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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31,
    2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number
    001-34746
  Accretive Health,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

02-0698101(State or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization)

Identification No.)401 North Michigan Avenue
    Suite 2700
    Chicago, Illinois(Address of principal
    executive offices)

60611(Zip Code)   Registrants telephone number, including area code
 (312) 324-7820
  Securities registered pursuant to Section 12(b) of the
    Act:
 Common Stock, $0.01 par value
  Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o   Rule 12b-2 o þ
      Common Stock, $0.01 par value

95,126,464




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ACCRETIVE
    HEALTH, INC.
  TABLE OF
    CONTENTS
   
 PagePART IItem 1.

Business


4Item 1A.

Risk Factors


29Item 1B.

Unresolved Staff Comments


41Item 2.

Properties


41Item 3.

Legal Proceedings


42PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


42Item 6.

Selected Consolidated Financial Data


46Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


49Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


69Item 8.

Financial Statements and Supplementary Data


70Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


70Item 9A.

Controls and Procedures


70Item 9B.

Other Information


70PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


70Item 11.

Executive Compensation


71Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


71Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


71Item 14.

Principal Accountant Fees and Services


71PART IVItem 15.

Exhibits and Financial Statement Schedules


71SIGNATURES


74EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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FORWARD-LOOKING
    STATEMENTS
  Form 10-K Form 10-K
  
    our ability to attract and retain customers;
    our financial performance;
    the advantages of our solutions as compared to those of others;
    our new quality and total cost of care service initiative;
    our ability to establish and maintain intellectual property
    rights;
    our ability to retain and hire necessary employees and
    appropriately staff our operations;
    our estimates regarding capital requirements and needs for
    additional financing; and
    our projected contracted annual revenue run rate.     3




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PART I  Unless the context indicates otherwise, references in this
    Annual Report to Accretive Health,
    Accretive, the Company, we,
    our, and us mean Accretive Health, Inc.
    and its subsidiaries.
  Item 1.
    Business  Overview
            day-to-day agreed-upon
   4




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on-site
   5




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Market
    Opportunity
    
    the Centers for Medicare and Medicaid Services of the
    U.S. Department of Health and Human Services, or CMS,
    estimates that in 2009 total revenue for hospitals was
    $759 billion, total revenue for home healthcare services
    was $68 billion and total revenue from sales of durable and
    non-durable medical equipment was $78 billion; and
    we target the largest physician organizations, which we believe
    represent $115 billion, or approximately 20% of CMSs
    estimate of total physician and clinical revenue in 2009.      
    Complexity of Revenue Cycle
    Management.  At most hospitals, there is a
    lack of standardization across operating practices, payor and
    patient payment methodologies, data management processes and
    billing systems. In general, after a patient receives healthcare
    services, the hospital must coordinate payment with two or more
    parties, including third-party insurance companies, federal and
    state government payors, private charities and individual
    payors. Hospitals also face a growing population of uninsured
    patients, whom healthcare providers have an ethical and legal
    obligation to treat.
    Lack of Integrated Systems and
    Processes.  Although interrelated, the
    individual steps in the revenue cycle are not operationally
    integrated across revenue cycle departments at many hospitals.
    Multiple tasks and milestones must be completed properly by
    personnel in various departments before a hospital or physician
    can be reimbursed for patient services. It is often difficult
    for a single organization to acquire and coordinate all the
    knowledge and experience necessary to identify and eliminate
    inefficiencies within the revenue cycle. Even if all steps are
    performed flawlessly, the time required to receive full payment
    for services creates long billing cycles. With frequent changes
    in the reimbursement rules imposed by third-party payors, the
    billing and collections cycle often is not timely and
    error-free, further lengthening the time before payment is
    actually received by the healthcare provider. 6




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
    Increasing Patient Financial Responsibility for Healthcare
    Services.  Hospitals are being forced to adapt
    to the need for
    direct-to-patient
    billing and collections capabilities as patients bear payment
    responsibility for an increasing portion of healthcare costs.
    Hospitals have traditionally focused on collecting payments from
    insurance companies and from state and federal payors, and
    typically are less familiar with the processes necessary to
    collect payments from patients at the point of service,
    including the use of alternative payment options. Patient
    billing is often confusing and payment instructions are often
    unclear. Moreover, hospitals generally do not utilize consumer
    segmentation techniques to formulate effective revenue
    collection approaches to patients. As a result, hospitals
    generally write-off a high percentage of patient-owed bills,
    resulting in increases in bad debt and uncompensated care.
    Outdated Systems and Insufficient Resources to Upgrade
    Them.  Many hospitals suffer from operating
    inefficiencies caused by outdated technology, increasingly
    complex billing requirements, a general lack of standardization
    of process and information flow, costly in-house services that
    could be more economically outsourced, and an increasingly
    stringent regulatory environment. Hospitals often lack the
    breadth and depth of data available to payors, and this lack of
    information may contribute to the filing of less accurate claims
    with third-party insurance payors and unfavorable resolutions of
    disputed claims. In addition, the endowments of most hospitals
    have significantly declined, motivating them to make their
    revenue cycle operations more efficient.    The
    Accretive Health Revenue Cycle Solutions
    
    the increasingly complex and challenging payor environment;
    a lack of fully integrated
    end-to-end
    revenue cycle management expertise;
    the consequences of increasing patient responsibility for their
    healthcare costs;
    the difficulty and associated expense of a single organization
    acquiring and coordinating the knowledge and experience
    necessary to efficiently manage the revenue cycle;
    ongoing attrition of revenue cycle staff; and
    frequent patient confusion and frustration with financial
    obligations and billing.     7




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
    Improving Net Revenue Yield.  We help
    our customers improve their net revenue yield. Through the use
    of our proprietary technologies and methodologies, we precisely
    calculate each customers improvement in net revenue yield.
    This calculation compares the customers actual cash
    collections for a given instance of care to the maximum
    potential cash receipts that the customer should have received
    from the instance of care, which we refer to as the best
    possible net compliant revenue. We aggregate these calculations
    for all instances of care and compare the result to the
    aggregate calculation for the year before we began to provide
    our services to the customer. We receive a share of each
    customers improvement in net revenue yield.
    Increasing Charge Capture.  We help our
    customers increase their charge capture by implementing
    optimization techniques and related processes. We utilize
    sophisticated analytics and artificial intelligence software to
    help improve the accuracy of claims filings and the resolution
    of disputed claims from third-party insurance payors. We also
    overlay a range of capabilities designed to reduce missed
    charges, improve the clinical/reimbursement interface and
    produce bills that comply with third-party payor requirements
    and applicable healthcare regulations.
    Making Revenue Cycle Operations More
    Efficient.  We help our customers make their
    revenue cycle operations more efficient by implementing advanced
    technologies, streamlining operations, avoiding unnecessary
    re-work and improving quality. We also can reduce the costs of
    third-party services, such as Medicaid eligibility review, by
    transferring the work to our own internal operations. For some
    customers, we are able to reduce operating costs further by
    transferring selected internal operations to our centralized
    shared services centers located in the United States and India.    
    Gathering Complete Patient and Payor
    Information.  We focus on gathering complete
    patient information and validating insurance coverage and
    benefits so the services can be recorded and billed 8




