |  |                 | 4.0     |  |  |  | 2.5  |  
|                                 
|Same hospital(j):                 |  |                           |         |        |  |                 |         |  |  |  |      |  
|Revenues                          |  | $                         | 329.5   |        |  | $               | 305.7   |  |  |  | 7.8  | %
|Admissions (e)                    |  |                           | 35,866  |        |  |                 | 36,028  |  |  |  | (0.4 | )
|Equivalent admissions(f)          |  |                           | 66,567  |        |  |                 | 64,454  |  |  |  | 3.3  |  
|Revenues per equivalent admission |  | $                         | 4,950   |        |  | $               | 4,744   |  |  |  | 4.3  |  
|Outpatient factor (f)             |  |                           | 1.86    |        |  |                 | 1.79    |  |  |  | 3.9  |  
|Emergency room visits (g)         |  |                           | 156,676 |        |  |                 | 153,774 |  |  |  | 1.9  |  
|Inpatient
surgeries               |  |                           | 10,485  |        |  |                 | 9,901   |  |  |  | 5.9  |  
|Outpatient surgeries (h)          |  |                           | 30,107  |        |  |                 | 27,805  |  |  |  | 8.3  |  
|Total surgeries                   |  |                           | 40,592  |        |  |                 | 37,706  |  |  |  | 7.7  |  
|Average
daily census              |  |                           | 805     |        |  |                 | 805     |  |  |  |     |  
|Average length of stay (days) (i) |  |                           | 4.1     |        |  |                 | 4.0     |  |  |  | 2.5  |  



---

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|(a) |  | Represents our cost of salaries and benefits, including employee health
benefits and workers compensation insurance, for all hospital and corporate
employees and contract labor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Includes our hospitals costs for pharmaceuticals, blood, surgical
instruments and all general supply items, including the cost of freight.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(c) |  | Consists primarily of contract services, physician recruitment,
professional fees, repairs and maintenance, rents and leases, utilities,
insurance, marketing and non-income taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(d) |  | EBITDA is defined as income before depreciation and amortization, interest
expense, gain on previously impaired assets, ESOP expense, minority
interests in earnings of consolidated entity, extraordinary items and
income taxes. EBITDA is commonly used as an analytical indicator within the
health care industry and also serves as a measure of leverage capacity and
debt service ability. EBITDA should not be considered as a measure of
financial performance under accounting principles generally accepted in the
United States and the items excluded from EBITDA are significant components
in understanding and assessing financial performance. EBITDA should not be
considered in isolation or as an alternative to net income, cash flows
generated by operating, investing or financing activities or other
financial statement data presented in the condensed consolidated financial
statements as an indicator of financial performance or liquidity. Because
EBITDA is not a measurement determined in accordance with accounting
principles generally accepted in the United States and is susceptible to
varying calculations, EBITDA as presented may not be comparable to other
similarly titled measures of other companies.
|   
|(e) |  | Represents the total number of patients admitted (in the facility for a
period in excess of 23 hours) to our hospitals and is used by management
and investors as a general measure of inpatient volume.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(f) |  | Management and investors use equivalent admissions as a general measure of
combined inpatient and outpatient volume. We compute equivalent admissions
by multiplying admissions (inpatient volume) by the outpatient factor (the
sum of gross inpatient revenue and gross outpatient revenue and then
dividing the resulting amount by gross inpatient revenue). The equivalent
admissions computation equates outpatient revenue to the volume measure
(admissions) used to measure inpatient volume resulting in a general
measure of combined inpatient and outpatient volume.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(g) |  | Represents the total number of hospital-based emergency room visits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(h) |  | Outpatient surgeries are those surgeries that do not require admission to our hospitals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(i) |  | Represents the average number of days an admitted patient stays in our hospitals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(j) |  | Same hospital information excludes the operations of hospitals which we
either acquired or divested during the periods presented. The costs of
corporate overhead are included in same hospital information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

For the Three Months Ended June 30, 2002 and 2001

Revenues increased 17.3% to $177.9 million for the three months ended June
30, 2002 compared to $151.6 million for the three months ended June 30, 2001
primarily as a result of our two acquisitions during the fourth quarter of 2001
and a 7.6% increase in same hospital revenues. The 2001 acquisitions increased
the growth in our actual revenues by $14.8 million while same hospital revenues
increased by $11.5 million. The 7.6% increase in same hospital revenues resulted
primarily from a 4.5% increase in same hospital equivalent admissions and a 2.9%
increase in same hospital revenues per equivalent admission. In addition, total
surgeries, inpatient surgeries and outpatient surgeries increased
6.7%, 9.6% and 5.7%, respectively, on a
same hospital basis for the three months ended June 30, 2002 over the same
period last year. The growth in outpatient surgeries increased our revenue;
however, these outpatient revenues lower our growth in revenues per equivalent
admission as revenues from outpatient services are generally lower than
inpatient services.

Our breakdown of
revenues for the three months ended June 30, 2002 was 33.8%
Medicare, 15.6% Medicaid, 39.1% discounted and commercial, and 11.5%
other. Our breakdown of revenues for the three months ended
June 30, 2001 was 35.1% Medicare, 14.0% Medicaid, 40.7%
discounted and commercial, and 10.2% other.

Net adjustments to estimated third-party payor settlements resulted in an
increase to net revenues of $2.1 million for the three months ended June 30,
2002 compared to $0.6 million for the same period last year. Net adjustments of
$1.7 million out of the $2.1 million mentioned above relate
to outpatient PPS revenues on
11 cost reports. We still have 22 cost reports to file that include outpatient
PPS revenues.

Our total costs did not increase at the same rate as our revenues. The
increase in volumes and revenues per equivalent admission contributed to the
reduction of our total operating expenses as a percentage of revenues because we
were able to spread our operating costs over an increased base of revenues.

Salaries and benefits increased as a percentage of revenues to 39.8% for the
three months ended June 30, 2002 from 39.2% for the three months ended June 30,
2001, primarily as a result of a 5.9% increase in salaries and benefits per
man-hour offset by a 2.2% decrease in man-hours per equivalent admission. Our
largest area of increase was employee benefits, which increased by $2.8
million over the same period last year. On a same hospital
basis, salaries and benefits increased as a percentage of revenues to 39.4% for
the three months ended June 30, 2002 from 39.2% over the same
period last year. On a same hospital basis, employee benefits
increased by $1.6 million over the same period last year.

Supply costs decreased slightly as a percentage of revenues to 12.3% for the
three months ended June 30, 2002 from 12.4% for the three months ended June 30,
2001 primarily as a result of the benefit from group purchasing and an increase
in our net revenues per

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equivalent admission. However, the cost of supplies per
equivalent admission increased 1.3% primarily as a result of increases in the
number of surgeries performed by us during the three months ended June 30, 2002
compared to the three months ended June 30, 2001 as supply costs incurred in
connection with surgeries are higher than supply costs incurred for other
procedures. Total surgeries increased 14.1% over the same period last year. On a
same hospital basis, supply costs decreased as a percentage of revenues to 12.2%
for the three months ended June 30, 2002 from 12.4% over the same period last
year.