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to the appropriate parties. For scheduled healthcare services,
    we educate the patient as to his or her potential financial
    responsibilities before receiving care. Our systems maintain an
    automated electronic scorecard, which measures the efficiency of
    up-front data capture, billing and collections throughout the
    life cycle of any given patient account. These scorecards are
    analyzed in the aggregate, and the results are used to help
    improve work flow processes and operational decisions for our
    customers. Our analyses of data measured by our systems show
    that hospitals employing our services have increased the
    percentage of non-emergency in-patient admissions with complete
    information profiles to more than 90%, enabling fewer billing
    delays, increased charge capture and reduced billing cycles.  
    Improving Claims Filing and Third-Party Payor
    Collections.  Based on our customers
    experience, and on industry sources, hospitals typically do not
    collect 100% of the amounts they are contractually owed by
    insurance companies. Through our proprietary technology and
    process expertise, we identify, for each patient encounter, the
    amount our customer should receive from a payor if the
    applicable contract with the payor and patient policies are
    followed. Over time, we compare these amounts with the actual
    cash collected to help identify which payors, types of medical
    treatments and patients represent various levels of payment risk
    for a customer. Using proprietary algorithms and analytics, we
    consider actual reimbursement patterns to predict the payment
    risk associated with a customers claims to its payors, and
    we then direct increased attention and time to the riskiest
    accounts. Our experience is that this approach significantly
    increases the likelihood that a customer will be reimbursed the
    amounts it is contractually owed for providing its services.
    Identifying Alternative Payment
    Sources.  We use various methods to find
    payment sources for uninsured patients and reimbursement for
    services not covered by third-party insurance. Our patient
    financial screening technology and methodologies often identify
    federal, state or private grant sources to help pay for
    healthcare services. These techniques are designed to ease the
    financial burden on uninsured or underinsured patients and
    increase the percentage of patient bills that are actually paid.
    After a typical implementation period, we have been able to help
    our customers find a third-party payment source for
    approximately 85% of all admitted patients who identified
    themselves as uninsured.
    Employing Proprietary Technology and
    Algorithms.  Our service offerings employ a
    variety of proprietary data analytics and predictive modeling
    algorithms. For example, we identify patient accounts with
    financial risk by applying data mining techniques to the data we
    have collected. Our systems are designed to streamline work
    processes through the use of proprietary algorithms that focus
    revenue cycle staff effort on those accounts deemed to have the
    greatest potential for improving net revenue yield or charge
    capture. We frequently adjust our proprietary predictive
    algorithms to reflect changes in payor and patient behavior
    based upon the knowledge we glean from our entire customer base.
    As new customers are added and payor and patient behavior
    changes, the information we use to create our algorithms
    expands, increasing the accuracy and value of those algorithms.
    We rely upon a combination of patent, trademark, copyright and
    trade secret law and contractual terms and conditions to protect
    our intellectual property rights. We hold one U.S. patent
    and have filed six additional U.S. patent applications
    covering key innovations utilized in our revenue cycle
    management solution.
    Using Analytical Capabilities and Operational Excellence.We draw on the experience that we have gained from
    working with many of the best healthcare provider systems in the
    United States to train hospital staffs about new and innovative
    revenue cycle management practices. We employ extensive
    analytical analyses to identify specific weaknesses in business
    processes. We also strive to achieve operational excellence and
    to foster an overall culture of leading by example. As a result,
    our on-site
    management teams have seen marked shifts in the behaviors of
    hospital administrative staff, including enthusiasm for setting
    daily and weekly goals, participation in daily
    half-hour
    gatherings to track results achieved during the day, and
    improved adherence to our standard operating procedures.   9




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Our
    Strategy
  provider-of-choice
  
    Delivering Tangible, Long-Term Results by Providing
    Services that Span the Entire Revenue
    Cycle.  Our revenue cycle solution is designed
    to help our customers achieve sustainable economic value through
    improvements in operating margins. Improvements in our
    customers operating margins in turn provide recurring
    revenues for us. Our technology and services are deeply
    integrated across the customers entire revenue cycle,
    whereas most competitive offerings address a narrower portion of
    the revenue cycle. Our offering alleviates the need to purchase
    services from multiple sources, potentially saving customers
    time, money and integration challenges in their efforts to
    improve their revenue cycle activities.
    Continuing to Develop Innovative Approaches to Increase
    the Collection Rate on Patient-Owed
    Obligations.  We have developed and continue
    to design creative approaches intended to increase net revenue
    yields on patient-owed obligations. These processes include
    direct communications with payors to establish patient pay
    amounts (after insurance and taking into account deductibles)
    and status, contract modeling applications to provide patients
    with accurate updates on the portion of an outstanding balance
    for which they are personally responsible, and the provision of
    prior balance data and payment alternatives to patients at the
    point of service. We also use consumer behavior modeling and
    conduct trending analyses for collections, and we offer patients
    a variety of payment methods.
    Enhancing and Developing Proprietary Algorithms to
    Identify Potential Errors and to Make Process
    Corrections.  Even as patients begin to assume
    responsibility for a greater portion of the cost of medical
    services, healthcare providers continue to rely upon third-party
    payors for the majority of medical reimbursements. To help
    improve revenue collection rates and timing for claims owed by
    payors, we have developed proprietary algorithms to assess risk
    and the resulting treatment of claims. Our methodology is
    designed to enable nearly 100% of outstanding claims to be
    reviewed, prioritized and pursued. We believe that our focus on
    collecting revenue from a broader range of outstanding claims
    and reducing the average time to collection differentiates our
    revenue cycle management services. An additional proprietary
    algorithm that distinguishes our services from others is
    incorporated in our charge capture application that identifies
    potential lost charges. In instances where our customers have
    been using other third-party applications, we routinely identify
    multiple additional lost charges.
    Expanding Our Revenue Cycle Shared Services
    Program.  Our revenue cycle shared services
    program, which includes patient scheduling and pre-registration,
    medical transcription and patient financial services, is
    structured to reduce a hospitals overhead costs while
    providing services of comparable or higher quality. Expansion of
    our shared services program is potentially advantageous for both
    our customers and us, as we both benefit from greater savings
    attributable to economies of scale and improvements in net
    revenue yield. We believe that continuing to transition
    customers to our shared services will help us achieve our
    targeted improvements in customer operating margins. We
    introduced the shared services program in 2008, and we continue
    to see interest in this offering from both new and existing
    customers. As of February 28, 2011, approximately 39% of
    our customers for whom we have 10




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provided revenue cycle management services for at least one year
    participate in our shared services program.  
    Hiring, Training and Retaining Our
    Personnel.  Our solutions were developed by
    what we believe to be the best personnel available in the
    market. In order to grow our business and solidify our
    competitive position, we need to continue to hire, train and
    retain very talented team members who demonstrate a strong focus
    on outstanding customer service. Employee recruitment is a
    priority for us because we believe that our long-term growth is
    limited more by the availability of top talent than by
    constraints in market demand for our solutions. We seek an
    ongoing influx of new personnel at all levels so that we have
    adequate staffing to pursue and accept new customer
    opportunities. We also make substantial ongoing investments in
    employee training, including our operator academy
    and revenue cycle academy which enable us to educate
    all new employees regarding our operating models and related
    processes and technology.
    Continuing to Diversify Our Customer
    Base.  In October 2004, Ascension Health
    became our founding customer. While Ascension Health is our
    largest customer and we expect to continue to expand our
    presence within Ascension Healths network of affiliated
    hospitals, we are focusing our marketing efforts primarily on
    other healthcare providers and expect to continue to diversify
    our customer base. In the year ended December 31, 2010
    compared to the year ended December 31, 2009, our net
    services revenue from customers not affiliated with Ascension
    Health grew by 47.6%, while our net services revenue from
    hospitals affiliated with Ascension Health was essentially
    unchanged. As a result, the percentage of our total net services
    revenue attributable to hospitals affiliated with Ascension
    Health declined from 88.7% in the year ended December 31,
    2006 to 50.7% in the year ended December 31, 2010. Between
    January 1, 2008 and December 31, 2010, approximately
    76% of the increase in our PCARRR was attributable to customers
    not affiliated with Ascension Health.
    Developing Enhanced Service Offerings that Offer Long-Term
    Opportunities.  We intend to continue to
    introduce new services that draw upon our core competencies and
    that we believe will be attractive to our target customers. In
    considering new services, we look for market opportunities that
    we believe present low barriers to entry, require limited
    incremental cost and present significant growth opportunities.
    For example, in 2009 we began providing physician advisory
    services to help hospitals classify emergency room patient
    admissions to maximize compliant revenue. In 2010, we introduced
    our quality and total cost of care offering focused on
    increasing the quality of healthcare through incentive payments
    to the hospitals and their affiliated physicians. We also plan
    to selectively pursue acquisitions that will enable us to
    broaden our service offerings.  Segments
  Form 10-K. end-to-end U.S.-based
  Our
    Services
  Core
    Service Offering  Revenue Cycle
    Management
   11




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
    Operating Management.  We assign
    highly-trained management teams to each customer site to
    facilitate technology implementation, provide hands-on training
    to existing hospital employees and guide staff toward achievable
    performance goals.
    Technology Improvements.  We integrate
    our proprietary technology with a hospitals transaction
    systems to help improve claims collections and realize operating
    efficiencies. By using a web interface to layer our applications
    on top of a hospitals existing software, we can bring our
    capabilities online in a timely manner without requiring any
    up-front hardware investment by customers.
    Standardized Operating Model.  We offer
    our customers a revenue cycle operating model that has delivered
    tangible financial benefits. Our standard implementation
    techniques are designed to enable us to install our operating
    model in a timely manner and consistently at customer sites. We
    utilize a uniform set of key performance indicators to drive and
    assess the revenue cycle operations of our customers. Our senior
    operational leaders monitor each customers revenue cycle
    performance through ten to twelve operating reviews each year.
    Multi-Industry Revenue Process
    Experience.  Our personnel have years of prior
    work experience advising customers on revenue process management
    issues in complex industries. We have combined this experience
    with healthcare industry innovative practices and operational
    excellence to form the foundation of our service offerings. We
    believe that the depth and breadth of our knowledge of
    healthcare and non-healthcare revenue cycle management help
    differentiate us from our competitors.
    Shared Services.  We offer customers the
    opportunity to realize operating efficiencies by outsourcing
    certain revenue tasks and responsibilities to shared facilities
    that we operate. By allowing multiple, unrelated hospitals to
    utilize the same set of resources for key revenue cycle tasks,
    our shared services capability provides opportunities to reduce
    the operating costs of our customers. We have been able to
    achieve meaningful margin improvements for the customers that
    utilize our shared services.   12




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Front Office (Patient Access).
  on-site
  
    verification of patient contact information, which improves
    accuracy of recording patient admissions data in the
    hospitals patient accounting system;
    real-time validation of coverage and benefits for insured
    patients, which allows up-front assessment of each
    patients ability to pay;
    screening of self-pay patients for alternative coverage
    solutions, which helps identify payment sources including
    long-term payment plans and charity or government-sponsored
    coverage for uninsured or underinsured patients; and
    up-front calculation of patient pay residuals, which facilitates
    accurate and timely communication and collection of residual
    payment obligations and any outstanding patient balances from
    previous services.  Middle Office (Health Services
    Billing).
 13




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
    in-house nurse auditors, who review the accuracy of treatments,
    diagnoses and charges in patient records and
    follow-up
    with hospital revenue cycle staff so that the bills may be
    updated and sent out within the normal billing cycle; and
    on-staff physicians, who help hospital case managers properly
    code emergency department patients during their transition from
    observation to in-patient status, to
    improve accurate and appropriate billing to payors.  Back Office (Collections). follow-up
  
    decrease the time required for bill creation and submission;
    increase the percentage of claims receiving maximum allowable
    reimbursement from payors;
    find alternative payment sources for unpaid and underpaid claims
    with both third-party payors and patients; and
    reduce contractual write-offs to provide an accurate record of
    outstanding charges.    
    Yield-Based Follow Up.  Our Yield-Based
    Follow Up application enables us to pursue reimbursement for
    claims based on risk scoring and detection as established by our
    proprietary algorithms.
    Medical Financial Solutions.  Our
    Medical Financial Solutions application uses proprietary
    algorithms to assess a patients propensity to pay and
    determines
    follow-up
    actions structured to allow higher yields with lower collections
    effort.
    Retro Eligibility.  Our Retro
    Eligibility application continually searches for insurance
    coverage for each patient visit, even after treatment has
    concluded, to determine whether uninsured patients are eligible
    for some form of insurance coverage.
    AHtoContract.  Our AHtoContract
    application utilizes proprietary modeling and analytics to
    calculate the aggregate reimbursement due to the hospital from
    third-party payors and patients for a given patient treatment.
    Underpayments.  Our Underpayments
    application employs payor remittance data and contract models to
    determine whether a payor has reimbursed less than its
    contracted amount for a specific claim and enables the
    hospitals back office staff to resolve these situations
    directly with payors.
    AHtoPost.  Our AHtoPost application is
    used by our shared services centers to centralize the task of
    posting cash payments to customers patient accounting
    systems.  Emerging
    Service Offerings
  Quality and Total Cost of
    Care.
 14