Other operating expenses decreased as a percentage of revenues to 18.7% for
the three months ended June 30, 2002 from 20.4% for the three months ended June
30, 2001. The decrease was primarily the result of a decrease in physician
recruiting expense as a percentage of revenue; however, the amount of physician
recruiting expense increased to $2.4 million for the three months ended June 30,
2002 from $1.7 million in the same period last year. On a same hospital basis,
other operating expenses decreased as a percentage of revenues to 18.8% for the
three months ended June 30, 2002 from 20.4% over the same period last year.

Provision for doubtful accounts increased as a percentage of revenues to
7.4% for the three months ended June 30, 2002 from 7.0% for the three months
ended June 30, 2001 primarily because of the effect of Ville Platte Medical Center,
which was acquired on December 1, 2001, and to an increase in our self-pay
revenues. On a same hospital basis, the provision for doubtful accounts decreased
as a percentage of revenues to 7.0% for the three months ended June 30, 2002
from 7.1% over the same period last year.

Depreciation and amortization expense increased to $9.7 million for the
three months ended June 30, 2002 compared to $8.5 million for the three months
ended June 30, 2001 primarily as a result of our two acquisitions during the
fourth quarter of 2001 and our increase in capital expenditures during the past
year. In addition, we accelerated depreciation expense by $0.5 million during
the three months ended June 30, 2002 as a result of replacing certain equipment
with new equipment purchased in a $10 million bulk purchase during June 2002. This
was partially offset by the cessation of goodwill amortization required by SFAS
142, which was effective January 1, 2002. Goodwill amortization during the three
months ended June 30, 2001 was $0.4 million.

Net interest expense decreased to $2.8 million for the three months ended
June 30, 2002 from $3.7 million for the three months ended June 30, 2001. This
decrease was primarily the result of our repurchase of $128.0 million of our 10
3/4% senior subordinated notes primarily during the three months ended June 30,
2002.

ESOP expense increased to $2.7 million for the three months ended June 30,
2002 from $2.4 million for the three months ended June 30, 2001. This increase
was primarily because of a higher average fair market value of our common stock
for the three months ended June 30, 2002 compared to the same period last year.
We recognize ESOP expense based on the average fair market value of the shares
committed to be released during the period.

Minority interests in earnings of consolidated entity increased slightly to
$0.8 million for the three months ended June 30, 2002 compared to $0.7 million
for the three months ended June 30, 2001 primarily because of an increase in the
pre-tax income of our non-wholly owned hospital.

The provision for income taxes increased to $9.6 million for the three
months ended June 30, 2002 compared to $8.0 million for the three months ended
June 30, 2001. These provisions reflect effective income tax rates of 42.3% for
the three months ended June 30, 2002 compared to 48.4% for the three months
ended June 30, 2001. The effective tax rate decreased primarily
due to the decline in the permanent differences between book and
taxable income as a percentage of pre-tax income.

During the three months ended June 30, 2002, we repurchased $120.5 million
of our 10 3/4% senior subordinated notes due 2009. In connection with these
repurchases, we recorded an extraordinary charge from the early retirement of
debt in the amount of $15.6 million, net of tax benefits of $9.4 million. The
gross extraordinary charge of $25.0 million consists of $21.2 million in
premiums, commissions and fees paid for the repurchases and $3.8 million in
non-cash net deferred loan cost write-offs.

In June 2001, we completed a $200 million, five-year amended and restated
credit agreement with a syndicate of banks, which increased our available credit
under our revolving credit agreement from $65 million to $200 million. Upon
consummation of this amended and restated agreement, we wrote off $2.6 million
of deferred loan costs related to our original credit agreement, which resulted
in an extraordinary charge of $1.6 million, net of a tax benefit of $1.0
million.

We had a net loss of $2.5 million for the three months ended June 30, 2002
compared to net income of $6.9 million for the three months ended June 30, 2001
for the reasons described above.

For the Six Months Ended June 30, 2002 and 2001

Revenues increased 17.5% to $359.5 million for the six months ended
June 30, 2002 compared to $305.9 million for the six months ended June 30, 2001
primarily as a result of our two acquisitions during the fourth quarter of 2001
and a 7.8% increase in same hospital revenues. The 2001 acquisitions increased
the growth in our actual revenues by $29.8 million while same hospital revenues
increased by $23.8 million. The 7.8% increase in same hospital revenues resulted
primarily from a 3.3% increase in same hospital equivalent admissions and a 4.3%
increase in same hospital revenues per equivalent admission. In addition, total
surgeries, inpatient surgeries and outpatient surgeries increased
7.7%, 5.9% and 8.3%, respectively, on a
same hospital basis for the six months ended June 30, 2002 over the same period
last year. The growth in outpatient surgeries increased our revenue; however,
these outpatient revenues lower our growth in revenues per equivalent admission
as revenues from outpatient services are generally lower than inpatient
services.

Our breakdown of
revenues for the six months ended June 30, 2002 was 34.6% Medicare,
15.8% Medicaid, 38.7% discounted and commercial and 10.9% other. Our
breakdown of revenues for the six months ended June 30, 2001 was
35.0% Medicare, 13.9% Medicaid, 40.8% discounted commercial, and
10.3% other.

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Net adjustments to estimated third-party payor settlements resulted in
an increase to net revenues of $2.1 million for the six months ended June 30,
2002 compared to $0.8 million for the same period last year. Net adjustments of
$1.7 million out of the $2.1 million mentioned above relate
to outpatient PPS revenues on
11 cost reports. We still have 22 cost reports to file that include outpatient
PPS revenues.

Our total costs did not increase at the same rate as our revenues. The
increase in volumes and revenues per equivalent admission contributed to the
reduction of our total operating expenses as a percentage of revenues because we
were able to spread our operating costs over an increased based of revenues.

Salaries and benefits increased as a percentage of revenues to 39.4%
for the six months ended June 30, 2002 from 39.1% for the six months ended June
30, 2001 primarily as a result of a 5.5% increase in salaries and benefits per
man-hour offset by a 2.0% decrease in man-hours per equivalent admission. Our
largest area of increase was employee benefits, which increased by $5.5
million over the same period last year. On a same hospital
basis, salaries and benefits decreased as a percentage of revenues to 38.9% for
the six months ended June 30, 2002 from 39.2% over the same period last year. On
a same hospital basis, employee benefits increased by $3.4 million over the same period last year.

Supply costs as a percentage of revenues were 12.5% for both the six
months ended June 30, 2002 and 2001. The cost of supplies per equivalent
admission increased 2.0% primarily as a result of increases in the number of
surgeries performed by us during the six months ended June 30, 2002 compared to
the six months ended June 30, 2001. Supply costs incurred in connection with
surgeries are higher than supply costs incurred for other procedures. Total
surgeries increased 15.7% over the same period last year. On a same hospital
basis, supply costs decreased as a percentage of revenues to 12.3% for the six
months ended June 30, 2002 from 12.5% over the same period last year. Offsetting
the increase in cost of supplies per equivalent admission is the increase in our
net revenues per equivalent admission of 2.8% during the six months ended June
30, 2002 as compared to the same period last year.

Other operating expenses decreased as a percentage of revenues to 18.2%
for the six months ended June 30, 2002 from 19.5% for the six months ended June
30, 2001. The decrease was primarily the result of a decrease in physician
recruiting expense as a percentage of revenues; however, the amount of physician
recruiting expense increased to $5.1 million for the six months ended June 30,
2002 from $4.0 million for the same period last year. On a same hospital basis,
other operating expenses decreased as a percentage of revenues to 18.3% for the
six months ended June 30, 2002 from 19.3% over the same period last year.

Provision for doubtful accounts decreased as a percentage of revenues
to 7.3% for the six months ended June 30, 2002 from 7.4% for the six months
ended June 30, 2001 primarily as a result of an improvement in same hospital
collections. On a same hospital basis, provision for doubtful accounts decreased
as a percentage of revenues to 7.1% for the six months ended June 30, 2002 from
7.5% over the same period last year. This improvement was offset by the effect
of Ville Platte Medical Center, which was acquired on December 1, 2001 and an
increase in our self-pay revenues.

Depreciation and amortization expense increased to $19.1 million for
the six months ended June 30, 2002 compared to $16.6 million for the six months
ended June 30, 2001 primarily as a result of our two acquisitions during the
fourth quarter of 2001 and our increase in capital expenditures during the past
year. In addition, we accelerated depreciation expense by $0.5 million during
the six months ended June 30, 2002 as a result of replacing certain equipment
with new equipment purchased in a $10 million bulk purchase during June 2002. This
was partially offset by the cessation of goodwill amortization required by SFAS
142, which was effective January 1, 2002. Goodwill amortization during the six
months ended June 30, 2001 was $0.8 million.

Net interest expense decreased to $6.9 million for the six months ended
June 30, 2002 from $10.2 million for the six months ended June 30, 2001. This
decrease was primarily the result of our repurchase of $128.0 million of our 10
3/4% senior subordinated notes during the six months ended June 30, 2002.

ESOP expense increased slightly to $5.2 million for the six months
ended June 30, 2002 from $5.0 million for the six months ended June 30, 2001.
This increase was primarily because of a higher average fair market value of our
common stock for the six months ended June 30, 2002 compared to the same period
last year. We recognize ESOP expense based on the average fair market value of
the shares committed to be released during the period.

During the six months ended June 30, 2001, we recorded a $0.5 million
pre-tax gain related to the favorable settlement of the sale of a facility for
which we previously recorded an impairment charge.

Minority interests in earnings of consolidated entity increased to $1.5
million for the six months ended June 30, 2002 compared to $1.3 million for the
six months ended June 30, 2001 primarily because of an increase in the pre-tax
income of our non-wholly owned hospital.

The provision for income taxes increased to $21.0 million for the six
months ended June 30, 2002 compared to $16.1 million for the six months ended
June 30, 2001. These provisions reflect effective income tax rates of 43.2% for
the six months ended June 30, 2002 compared to 48.4% for the six months ended
June 30, 2001. The effective tax rate decreased primarily due to the decline in the permanent differences between book and
taxable income as a percentage of pre-tax income.

During the six months ended June 30, 2002, we repurchased $128.0
million of our 10 3/4% senior subordinated notes due 2009. In connection with
these repurchases, we recorded an extraordinary charge from the early retirement
of debt in the amount of $16.4 million, net of tax benefits of $9.9 million. The
gross extraordinary charge of $26.3 million consists of $22.3 million in
premiums, commissions and fees paid for the repurchases and $4.0 million in
non-cash net deferred loan cost write-offs.

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In June 2001, we completed a $200 million, five-year amended and
restated credit agreement with a syndicate of banks, which increased our
available credit under our revolving credit agreement from $65 million to $200
million. Upon consummation of this amended and restated agreement, we wrote off
$2.6 million of deferred loan costs related to our original credit agreement,
which resulted in an extraordinary charge of $1.6 million, net of a tax benefit
of $1.0 million.

Net income decreased to $11.2 million for the six months ended June 30,
2002 compared to $15.5 million for the six months ended
June 30, 2001 for the reasons described above.

Liquidity and Capital Resources

Our cash and cash equivalents increased to $155.1 million at June 30, 2002,
from $57.2 million at December 31, 2001. The increase is primarily from $52.6
million provided by operating activities and $94.9 million provided by financing
activities offset in part by $49.6 million used in investing activities.

Our working capital increased to $216.7 million at June 30, 2002 compared to
$82.7 million at December 31, 2001; and our cash provided by operating
activities increased to $52.6 million in the six months ended June 30, 2002 from
$50.6 million in the same period last year. The increase in working capital was
primarily the result of our net issuance of $242.7 million 4 1/2% convertible
subordinated notes due 2009 partially offset by $128.0 million in repurchases of
our 10 3/4% senior subordinated notes due 2009. The increase in cash provided by
operating activities was primarily the result of improved income before
extraordinary items offset by the larger increase in accounts
receivable resulting from higher revenues during the six months ended June 30, 2002 compared to the same
period last year.

Cash used in investing activities increased to $49.6 million in the six
months ended June 30, 2002 from $23.5 million in the same period last year
primarily as a result of an increase in capital expenditures and purchases of
$21.5 million in short-term investments in debt securities. Capital expenditures
increased to $26.8 million during the six months ended June 30, 2002 compared to
$22.6 million during the same period last year. Our routine capital expenditures
were $11.4 million for the six months ended June 30, 2002. In addition, we
entered into a bulk purchase agreement in June 2002 to purchase $10 million in new
equipment, of which we paid $5.5 million as of June 30, 2002. We have some large
projects in process at a number of our facilities. In response to the increasing demand for outpatient care, we are
reconfiguring some of our hospitals to accommodate more effectively outpatient
services and restructuring existing surgical capacity in some of our hospitals
to permit additional outpatient volume and a greater variety of outpatient
services. At June 30, 2002, we had
projects under construction that had an estimated additional cost to complete
and equip of approximately $56.0 million. We anticipate that these projects will
be completed over the next thirty-six months. We anticipate total capital
expenditures in 2002 of approximately $65 million, excluding acquisitions. We
anticipate funding these expenditures through cash provided by operating
activities, available cash and borrowings under our revolving credit facility.

Cash provided by financing activities was $94.9 million during the six months
ended June 30, 2002 compared to cash used in financing activities of $37.3
million during the same period last year. We raised a net $242.7 million in an
offering of 4 1/2% convertible subordinated notes due 2009 during May 2002. This
was offset by our repurchase of $128.0 million in our 10 3/4% senior
subordinated notes due 2009 during the six months ended June 30,
2002. We paid $22.3 million in premiums, commissions and fees on these
repurchases. During the six months ended June 30, 2001 we received $100.4
million from our public offering of common stock and repaid $139.3 million of
bank debt.

Subsequent to June 30, 2002 (after our earnings release date of July 22,
2002), we repurchased an additional $17.8 million of our 10 3/4% senior
subordinated notes and paid $3.3 million in premiums, commissions and fees
related to these additional repurchases.

On August 12, 2002,
we entered into a definitive agreement to acquire 100-bed
Russellville Hospital in Russellville, Alabama for approximately $21
million, including working capital. We anticipate using our available
cash to finance the cost of this transaction. The hospital had
revenues of approximately $27 million for the twelve months ended
June 30, 2002. We anticipate to complete and close this purchase in
early October 2002.