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
    Improperly Aligned
    Incentives.  Healthcare providers currently
    have little or no financial incentive to make the necessary
    people, processes or technology investments to optimize care
    delivery that results in a lower total cost of care for their
    patients. The prevailing
    fee-for-service
    payment system reimburses healthcare providers for the amount or
    number of services provided, establishing an incentive for more
    healthcare services to be provided.
    Non-Coordination of Care Across Healthcare
    Settings.  Due to the fragmented nature of the
    healthcare provider market, the prevailing
    fee-for-service
    reimbursement system and a lack of coordination resources,
    healthcare providers find it challenging to optimize healthcare
    delivery across the full continuum of providers and services.
    This challenge is magnified for patients with complex medical
    conditions that visit multiple providers. Studies have shown
    that a small portion of medically complex patients are
    accountable for a disproportionate share of total healthcare
    costs.
    Lack of Integrated Technology Systems and Information
    Sharing Processes.  Due to the improperly
    aligned incentives and fragmented delivery system, providers
    generally lack an integrated technology system that projects the
    acuity and healthcare needs of patients, communicates and
    assigns various tasks to other providers, and measures the
    results of each patient encounter to maximize overall patient
    quality and cost of care. There are significant costs associated
    with developing this type of technology, and providers generally
    lack the financial resources to develop this functionality.  fee-for-service
     15




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Physician Advisory Services.
     17




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Customers
  Our
    Customers
      
    Academic Medical Centers and Ambulatory
    Clinics.  Academic medical centers and
    ambulatory clinics, including related physician practices,
    represent approximately $132 billion in annual net patient
    revenue. This market segment offers attractive opportunities for
    us because of the significant size and patient volume of
    academic medical centers and ambulatory clinics (typically more
    than $1 billion each in net patient revenue) and the
    fragmented revenue cycle management operations of most physician
    practices. Our customers in this market segment include the
    Dartmouth-Hitchcock Medical Center and the Henry Ford Health
    System.
    Catholic Community Healthcare
    Systems.  Catholic community healthcare
    systems represented our initial target market segment and remain
    a primary focus for us. Catholic community healthcare systems
    manage approximately $68 billion in annual net patient
    revenue. Ascension Health is the nations largest Catholic
    and largest non-profit healthcare system, with a network of 78
    hospitals and related healthcare facilities located in
    20 states and the District of Columbia. We serve a number
    of hospitals and regional healthcare systems affiliated with
    Ascension Health.
    Other Faith-Based Community Healthcare
    Systems.  Drawing on our experience with the
    Catholic community healthcare system market, we also target the
    market for other faith-based community healthcare systems.
    Healthcare systems affiliated with other religious faiths manage
    approximately $46 billion in annual net patient revenue. We
    serve several regional healthcare systems in this market segment.
    Not-for-Profit
    Community Hospitals.  There are nearly 2,000
    not-for-profit
    community hospitals, with a variety of affiliations that are not
    faith-based.
    Not-for-profit
    community hospitals, including integrated delivery networks,
    manage approximately $265 billion in annual net patient
    revenue. Fairview Health Services, which is an integrated
    delivery network, is one of our customers in this market
    segment, with seven hospitals served, and is our inaugural
    quality and total cost of care customer.
    Physicians Billing
    Organizations.  Large physicians billing
    organizations represent more than $115 billion in annual
    net patient revenue. Our customer work in this market includes
    the billing activities involving several hundred physicians at
    the Dartmouth-Hitchcock Medical Center and the Henry Ford Health
    System.
    For-Profit Hospital Systems.  For-profit
    hospital systems manage approximately $101 billion in
    annual net patient revenue. This sector, although smaller than
    the
    not-for-profit
    sector, still represents a significant target market segment for
    our revenue cycle services. We currently serve one for-profit 18




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hospital as the result of the acquisition of a formerly
    non-profit hospital by a for-profit company in 2009.  
    Government-Owned Hospitals.  Based on
    industry sources, each major metropolitan area in the United
    States has at least one large municipal or city-owned hospital
    system. We believe that this market segment represents
    approximately $111 billion in annual net patient revenue.
    We do not currently have any customers in this market segment.
    Home Services and Medical Equipment.  In
    2010, we began targeting the home healthcare services and
    medical equipment providers market, which we believe represents
    $80 billion in annual net patient revenue. This market
    includes both for-profit and
    not-for-profit
    companies which work with hospitals and physicians across the
    United States. We believe that most companies in this market
    fail to capture and collect a significant portion of the total
    amounts contractually owed to them due to their highly
    decentralized customer service and order entry departments and
    the differences in payor requirements that occur when goods and
    services are provided in multiple locations.  not-for-profit
  Customer
    Agreements
        
    we assume responsibility for the management and cost of the
    customers revenue cycle or population health management
    operations, including the payroll and benefit costs associated
    with the customers employees conducting activities within
    our contracted services, and the agreements and costs associated
    with the related third-party services;
    we are required to staff a sufficient number of our own
    employees on each customers premises and the technology
    necessary to implement and manage our services;
    in general, the customer pays us base fees equal to a specified
    amount, subject to annual increases under an
    agreed-upon
    formula, and incentive fees based on achieving
    agreed-upon
    financial benchmarks;
    the parties provide representations and indemnities to each
    other; and
    the contracts are subject to termination by either party in the
    event of a material breach which is not cured by the breaching
    party.  Sales and
    Marketing
   19




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Technology
  Technology
    Development
  30-day seven-day
      Technology
    Operations
      backed-up back-ups backed-up back-up back-up,
 20




---



##### Table of Contents



follow-up,
        end-to-end server-by-server
  Proprietary
    Software Suite
  Revenue Cycle Management. follow-up
 21




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##### Table of Contents




    The patient access domain is used during hospital
    employees first interactions with patients, either at the
    point of service in a hospital or in advance of a hospital visit
    during our pre-registration process. The domain uses a
    straightforward, consistent architecture.
    The improving best possible domain is designed to
    facilitate top-line revenue improvements and bottom-line
    efficiency gains. The domains AHtoCharge application is a
    rules-based engine that, with the oversight of a centralized
    team of nurse-auditors, automatically analyzes medical billing
    and coding data to identify inconsistencies that may delay or
    hinder collections.
    The
    follow-up
    domain tracks unpaid claims and contacts with insurance
    companies, government organizations and other payors responsible
    for outstanding debts for past patient services. The domain also
    organizes previously unpaid claims using a proprietary
    risk-based algorithm.
    The measurement domain integrates our functional
    domains by providing real-time metrics and insight into the
    operation of revenue cycle businesses. This application can be
    used to generate standard operational reports and allows the end
    user to review and analyze all of the micro-level data that
    supports the results found in these reports.  
  follow-up off-the-shelf
  Quality and Total Cost of Care.
 22




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Competition
  end-to-end
      
    software vendors and other technology-supported revenue cycle
    management business process outsourcing companies, such as
    athenahealth and MedAssets;
    traditional consultants, either specialized healthcare
    consulting firms or healthcare divisions of large accounting
    firms, such as Deloitte Consulting and Huron Consulting; and
    IT outsourcers, which typically are large, non-healthcare
    focused business process outsourcing and information technology
    outsourcing firms, such as Perot Systems and Computer Science
    Corporation/First Consulting.      
    knowledge and understanding of the complex healthcare payment
    and reimbursement system in the United States;
    a track record of delivering revenue improvements and efficiency
    gains for hospitals and healthcare systems;
    the ability to deliver a solution that is fully-integrated along
    each step of a hospitals revenue cycle operations;
    cost-effectiveness, including the breakdown between up-front
    costs and
    pay-for-performance
    incentive compensation;
    reliability, simplicity and flexibility of the technology
    platform;
    understanding of the healthcare industrys regulatory
    environment; and
    sufficient infrastructure and financial stability.    
    our solutions do not require any up-front cash investment from
    customers and we do not charge hourly or licensing fees for our
    services;
    we serve only healthcare providers and do not provide services
    to third-party payors; and
    we focus on delivering significant and sustainable improvements
    rather than one-time cost reductions only. 23




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##### Table of Contents



end-to-end
  Government
    Regulation
    Government
    Regulation of Health Information
  Privacy and Security Regulations.
    
    as to how we will use and disclose the protected health
    information;
    that we will implement reasonable administrative, physical and
    technical safeguards to protect such information from misuse;
    that we will enter into similar agreements with our agents and
    subcontractors that have access to the information;
    that we will report security incidents and other inappropriate
    uses or disclosures of the information; and
    that we will assist the customer with certain of its duties
    under HIPAA.  Transaction Requirements.
  Data Security and Breaches.
 24




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State Laws.
  Other Requirements.
  Government
    Regulation of Reimbursement
    Fraud
    and Abuse Laws
    Anti-Kickback Laws.
 25




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False or Fraudulent Claim Laws.
      Stark Law and Similar State Laws. and/or
  and/or
 26




---



##### Table of Contents



Laws
    Limiting Assignment of Reimbursement Claims
    Emergency
    Medical Treatment and Active Labor Act
      Regulation
    of Debt Collection Activities
       27




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Regulation
    of Credit Card Activities
    Foreign
    Regulations
    Intellectual
    Property
    follow-up
     28




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Employees
        Corporate
    Information
  (312) 324-7820.
  Information
    availability
  Form 10-K, Form 10-Q, Form 8-K, Form 10-K
  Item 1A.
    Risk
    Factors  Risks
    Related to Our Business and Industry
  We may
    not be able to maintain or increase our profitability, and our
    recent growth rates may not be indicative of our future growth
    rates.
   29




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Hospitals
    affiliated with Ascension Health currently account for a
    majority of our net services revenue, and we have several
    customers that have each accounted for 10% or more of our net
    services revenue in past fiscal periods. The termination of our
    master services agreement with Ascension Health, or any
    significant loss of business from our large customers, would
    have a material adverse effect on our business, results of
    operations and financial condition.
        Our
    master services agreement with Ascension Health requires us to
    offer to Ascension Healths affiliated hospitals service
    fees that are at least as low as the fees we charge any other
    similarly situated customer receiving comparable services at
    comparable volumes.
   30




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##### Table of Contents



Our
    agreements with hospitals affiliated with Ascension Health and
    with some other customers include provisions that could impede
    or delay our ability to enter into managed service contracts
    with new customers.
    The
    markets for our revenue cycle management and quality and total
    cost of care services may develop more slowly than we expect,
    which could adversely affect our revenue and our ability to
    maintain or increase our profitability.
  fee-for-service
  end-to-end
  We
    operate in a highly competitive industry, and our current or
    future competitors may be able to compete more effectively than
    we do, which could have a material adverse effect on our
    business, revenue, growth rates and market share.
   31




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If we
    are unable to retain our existing customers, our financial
    condition will suffer.
    We
    face a variable selling cycle to secure new revenue cycle and
    quality and total cost of care managed service contracts, making
    it difficult to predict the timing of specific new customer
    relationships.
    Delayed
    or unsuccessful implementation of our technologies or services
    with our customers or implementation costs that exceed our
    expectations may harm our financial results.
    Our
    quarterly results of operations may fluctuate as a result of
    factors that may impact our incentive and base fees, some of
    which may be outside of our control.
   32




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quarter-to-quarter
  quarter-to-quarter
  If we
    lose key personnel or if we are unable to attract, hire,
    integrate and retain key personnel and other necessary
    employees, our business would be harmed.
    The
    imposition of legal responsibility for obligations related to
    our employees or our customers employees could adversely
    affect our business or subject us to liability.
    If we
    fail to manage future growth effectively, our business would be
    harmed.
   33




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Disruptions
    in service or damage to our data centers and shared services
    centers could adversely affect our business.
    denial-of-service
  If our
    security measures are breached or fail and unauthorized access
    is obtained to a customers data, our service may be
    perceived as not being secure, the attractiveness of our
    services to current or potential customers may be reduced, and
    we may incur significant liabilities.
   34