As of August 13, 2002, we had a $22.2 million letter of credit, which reduced
the amount available under our $200 million revolving credit facility by that
amount to $177.8 million.

The following table reflects a summary of our obligations and commitments
outstanding at June 30, 2002:

PAYMENTS DUE BY PERIOD

|                             |          |               |       |        |  |           |           |           |  |               |     |     |  |   |     |     |  |   |       |       | 
|---------------------------- | -------- | ------------- | ----- | ------ |  | --------- | --------- | --------- |  | ------------- | --- | --- |  | - | --- | --- |  | - | ----- | ----- | 
|                             |          |               |       |        |  |           | LESS THAN |           |  |               |     |     |  |   |     |     |  |   |      
|CONTRACTUAL CASH OBLIGATIONS |          | TOTAL         |       | 1 YEAR |  | 1-3 YEARS |           | 4-5 YEARS |  | AFTER 5 YEARS
|                             |          |               |       |        |  |           |           |           |  |              
|                             |          | (in millions)
|Long-term debt               |          | $             | 272.0 |        |  | $         |          |           |  | $             |    |     |  | $ |    |     |  | $ | 272.0 |      
|Lease obligations(a)         |          |               | 15.5  |        |  |           | 3.5       |           |  |               | 4.6 |     |  |   | 3.6 |     |  |   | 3.8   |      
|Other long-term obligations  |          |               | 0.1   |        |  |           |          |           |  |               | 0.1 |     |  |   |    |     |  |   |      |      
|                             |          |               |       |        |  |           |           |           |  |               |     |     |  |   |     |     |  |   |       |      
|                             | Subtotal |               | $     | 287.6  |  |           | $         | 3.5       |  |               | $   | 4.7 |  |   | $   | 3.6 |  |   | $     | 275.8 | 
|                             |          |               |       |        |  |           |           |           |  |               |     |     |  |   |     |     |  |   |       |      

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AMOUNT OF COMMITMENT EXPIRATION PER PERIOD

|                                |                                   |               |      |        |  |           |           |           |  |               |     |      |  |   |     |     |  |   |   |       | 
|------------------------------- | --------------------------------- | ------------- | ---- | ------ |  | --------- | --------- | --------- |  | ------------- | --- | ---- |  | - | --- | --- |  | - | - | ----- | 
|                                |                                   |               |      |        |  |           | LESS THAN |           |  |               |     |      |  |   |     |     |  |   |  
|OTHER COMMERCIAL COMMITMENTS    |                                   | TOTAL         |      | 1 YEAR |  | 1-3 YEARS |           | 4-5 YEARS |  | AFTER 5 YEARS
|                                |                                   |               |      |        |  |           |           |           |  |              
|                                |                                   | (in millions)
|Guarantees of surety bonds      |                                   | $             | 0.5  |        |  | $         | 0.5       |           |  | $             |    |      |  | $ |    |     |  | $ |  |      
|Letters of credit               |                                   |               | 22.2 |        |  |           | 22.2      |           |  |               |    |      |  |   |    |     |  |   |  |      
|Capital expenditure commitments |                                   |               | 11.4 |        |  |           | 3.2       |           |  |               | 8.2 |      |  |   |    |     |  |   |  |      
|Physician commitments           |                                   |               | 17.1 |        |  |           | 11.8      |           |  |               | 3.6 |      |  |   | 1.7 |     |  |   |  |      
|                                |                                   |               |      |        |  |           |           |           |  |               |     |      |  |   |     |     |  |   |   |      
|                                | Subtotal                          |               | $    | 51.2   |  |           | $         | 37.7      |  |               | $   | 11.8 |  |   | $   | 1.7 |  |   | $ |      | 
|                                |                                   |               |      |        |  |           |           |           |  |               |     |      |  |   |     |     |  |   |   |      
|                                | Total obligations and commitments |               | $    | 338.8  |  |           | $         | 41.2      |  |               | $   | 16.5 |  |   | $   | 5.3 |  |   | $ | 275.8 | 
|                                |                                   |               |      |        |  |           |           |           |  |               |     |      |  |   |     |     |  |   |   |      



---

|(a) |  | Includes capital and operating lease obligations; capital lease obligations are not material.
|--- |  | ---------------------------------------------------------------------------------------------

We are in compliance with all covenants or other requirements set forth in
our credit agreements or indentures. Further, these agreements do not contain
provisions that would accelerate the maturity dates of our debt upon a downgrade
in our credit rating. However, a downgrade in our credit rating could adversely
affect our ability to renew existing, or obtain access to new credit facilities
in the future and could increase the cost of such facilities. We do not have any
relationships with unconsolidated entities or financial partnerships, such as
entities often referred to as structured finance or special purpose entities,
which would have been established for the purpose of facilitating off-balance
sheet arrangements or other contractually narrow or limited purposes. As such,
we are not materially exposed to any financing, liquidity, market or credit risk
that could arise if we had engaged in such relationships.

We do not consider the sale of any assets to be necessary to repay our
indebtedness or to provide working capital. However, for other reasons, we may
sell facilities in the future from time to time. Our management anticipates that
operations and amounts available under our revolving credit facility will
provide sufficient liquidity for the next twelve months.

Our business plan contemplates the acquisition of additional hospitals and we
continuously review potential acquisitions. These acquisitions may, however,
require additional financing. We continually evaluate opportunities to sell
additional equity or debt securities, obtain credit facilities from lenders, or
restructure our long-term debt for strategic reasons or to further strengthen
our financial position. We have in the past and may, from time to time in the future, acquire
additional senior subordinated notes in the open market. The sale of additional equity or convertible debt
securities could result in additional dilution to our stockholders.

We do not expect to pay dividends on our common stock in the foreseeable
future.

Impact of Recently Issued Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations, and SFAS 142, Goodwill and Other Intangible Assets, (the
Statements). These Statements make significant changes to the accounting for
business combinations, goodwill and intangible assets.

SFAS 141 eliminates the pooling-of-interests method of accounting for
business combinations. In addition, it further clarifies the criteria for
recognition of intangible assets separately from goodwill. SFAS 141 was
effective for transactions completed subsequent to June 30, 2001. The
application of SFAS 141 did not have a material effect on our results of
operations or financial position.

Under SFAS 142, goodwill and intangible assets with indefinite lives are no
longer amortized but are reviewed at least annually for impairment. The
amortization provisions of SFAS 142 apply to goodwill and intangible assets
acquired after June 30, 2001. With respect to goodwill and intangible assets
acquired prior to July 1, 2001, we adopted SFAS 142 effective January 1, 2002.
Application of the non-amortization provisions of SFAS 142 for goodwill would
have resulted in an increase in income before extraordinary items and net income
of approximately $0.4 million and $0.8 million ($0.3 million and $0.6 million,
after-tax or $0.01 and $0.02 per diluted share) for the three months and six
months ended June 30, 2001, respectively. Pursuant to SFAS 142, we completed our
transition impairment tests of goodwill during the second quarter of 2002 and
did not incur an impairment charge. We will perform our initial annual
impairment test later in 2002 in accordance with SFAS 142.

SFAS 143, Accounting for Asset Retirement Obligations, was issued in August
2001 by the FASB and is effective for financial statements issued for fiscal
years beginning after June 15, 2002. Earlier application is encouraged. SFAS 143
establishes accounting standards for recognition and measurement of a liability
for an asset retirement obligation and the associated retirement costs. SFAS 143
applies to all entities and to legal obligations associated with the retirement
of long-lived assets that result from the acquisition, construction, development
and (or) the normal operation of a long-lived asset, except for certain
obligations of lessees. We do not expect SFAS 143 to have a material effect on
our results of operations or financial position.

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In August 2001, the FASB also issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which supersedes SFAS 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of, and the accounting and reporting provisions of APB Opinion No.
30, Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS
144 removes goodwill from its scope and clarifies other implementation issues
related to SFAS 121. SFAS 144 also provides a single framework for evaluating
long-lived assets to be disposed of by sale. The provisions of SFAS 144 are
effective for financial statements issued for fiscal years beginning after
December 15, 2001, and interim periods within those fiscal years and, generally,
are to be applied prospectively. SFAS 144 did not have a material effect on our
results of operations or financial position.

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. Under
certain provisions of SFAS 145, gains and losses related to the extinguishment
of debt should no longer be segregated on the income statement as extraordinary
items net of the effects of income taxes. Instead, those gains and losses should
be included as a component of income before income taxes. The provisions of SFAS
145 are effective for fiscal years beginning after May 15, 2002 with early
adoption encouraged. Any gain or loss on extinguishment of debt that was
classified as an extraordinary item in prior periods presented that does not
meet the criteria in Accounting Principles Board Opinion No. 30 for
classifications as an extraordinary item should be reclassified upon adoption.
Had we adopted SFAS 145 in the first quarter of fiscal year 2001, the
extraordinary loss on early retirement of debt of $25.0 million and $26.3
million, before the $9.4 million and $9.9 million effect of income taxes, for
the three months and six months ended June 30, 2002, respectively, would have
been reflected in income before income taxes. In addition, the extraordinary
loss on early retirement of debt of $2.6 million, before the $1.0 million
effect of income taxes for the three months and six months ended June 30, 2001,
would also have been reflected in income before income taxes. There would be no
resulting change in net income.

In July 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities. The
standard requires companies to recognize costs associated with exit
or disposal activities when they are incurred rather than at the date
of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain
employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, or other exit or disposal
activity. The provisions of this Statement are effective for exit or
disposal activities initiated after December 31, 2002. We do not
anticipate the adoption of this standard to impact our results of
operations.

Contingencies

HCA Investigations, Litigation and Indemnification Rights

HCA is currently the subject of various federal and state investigations,
qui tam actions, shareholder derivative and class action suits, patient/payor
actions and general liability claims. HCA is also the subject of a formal order
of investigation by the SEC. Based on our review of HCAs public filings, we
understand that the SECs investigation of HCA includes the anti-fraud, insider
trading, periodic reporting and internal accounting control provisions of the
federal securities laws. These investigations, actions and claims relate to HCA
and its subsidiaries, including subsidiaries that, before our formation as an
independent company, owned the facilities that we now own.

HCA is a defendant in several qui tam actions, or actions brought by private
parties, known as relators, on behalf of the United States of America, which
have been unsealed and served on HCA. The actions allege, in general, that HCA
and certain subsidiaries and/or affiliated partnerships violated the False Clams
Act, 31 U.S.C. ss. 3729 et seq., for improper claims submitted to the government
for reimbursement. The lawsuits generally seek three times the amount of damages
caused to the United States by the submission of any Medicare or Medicaid false
claims presented by the defendants to the federal government, civil penalties of
not less than $5,500 nor more than $11,000 for each such Medicare or Medicaid
claim, attorneys fees and costs. HCA has disclosed that, on March 15, 2001, the
Department of Justice filed a status report setting forth the governments
decisions regarding intervention in existing qui tam actions against HCA and
filed formal complaints for those suits in which the government has intervened.
HCA stated that, of the original 30 qui tam actions, the Department of Justice
remains active and has elected to intervene in eight actions. HCA has also
disclosed that it is aware of additional qui tam actions that remain under seal
and believes that there may be other sealed qui tam cases of which it is
unaware.

Based on our review of HCAs public filings, we understand that, in December
2000, HCA entered into a Plea Agreement with the Criminal Division of the
Department of Justice and various U.S. Attorneys Offices (which we will refer
to as the plea agreement) and a Civil and Administrative Settlement Agreement
with the Civil Division of the Department of Justice (which we will refer to as
the civil agreement). Based on our review of HCAs public filings, we understand
that the agreements resolve all Federal criminal issues outstanding against HCA
and certain issues involving Federal civil claims by or on behalf of the
government against HCA relating to DRG coding, outpatient laboratory billing and
home health issues. Pursuant to the plea agreement, HCA paid the government $95
million during the first quarter of 2001. The civil agreement was approved by
the Federal District Court of the District of Columbia in August 2001. Pursuant
to the civil agreement, HCA agreed to pay the government $745 million plus
interest, which was paid in the third quarter of 2001. Based on our review of
HCAs public filings, we understand that certain civil issues are not covered by
the civil agreement and remain outstanding, including claims related to cost
reports and physician relations issues. The plea agreement and the civil
agreement relate only to conduct that was the subject of the federal
investigations resolved in the agreements and do not resolve various qui tam
actions filed by private parties against HCA, or pending state actions.

On March 28, 2002, HCA announced that it reached an understanding with CMS
to resolve all Medicare cost report, home office cost statement, and appeal
issues between HCA and CMS. The understanding provides that HCA would pay CMS
$250 million with respect to these matters. The resolution is subject to
approval by the Department of Justice and execution of a definitive written
agreement.

HCA has agreed to indemnify us for any losses, other than consequential
damages, arising from the pending governmental investigations of HCAs business
practices prior to the date of the distribution and losses arising from legal
proceedings, present or

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future, related to the
 investigation or actions engaged in before the distribution that relate to the investigation. HCA has also agreed
that, in the event that any hospital owned by us at the time of the spin-off is
permanently excluded from participation in the Medicare and Medicaid programs as
a result of the proceedings described above, then HCA will make a cash payment
to us, in an amount (if positive) equal to five times the excluded hospitals
1998 income from continuing operations before depreciation and amortization,
interest expense, management fees, minority interests and income taxes, as set
forth on a schedule to the distribution agreement, less the net proceeds of the
sale or other disposition of the excluded hospital. However, we could be held
responsible for any claims that are not covered by the agreements reached with
the Federal government or for which HCA is not required to, or fails to,
indemnify us. In addition, should HCA be unable to fulfill its obligations with
the Federal government, the Company could ultimately be held responsible
specifically for any settlement related to the former HCA hospitals operated by
the Company. If indemnified matters were asserted successfully against us or any
of our facilities, and HCA failed to meet its indemnification obligations, then
this event could have a material adverse effect on our business, financial
condition, results of operations or prospects.