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##### Table of Contents



We may
    be liable to our customers or third parties if we make errors in
    providing our services, and our anticipated net services revenue
    may be lower if we provide poor service.
    We
    offer our services in many jurisdictions and, therefore, may be
    subject to state and local taxes that could harm our business or
    that we may have inadvertently failed to pay.
    We may
    seek to expand into international markets in the future. We have
    no experience in providing services to customers outside of the
    United States. Expansion into international markets, if pursued,
    could expose us to additional risks that we do not face in the
    United States, which could have an adverse effect on our
    operating results.
      Our
    growing operations in India expose us to risks that could have
    an adverse effect on our costs of operations.
   35




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Negative
    public perception in the United States regarding offshore
    outsourcing and proposed legislation may increase the cost of
    delivering our services.
      Regulatory
    Risks
  The
    healthcare industry is heavily regulated. Our failure to comply
    with regulatory requirements could create liability for us,
    result in adverse publicity and negatively affect our
    business.
   36




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Developments
    in the healthcare industry, including national healthcare
    reform, could adversely affect our business.
    If a
    breach of our measures protecting personal data covered by the
    Health Insurance Portability and Accountability Act or Health
    Information Technology for Economic and Clinical Health Act
    occurs, we may incur significant liabilities.
    If we
    fail to comply with federal and state laws governing submission
    of false or fraudulent claims to government healthcare programs
    and financial relationships among healthcare providers, we may
    be subject to civil and criminal penalties or loss of
    eligibility to participate in government healthcare
    programs.
   37




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Our
    failure to comply with debt collection and consumer credit
    reporting regulations could subject us to fines and other
    liabilities, which could harm our reputation and
    business.
   38




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##### Table of Contents



Potential
    additional regulation of the disclosure of health information
    outside the United States may increase our costs.
    Risks
    Related to Intellectual Property
  We may
    be unable to adequately protect our intellectual
    property.
       39




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##### Table of Contents



Claims
    by others that we infringe their intellectual property could
    force us to incur significant costs or revise the way we conduct
    our business.
    
    be time-consuming and expensive to defend, whether meritorious
    or not;
    require us to stop providing the services that use the
    technology that infringes the other partys intellectual
    property;
    divert the attention of our technical and managerial resources;
    require us to enter into royalty or licensing agreements with
    third parties, which may not be available on terms that we deem
    acceptable, if at all;
    prevent us from operating all or a portion of our business or
    force us to redesign our services and technology platforms,
    which could be difficult and expensive and may make the
    performance or value of our service offerings less attractive;
    subject us to significant liability for damages or result in
    significant settlement payments; or
    require us to indemnify our customers as we are required by
    contract to indemnify some of our customers for certain claims
    based upon the infringement or alleged infringement of any third
    partys intellectual property rights resulting from our
    customers use of our intellectual property.    Risks
    Related to the Ownership of Shares of Our Common Stock
  Anti-takeover
    provisions in our charter documents and Delaware law could
    discourage, delay or prevent a change in control of our company
    and may affect the trading price of our common
    stock.
   40




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##### Table of Contents




    authorize the issuance of blank check preferred
    stock that could be issued by our board of directors to thwart a
    takeover attempt;
    provide for a classified board of directors, as a result of
    which the successors to the directors whose terms have expired
    will be elected to serve from the time of election and
    qualification until the third annual meeting following their
    election;
    require that directors only be removed from office for cause and
    only upon a supermajority stockholder vote;
    provide that vacancies on the board of directors, including
    newly created directorships, may be filled only by a majority
    vote of directors then in office;
    limit who may call special meetings of stockholders;
    prohibit stockholder action by written consent, requiring all
    actions to be taken at a meeting of the stockholders; and
    require supermajority stockholder voting to effect certain
    amendments to our restated certificate of incorporation and
    amended and restated bylaws.    We do
    not anticipate paying any cash dividends on our capital stock in
    the foreseeable future.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties      on-site
 41




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##### Table of Contents



Item 3.
    Legal
    Proceedings   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuers Purchases of Equity Securities    Price RangeHigh

Low2010Quarter ended June 30, 2010(1)

$
15.21


$
12.53Quarter ended September 30, 2010

$
13.34


$
9.05Quarter ended December 31, 2010

$
16.25


$
8.30     (1)
    
    Our common stock began trading on May 20, 2010.    Dividend
    Policy
      Equity
    Compensation Plan Information
   42




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##### Table of Contents



Number of





Number of SecuritiesSecurities to be


Weighted-Average


Remaining Available forIssued Upon Exercise


Exercise Price of


Future Issuance UnderPlan

of Outstanding Options


Outstanding Options


Equity Compensation Plans2006 Amended and Restated Stock Option Plan


15,459,090


$
9.41



2010 Stock Incentive Plan


290,314



11.57



8,054,762Total


15,749,404


$
9.45



8,054,762   Sales of
    Unregistered Securities and Use of Proceeds
  Use of
    Proceeds from Initial Public Offering
  Form S-1 No. 333-162186) and/or
  Form S-1
  Unregistered
    Sales of Equity Securities
    (a) Issuances
    of Capital Stock
   43




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##### Table of Contents



(b) Warrant
    Grants and Exercises
        (c) Option
    Grants and Exercises
     44




---



##### Table of Contents



(d) Issuance
    of Shares for Financial Advisory Services
  and/or and/or
  Stock
    Price Performance Graph
    COMPARISON
    OF CUMULATIVE TOTAL RETURN
  
 ASSUMES $100 INVESTED ON MAY 20, 2010
 ASSUMES DIVIDEND REINVESTED
 FISCAL YEAR ENDING DEC. 31, 2010
  45




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##### Table of Contents



Company/Market/Peer Group


5/20/2010


5/31/2010


6/30/2010


7/31/2010


8/31/2010


9/30/2010


10/31/2010


11/30/2010


12/31/2010Accretive Health, Inc.