The extent to which we may or may not continue to be affected by the ongoing
investigations of HCA and the initiation of additional investigations, if any,
cannot be predicted. These matters could have a material adverse effect on our
business, financial condition, results of operations or prospects in future
periods.

Americans with Disabilities Act Claim

On January 12, 2001, Access Now, Inc., a disability rights organization,
filed a class action lawsuit against each of our hospitals alleging
non-compliance with the accessibility guidelines under the Americans with
Disabilities Act. The lawsuit, filed in the United States District Court for the
Eastern District of Tennessee does not seek any monetary damages but, instead,
seeks only injunctive relief requiring facility modification, where necessary,
to meet the ADA guidelines, along with attorneys fees and costs. In January
2002, the District Court certified the class action and issued a scheduling
order that requires the parties to complete discovery and inspection for
approximately six facilities per year. We intend to vigorously defend the
lawsuit, recognizing our obligation to correct any deficiencies in order to
comply with the ADA.

General Liability Claims

We are, from time to time, subject to claims and suits arising in the
ordinary course of business, including claims for damages for personal injuries,
breach of management contracts, for wrongful restriction of or interference with
physicians staff privileges and employment related claims. In certain of these
actions, plaintiffs request punitive or other damages against us that may not be
covered by insurance. We are currently not a party to any proceeding which, in
managements opinion, would have a material adverse effect on our business,
financial condition or results of operations.

Corporate Integrity Agreement

In December 2000, we entered into a corporate integrity agreement with the
Office of Inspector General and agreed to maintain its compliance program in
accordance with the corporate integrity agreement. This agreement was amended in
May 2002. Complying with the compliance measures and reporting and auditing
requirements of the corporate integrity agreement will require additional
efforts and costs. Failure to comply with the terms of the corporate integrity
agreement could subject us to significant monetary penalties.

Physician Commitments

We have committed to provide certain financial assistance pursuant to
recruiting agreements with various physicians practicing in the communities in
which we serve. In consideration for a physician relocating to one of its
communities and agreeing to engage in private practice for the benefit of the
respective community, we may loan certain amounts of money to a physician,
normally over a period of one year, to assist in establishing his or her
practice. We have committed to advance amounts of approximately $17.1 million at
June 30, 2002. The actual amount of such commitments to be subsequently advanced
to physicians often depends upon the financial results of a physicians private
practice during the guaranteed period. Generally, amounts advanced under the
recruiting agreements may be forgiven prorata over a period of 48 months
contingent upon the physician continuing to practice in the respective
community.

Acquisitions

We have acquired and will continue to acquire businesses with prior
operating histories. Acquired companies may have unknown or contingent
liabilities, including liabilities for failure to comply with health care laws
and regulations, such as billing and reimbursement, fraud and abuse and similar
anti-referral laws. Although we institute policies designed to conform practices
to its standards following completion of acquisitions, there can be no assurance
that we will not become liable for past activities that may later be asserted to
be improper by private plaintiffs or government agencies. Although we generally
seek to obtain indemnification from prospective sellers covering such matters,
there can be no assurance that any such matter will be covered by
indemnification, or if covered, that such indemnification will be adequate to
cover potential losses and fines.

Inflation

The healthcare industry is labor intensive. Wages and other expenses
increase during periods of inflation and when shortages in marketplaces occur.
In addition, suppliers and insurers pass along rising costs to us in the form of
higher prices. Our ability to pass on these increased costs is limited because
of increasing regulatory and competitive pressures as discussed above. In the
event we experience inflationary pressures, results of operations may be
materially affected.

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Healthcare Reform

In recent years, an increasing number of legislative proposals have been
introduced or proposed to Congress and in some state legislatures. While we are
unable to predict which, if any, proposals for healthcare reform will be
adopted, there can be no assurance that proposals adverse to our business will
not be adopted.

Unfiled Medicare Cost Reports

Hospitals participating in the Medicare and some Medicaid programs, whether
paid on a reasonable cost basis or under a Prospective Payment System, are
required to meet certain financial reporting requirements. Federal and, where
applicable, state regulations require submission of annual cost reports
identifying medical costs and expenses associated with the services provided by
each hospital to Medicare beneficiaries and Medicaid recipients. Since
implementation of outpatient PPS in August 2000, the due dates of all Medicare
cost reports have been extended due to a delay in receiving certain government
reports. We anticipate filing all delayed cost reports with extended due dates
during the later half of 2002. Because of the extensions, the magnitude of
potential adjustments and changes in estimates is significantly greater at June
30, 2002 than in recent periods.

Net adjustments to estimated third-party payor settlements resulted in an
increase to net revenues of $2.1 million for the six months ended June 30, 2002
compared to $0.8 million for the same period last year. Net adjustments of $1.7
million out of the $2.1 million mentioned above relate to
outpatient PPS revenues on 11
cost reports. We still have 22 cost reports to file which include
outpatient PPS revenues.

Related Party Transaction

As part of an
employee's relocation package, we purchased the employee's house at
the appraised value of $650,000 in May 2002. The house is currently
listed for sale and we do not anticipate a material effect on our
financial statements when it is sold.




Item 3: Quantitative and Qualitative Disclosures about Market Risk

During the six months ended June 30, 2002 there were no material changes in
the quantitative and qualitative disclosures about market risks presented in our
Annual Report on Form 10-K for the year ended December 31, 2001.




Part II: Other Information




Item 4: Submission of Matters to a Vote of Security Holders

We held the LifePoint Hospitals, Inc. annual meeting of stockholders on May
14, 2002. At the annual meeting, votes were cast as follows:

|                                                                                                                      |                    |  |            |            |           |  |         |        |       |  |           |   | 
|--------------------------------------------------------------------------------------------------------------------- | ------------------ |  | ---------- | ---------- | --------- |  | ------- | ------ | ----- |  | --------- | - | 
|                                                                                                                      |                    |  | VOTES IN   |            |           |  |         |        | VOTES
|                                                                                                                      |                    |  | FAVOR      |            | ABSTAINED |  | AGAINST
|                                                                                                                      |                    |  |            |            |           |  |        
|(a) Election of Class III Directors                                                                                   |                    |  |            |            |           |  |         |        |       |  |           |  
|                                                                                                                      | Kenneth C. Donahey |  |            | 33,965,650 |           |  |         | 43,364 |       |  |           |  | 
|                                                                                                                      | Richard H. Evans   |  |            | 33,965,539 |           |  |         | 43,475 |       |  |           |  | 
|(b) Approval of the LifePoint Hospitals, Inc.
   Employee Stock Purchase Plan                                         |                    |  | 31,106,356 |            |           |  | 7,646   |        |       |  | 201,276   |  
|(c) Approval of the proposed amendment to the
LifePoint
   Hospitals, Inc. 1998 Long-Term
Incentive Plan              |                    |  | 26,111,881 |            |           |  | 26,057  |        |       |  | 5,177,339 |  
|(d) Ratification of Ernst & Young LLP as
independent auditors
   of our company for
the year ending December 31, 2002 |                    |  | 33,268,632 |            |           |  | 5,962   |        |       |  | 734,420   |  

As mentioned in the above table, Kenneth C.
Donahey and Richard H. Evans were elected as Class III directors. The terms of the
Class III directors will expire at the annual meeting of stockholders
in 2005 but not before their respective successors are elected and
qualified. The terms of the following Class I directors will continue
until the annual meeting in 2003: Ricki Tigert Helfer and John E.
Maupin, Jr., DDS. The terms of the following Class II directors will
continue until the annual meeting in 2004: DeWitt Ezell, Jr. and
William V. Lapham.