$
100.00



$
112.92



$
115.18



$
103.51



$
81.92



$
94.29



$
93.85



$
119.18



$
141.47NYSE Composite Index


$
100.00



$
102.19



$
97.50



$
105.63



$
101.42



$
110.34



$
113.99



$
113.02



$
121.30Morningstar Health Information Services


$
100.00



$
102.34



$
96.64



$
96.91



$
92.94



$
103.60



$
107.37



$
106.00



$
114.83     Item 6.
    Selected
    Consolidated Financial Data  Form 10-K Form 10-K.
  Form 10-K. Form 10-K.
  46




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##### Table of Contents



Year Ended December 31,2006


2007


2008


2009


2010(In thousands, except share and per share data)Statement of Operations Data:Net services revenue

$
160,741


$
240,725


$
398,469


$
510,192


$
606,294Costs of services


141,767



197,676



335,211



410,711



478,276Operating margin


18,974



43,049



63,258



99,481



128,018Operating expenses:Infused management and technology


18,875



27,872



39,234



51,763



64,029Selling, general and administrative


8,777



15,657



21,227



30,153



41,671Total operating expenses


27,652



43,529



60,461



81,916



105,700Income (loss) from operations


(8,678
)


(480
)


2,797



17,565



22,318Net interest income (expense)(1)


1,359



1,710



710



(9
)


29Income (loss) before provision for income taxes


(7,319
)


1,230



3,507



17,556



22,347Provision for income taxes






456



2,264



2,966



9,729Net income (loss)

$
(7,319
)

$
774


$
1,243


$
14,590


$
12,618Net income (loss) per common share:Basic:

$
(0.28
)

$
0.01


$
(0.19
)

$
0.17


$
0.18Diluted:


(0.28
)


0.01



(0.19
)


0.15



0.13Weighted-average shares used in computing net income (loss) per
    common share:Basic:


25,918,942



32,968,085



36,122,470



36,725,194



70,732,791Diluted:


25,918,942



40,360,362



36,122,470



43,955,167



94,206,677Other Operating Data (unaudited):Adjusted EBITDA(2)

$
(7,125
)

$
6,842


$
12,220


$
32,912


$
45,024   As of December 31,2006


2007


2008


2009


2010(In millions)Projected contracted annual revenue run rate(3)

$
200 to $204


$
309 to $315


$
421 to $430


$
509 to $519


$
698 to $713   As of December 31,2006


2007


2008


2009


2010(In thousands)Balance Sheet Data:Cash and cash equivalents

$
20,782


$
34,745


$
51,656


$
43,659


$
155,573Working capital


(2,445
)


8,010



(3,453
)


(4,122
)


109,757Total assets


27,333



60,858



86,904



103,472



262,619Total stockholders equity

$
3,166


$
15,910


$
7,923


$
21,279



142,719     (1)
    
    Interest income results from earnings associated with our cash
    and cash equivalents. Interest income declined subsequent to
    2007 due to reductions in market interest rates. No debt or
    other interest-bearing obligations were outstanding during any
    of the periods presented. Interest expense for 2009 is a result
    of a 47




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$150 origination fee paid in connection with establishing our
    new revolving line of credit and has been shown net of interest
    income earned during the year.(2)
    
    We define adjusted EBITDA as net income (loss) before net
    interest income (expense), income tax expense (benefit),
    depreciation and amortization expense and share-based
    compensation expense. Adjusted EBITDA is a non-GAAP financial
    measure and should not be considered as an alternative to net
    income, operating income and any other measure of financial
    performance calculated and presented in accordance with GAAP.    
    adjusted EBITDA and similar non-GAAP measures are widely used by
    investors to measure a companys operating performance
    without regard to items that can vary substantially from company
    to company depending upon financing and accounting methods, book
    values of assets, capital structures and the methods by which
    assets were acquired;
    securities analysts often use adjusted EBITDA and similar
    non-GAAP measures as supplemental measures to evaluate the
    overall operating performance of companies; and
    by comparing our adjusted EBITDA in different historical
    periods, our investors can evaluate our operating results
    without the additional variations of interest income (expense),
    income tax expense (benefit), depreciation and amortization
    expense and share-based compensation expense.    
    as a measure of operating performance, because it does not
    include the impact of items that we do not consider indicative
    of our core operating performance;
    for planning purposes, including the preparation of our annual
    operating budget;
    to allocate resources to enhance the financial performance of
    our business;
    to evaluate the effectiveness of our business
    strategies; and
    in communications with our board of directors and investors
    concerning our financial performance.    
    adjusted EBITDA does not reflect our cash expenditures or future
    requirements for capital expenditures or other contractual
    commitments;
    adjusted EBITDA does not reflect changes in, or cash
    requirements for, our working capital needs;
    adjusted EBITDA does not reflect share-based compensation
    expense;
    adjusted EBITDA does not reflect cash requirements for income
    taxes;
    adjusted EBITDA does not reflect net interest income
    (expense); and
    other companies in our industry may calculate adjusted EBITDA
    differently than we do, limiting its usefulness as a comparative
    measure.  Form 10-K,
 48




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##### Table of Contents



Year Ended December 31,2006


2007


2008


2009


2010(In thousands)Net income (loss)

$
(7,319
)

$
774


$
1,243


$
14,590


$
12,618Net interest (income) expense(a)


(1,359
)


(1,710
)


(710
)


9



(29
)Provision for income taxes






456



2,264



2,966



9,729Depreciation and amortization expense


626



1,307



2,540



3,921



6,157EBITDA

$
(8,052
)

$
827


$
5,337


$
21,486


$
28,475Stock compensation expense(b)


844



934



3,551



6,917



16,549Stock warrant expense(b)


83



5,081



3,332



4,509



Adjusted EBITDA

$
(7,125
)

$
6,842


$
12,220


$
32,912


$
45,024     (a)
    
    See footnote 1 above.(b)
    
    Stock compensation expense and stock warrant expense
    collectively represent the share-based compensation expense
    reflected in our financial statements. Of the amounts presented
    above, $928, $921 and $1,736 was classified as a reduction in
    net services revenue for the years ended December 31, 2007,
    2008 and 2009, respectively. No such reduction was recorded for
    the year ended December 31, 2010 as all warrants had been
    earned and therefore there was no stock warrant expense.  (3)
    
    We define our projected contracted annual revenue run rate as
    the expected total net services revenue for the subsequent
    12 months for all healthcare providers for which we are
    providing services under contract. We believe that our projected
    contracted annual revenue run rate is a useful method to measure
    our overall business volume at a point in time and changes in
    the volume of our business over time because it eliminates the
    timing impact associated with the signing of new contracts
    during a specific quarterly or annual period. Actual revenues
    may differ from the projected amounts used for purposes of
    calculating projected contracted annual revenue run rate
    because, among other factors, the scope of services provided to
    existing customers may change and the incentive fees we earn may
    be more or less than expected depending on our ability to
    achieve projected increases in our customers net revenue
    yield and projected reductions in the total medical cost of the
    customers patient populations. See Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview  Our Background
    for more information.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  You should read the following discussion and analysis of our
    financial condition and results of operations together with our
    financial statements and the related notes and other financial
    information included elsewhere in this Annual Report on
    Form 10-K.
    Some of the information contained in this discussion and
    analysis or set forth elsewhere in this Annual Report on
    Form 10-K,
    including information with respect to our plans and strategy for
    our business and related financing, includes forward-looking
    statements that involve risks and uncertainties. You should
    review the Risk Factors section of this Annual
    Report on
    Form 10-K
    for a discussion of important factors that could cause actual
    results to differ materially from the results described in or
    implied by the forward-looking statements contained in the
    following discussion and analysis.
  Overview
  Our
    Background
   49