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Item 6: Exhibits and Reports on Form 8-K

(a)  List of Exhibits:

|               |  |                                                                                                                                                                                                                                                                                                    
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | DESCRIPTION                                                                                                                                                                                                                                                                                        
|2.1            |  | Distribution Agreement dated May 11, 1999 by and among Columbia/HCA,
Triad Hospitals, Inc. and LifePoint Hospitals, Inc. (i)                                                                                                                                                                       
|               |  |                                                                                                                                                                                                                                                                                                    
|3.1            |  | Certificate of Incorporation of LifePoint Hospitals, Inc. (i)                                                                                                                                                                                                                                      
|               |  |                                                                                                                                                                                                                                                                                                    
|3.2            |  | Bylaws of LifePoint Hospitals, Inc. (i)                                                                                                                                                                                                                                                            
|               |  |                                                                                                                                                                                                                                                                                                    
|3.3            |  | Certificate of Incorporation of LifePoint Hospitals Holdings, Inc. (ii)                                                                                                                                                                                                                            
|               |  |                                                                                                                                                                                                                                                                                                    
|3.4            |  | Bylaws of LifePoint Hospitals Holdings, Inc. (ii)                                                                                                                                                                                                                                                  
|               |  |                                                                                                                                                                                                                                                                                                    
|4.1            |  | Form of Specimen Certificate for LifePoint Hospitals Common Stock
(iii)                                                                                                                                                                                                                            
|               |  |                                                                                                                                                                                                                                                                                                    
|4.2            |  | Indenture (including form of 10 3/4% Senior Subordinated Notes due
2009) dated as of May 11, 1999, between HealthTrust, Inc.  The
Hospital Company and Citibank N.A. as Trustee (i)                                                                                                               
|               |  |                                                                                                                                                                                                                                                                                                    
|4.3            |  | Form of 10 3/4% Senior Subordinated Notes due 2009 (filed as part of
Exhibit 4.2)                                                                                                                                                                                                                  
|               |  |                                                                                                                                                                                                                                                                                                    
|4.4            |  | Registration Rights Agreement dated as of May 11, 1999 between
HealthTrust and the Initial Purchasers named therein (i)                                                                                                                                                                            
|               |  |                                                                                                                                                                                                                                                                                                    
|4.5            |  | LifePoint Assumption Agreement dated May 11, 1999 between HealthTrust
and LifePoint Hospitals (i)                                                                                                                                                                                                  
|               |  |                                                                                                                                                                                                                                                                                                    
|4.6            |  | Holdings Assumption Agreement dated May 11, 1999 between LifePoint
Hospitals and LifePoint Hospitals Holdings (i)                                                                                                                                                                                  
|               |  |                                                                                                                                                                                                                                                                                                    
|4.7            |  | Guarantor Assumption Agreements dated May 11, 1999 between LifePoint
Hospitals Holdings and the Guarantors signatory thereto (i)                                                                                                                                                                   
|               |  |                                                                                                                                                                                                                                                                                                    
|4.8            |  | Rights Agreement dated as of May 11, 1999 between the Company and
National City Bank as Rights Agent (i)                                                                                                                                                                                           
|               |  |                                                                                                                                                                                                                                                                                                    
|4.9            |  | Indenture, dated as of May 22, 2002, between LifePoint Hospitals,
Inc. and National City Bank, as trustee, relating to the 4 1/2%
Convertible Subordinated Notes due 2009 (iv)                                                                                                                     
|               |  |                                                                                                                                                                                                                                                                                                    
|4.10           |  | Registration Rights Agreement, dated as of May 22, 2002, among
LifePoint Hospitals, Inc., UBS Warburg LLC, Credit Suisse First
Boston Corporation, Deutsche Bank Securities, Inc., Lehman Brothers
Inc., Salomon Smith Barney Inc., Banc of America Securities LLC, and
Fleet Securities, Inc. (iv)
|               |  |                                                                                                                                                                                                                                                                                                    
|4.11           |  | Form of 4 1/2% Convertible Subordinated Note due 2009 of LifePoint
Hospitals, Inc. (iv)                                                                                                                                                                                                            
|               |  |                                                                                                                                                                                                                                                                                                    
|99.1           |  | Certification of the Chief Executive Officer of LifePoint Hospitals,
Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                 
|               |  |                                                                                                                                                                                                                                                                                                    
|99.2           |  | Certification of the Chief Financial Officer of LifePoint Hospitals,
Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                 
|               |  |                                                                                                                                                                                                                                                                                                    
|99.3           |  | Certification of the Chief Executive Officer of LifePoint Hospitals
Holdings, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                        
|               |  |                                                                                                                                                                                                                                                                                                    
|99.4           |  | Certification of the Chief Financial Officer of LifePoint Hospitals
Holdings, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                        



---

|(i)   |  | Incorporated by reference from the LifePoint Hospitals, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.                                           
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|(ii)  |  | Incorporated by reference from the LifePoint Hospitals Holdings, Inc. Annual Report on Form 10-K for the year ended December 31,
1999.                                     
|     
|(iii) |  | Incorporated by reference from exhibits to LifePoint Hospitals Registration Statement on
Form 10 under the Securities Exchange Act of 1934, as amended.                   
|     
|(iv)  |  | Incorporated by reference from
the exhibits to LifePoint Hospitals Registration Statement on
Form S-3 under the Securities Act of 1933, as amended, File Number
333-90536.

(b)  Reports on Form 8-K filed during the three months ended June 30,
2002:

On April 3, 2002, we furnished pursuant to Item 5 of Form 8-K concerning our
press release issued on April 2, 2002. This press release announced that we are
purchasing, in the open market and in privately negotiated transactions, our
outstanding 10 3/4% senior subordinated notes due 2009.

On April 8, 2002, we furnished pursuant to Item 5 of Form 8-K concerning our
press release issued on April 5, 2002. This press release announced that we
purchased, in the open market and in privately negotiated transactions,
$60,123,000 of our outstanding 10 3/4% senior subordinated notes due 2009.

On April 11,
2002, we furnished pursuant to Item 9 of Form 8-K a copy of
our press release issued on April 11, 2002 concerning the
webcast of our first quarter 2002 earnings results.

On April 23, 2002, we furnished pursuant to Item 9 of Form 8-K a copy of our
press release issued on April 22, 2002 containing our first quarter 2002 earnings
results.

On May 2, 2002, we furnished pursuant to Item 9 of Form 8-K a copy of our
press release issued on May 1, 2002 announcing our participation in the Deutsche Bank
Health Care 2002 Conference held May 7-9, 2002 in Baltimore, MD. In addition we
furnished pursuant to Item 9 of Form 8-K detailed historical financial
operational data.

On May 16, 2002,
we furnished pursuant to Item 9 of Form 8-K concerning a
copy of our
press release issued on May 16, 2002 announcing our intention to offer approximately $200
million of seven-year convertible subordinated notes. In addition, we furnished
pursuant to Item 5 of Form 8-K our adoption of the LifePoint Hospitals, Inc.
Change in Control Severance Plan effective June 1, 2002, the approval by our
stockholders adding 2,500,000 shares of common stock to the shares authorized
for issuance under the LifePoint Hospitals, Inc 1998 Long-Term Incentive Plan
and certain adjustments to our proxy statement.

On May 17, 2002, we furnished pursuant to Item 9 of Form 8-K a copy of our
press release issued on May 17, 2002 announcing the pricing of a private placement of
$200 million of our 4 1/2% convertible subordinated notes due 2009.

On May 20, 2002, we furnished pursuant to Item 9 of Form 8-K a copy of our
press release issued on May 20, 2002 announcing the exercise by the initial purchasers
of their option to purchase an additional $50 million of our 4 1/2% convertible
subordinated notes due 2009 to cover over-allotments.

On May 24, 2002, we furnished pursuant to Item 9 of Form 8-K a copy of our
press release issued on May 23, 2002 announcing completion of our 4 1/2% convertible
subordinated note offering and updating our guidance for 2002.

On June 3, 2002, we furnished pursuant to Item 9 of Form 8-K a copy of our
press release issued on June 3, 2002 announcing additional repurchases of our 10 3/4%
senior subordinated notes due 2009.

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SIGNATURES

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

|                      |  |                                                                                                                                                                           
|--------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Date: August 13, 2002 |  | LifePoint Hospitals, Inc.
/s/Michael J. Culotta
Michael J. Culotta
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)         
|                     
|                      |  |                                                                                                                                                                           
|                     
|Date: August 13, 2002 |  | LifePoint Hospitals Holdings, Inc.
/s/Michael J. Culotta
Michael J. Culotta
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

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EXHIBIT INDEX

|               |  |                                                                                                                                                                                                                                                                                                    
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | DESCRIPTION                                                                                                                                                                                                                                                                                        
|2.1            |  | Distribution Agreement dated May 11, 1999 by and among Columbia/HCA,
Triad Hospitals, Inc. and LifePoint Hospitals, Inc. (i)                                                                                                                                                                       
|               |  |                                                                                                                                                                                                                                                                                                    
|3.1            |  | Certificate of Incorporation of LifePoint Hospitals, Inc. (i)                                                                                                                                                                                                                                      
|               |  |                                                                                                                                                                                                                                                                                                    
|3.2            |  | Bylaws of LifePoint Hospitals, Inc. (i)                                                                                                                                                                                                                                                            
|               |  |                                                                                                                                                                                                                                                                                                    
|3.3            |  | Certificate of Incorporation of LifePoint Hospitals Holdings, Inc. (ii)                                                                                                                                                                                                                            
|               |  |                                                                                                                                                                                                                                                                                                    
|3.4            |  | Bylaws of LifePoint Hospitals Holdings, Inc. (ii)                                                                                                                                                                                                                                                  
|               |  |                                                                                                                                                                                                                                                                                                    
|4.1            |  | Form of Specimen Certificate for LifePoint Hospitals Common Stock
(iii)                                                                                                                                                                                                                            
|               |  |                                                                                                                                                                                                                                                                                                    
|4.2            |  | Indenture (including form of 10 3/4% Senior Subordinated Notes due
2009) dated as of May 11, 1999, between HealthTrust, Inc.  The
Hospital Company and Citibank N.A. as Trustee (i)                                                                                                               
|               |  |                                                                                                                                                                                                                                                                                                    
|4.3            |  | Form of 10 3/4% Senior Subordinated Notes due 2009 (filed as part of
Exhibit 4.2)                                                                                                                                                                                                                  
|               |  |                                                                                                                                                                                                                                                                                                    
|4.4            |  | Registration Rights Agreement dated as of May 11, 1999 between
HealthTrust and the Initial Purchasers named therein (i)                                                                                                                                                                            
|               |  |                                                                                                                                                                                                                                                                                                    
|4.5            |  | LifePoint Assumption Agreement dated May 11, 1999 between HealthTrust
and LifePoint Hospitals (i)                                                                                                                                                                                                  
|               |  |                                                                                                                                                                                                                                                                                                    
|4.6            |  | Holdings Assumption Agreement dated May 11, 1999 between LifePoint
Hospitals and LifePoint Hospitals Holdings (i)                                                                                                                                                                                  
|               |  |                                                                                                                                                                                                                                                                                                    
|4.7            |  | Guarantor Assumption Agreements dated May 11, 1999 between LifePoint
Hospitals Holdings and the Guarantors signatory thereto (i)                                                                                                                                                                   
|               |  |                                                                                                                                                                                                                                                                                                    
|4.8            |  | Rights Agreement dated as of May 11, 1999 between the Company and
National City Bank as Rights Agent (i)                                                                                                                                                                                           
|               |  |                                                                                                                                                                                                                                                                                                    
|4.9            |  | Indenture, dated as of May 22, 2002, between LifePoint Hospitals,
Inc. and National City Bank, as trustee, relating to the 4 1/2%
Convertible Subordinated Notes due 2009 (iv)                                                                                                                     
|               |  |                                                                                                                                                                                                                                                                                                    
|4.10           |  | Registration Rights Agreement, dated as of May 22, 2002, among
LifePoint Hospitals, Inc., UBS Warburg LLC, Credit Suisse First
Boston Corporation, Deutsche Bank Securities, Inc., Lehman Brothers
Inc., Salomon Smith Barney Inc., Banc of America Securities LLC, and
Fleet Securities, Inc. (iv)
|               |  |                                                                                                                                                                                                                                                                                                    
|4.11           |  | Form of 4 1/2% Convertible Subordinated Note due 2009 of LifePoint
Hospitals, Inc. (iv)                                                                                                                                                                                                            
|               |  |                                                                                                                                                                                                                                                                                                    
|99.1           |  | Certification of the Chief Executive Officer of LifePoint Hospitals,
Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                 
|               |  |                                                                                                                                                                                                                                                                                                    
|99.2           |  | Certification of the Chief Financial Officer of LifePoint Hospitals,
Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                 
|               |  |                                                                                                                                                                                                                                                                                                    
|99.3           |  | Certification of the Chief Executive Officer of LifePoint Hospitals
Holdings, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                        
|               |  |                                                                                                                                                                                                                                                                                                    
|99.4           |  | Certification of the Chief Financial Officer of LifePoint Hospitals
Holdings, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                        



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|(i)   |  | Incorporated by reference from the LifePoint Hospitals, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.                                           
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|     
|(ii)  |  | Incorporated by reference from the LifePoint Hospitals Holdings, Inc. Annual Report on Form 10-K for the year ended December 31,
1999.                                     
|     
|(iii) |  | Incorporated by reference from
exhibits to LifePoint Hospitals Registration Statement on
Form 10 under the Securities Exchange Act of 1934, as amended.                   
|     
|(iv)  |  | Incorporated by reference from
the exhibits to LifePoint Hospitals Registration Statement on
Form S-3 under the Securities Act of 1933, as amended, File Number
333-90536.