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agreed-upon
     50




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Seasonality
   51




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Net
    Services Revenue
    
    Base fee revenues represent our contractually-agreed annual fees
    for managing and overseeing our customers revenue cycle or
    quality and total cost of care operations. Following a
    comprehensive review of a customers operations, the
    customers base fees are tailored to its specific
    circumstances and the extent of the customers operations
    for which we are assuming operational responsibility; we do not
    have standardized fee arrangements.
    Incentive payment revenues for revenue cycle management services
    represent the amounts we receive by increasing our
    customers net patient revenue and identifying potential
    payment sources for patients who are uninsured and underinsured.
    These payments are governed by specific formulas contained in
    the managed service contract with each of our customers. In
    general, we earn incentive payments by increasing a
    customers actual cash yield as a percentage of the
    contractual amount owed to such customer for the healthcare
    services provided.
    Incentive payment revenues for quality and total cost of care
    services will represent our share of the provider community cost
    savings for our role in providing the technology infrastructure
    and for managing the care coordination process.  procedure-by-procedure
      YearEndedDecember 31,2010Net base fees for managed service contracts


86
%Incentive payments for managed service contracts


12
%Other services


2
%Total


100
%     Costs
    of Services
  on-site
 52




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##### Table of Contents




    Salaries and benefits of the customers employees engaged
    in activities which are included in our contract and who are
    assigned to work
    on-site with
    us. Under our contracts with our customers, we are responsible
    for the cost of the salaries and benefits for these employees of
    our customers. Salaries are paid and benefits are provided to
    such individuals directly by the customer, instead of adding
    these individuals to our payroll, because these individuals
    remain employees of our customers.
    Salaries and benefits of our employees in our shared services
    centers (these individuals are distinct from
    on-site
    infused management discussed below) and the
    non-payroll costs associated with operating our shared service
    centers.
    Costs associated with vendors that provide services integral to
    the customers services we are contracted to manage.    Operating
    Margin
    
    We typically enhance the productivity of a customers
    revenue cycle operations over time as we fully implement our
    technology and procedures and because any overlap between costs
    of our shared services centers and costs of hospital operations
    targeted for transition is generally concentrated in the first
    year of the contract.
    Incentive payments under each managed service contract generally
    increase over time as we deploy additional programs and the
    programs we implement become more effective and produce improved
    results for our customers.  Infused
    Management and Technology Expenses
  on-site
  Selling,
    General and Administrative Expenses
   53




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##### Table of Contents



Interest
    Income (Expense)
    Income
    Taxes
    Application
    of Critical Accounting Policies and Use of Estimates
      Form 10-K.
 54




---



##### Table of Contents



Form 10-K.
  Revenue
    Recognition
        quarter-to-quarter
        Accounts
    Receivable and Allowance for Uncollectible
    Accounts
     55




---



##### Table of Contents



account-by-account
  Fair
    Value of Financial Instruments
      
    Level 1:  Observable inputs such as quoted
    prices in active markets for identical assets and liabilities;
    Level 2:  Inputs other than quoted prices
    but are observable for the asset or liability, either directly
    or indirectly. These include quoted prices for similar assets or
    liabilities in active markets and quoted prices for identical or
    similar assets or liabilities in markets that are not active;
    and model-derived valuations in which all significant inputs and
    significant value drivers are observable in active
    markets; and
    Level 3:  Valuations derived from
    valuation techniques in which one or more significant inputs or
    significant value drivers are unobservable.    Software
    Development
  350-40, Intangibles  Goodwill and Other 
    Internal-Use Software ASC 350-40,
  Goodwill
  Intangibles 
    Goodwill and Other
 56




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##### Table of Contents



Impairments
    of Long-Lived Assets
  Property, Plant and
    Equipment
  Income
    Taxes
        
    differences in timing of depreciation on fixed assets;
    the timing of revenue recognition arising from incentive
    payments;
    employee compensation expense arising from stock
    options; and
    costs associated with the issuance of warrants to purchase
    shares of our common stock.  ASC 740-10, Income Taxes  Overall
  Share-Based
    Compensation Expense
  Compensation  Stock
    Compensation
  Restricted Stock Plan.
 57




---



##### Table of Contents




    In June 2004, we issued shares of common stock to certain
    employees and directors. In January 2005, we issued additional
    shares of common stock to a member of our board of directors.
    These shares vested on various schedules ranging from immediate
    vesting to vesting over a period of 48 months. As a result,
    we recorded share-based compensation expense of $2,328 in 2008.
    We did not record any share-based compensation expense in 2009
    or 2010 relating to these issuances.  Ascension Health Stock and Warrants. start-up
  
    Initial Stock Issuance and Protection Warrant
    Agreement.  In October and November 2004, we
    issued 3,537,306 shares of common stock to Ascension
    Health, then representing a 5% ownership interest in our company
    on a fully-diluted basis, and entered into a protection warrant
    agreement under which Ascension Health was granted the right to
    purchase additional shares of common stock from time to time for
    $0.003 per share when Ascension Healths ownership interest
    in our company declined below 5% due to our issuance of
    additional stock or rights to purchase stock. The protection
    warrant agreement expired on the closing of our initial public
    offering in May 2010. We made the initial stock grant and
    entered into the protection warrant agreement because Ascension
    Health agreed to provide us with an operational laboratory and
    related
    start-up
    consulting services in connection with our development of our
    initial revenue cycle management service offering.    
    Supplemental Warrant.  Pursuant to a
    supplemental warrant agreement that became effective in November
    2004, Ascension Health had the right to purchase up to
    3,537,306 shares of our common stock based upon the
    achievement of specified milestones relating to its sales and
    marketing assistance. The supplemental warrant agreement expired
    on the closing of our initial public offering in May 2010.        Licensing and Consulting Warrant.
 58




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##### Table of Contents



Year Ended December 31,2008

2009Future dividends



Risk-free interest rate

3.45%

2.91%Expected volatility

50%

50%Expected life(1)

6.6 years

5.6 years     (1)
    
    Expected life applies to Ascension Healths supplemental
    warrant only, since the other warrants were fully vested upon
    grant.  Stock Option Plans.
     59




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##### Table of Contents



Year Ended December 31,2008

2009

2010Future dividends





Risk-free interest rate

2.8 to 4.0%

1.6% to 3.2%

1.6% to 2.6%Expected volatility

50%

50%

50%Expected life

6.25 years

6.25 years

6.25 yearsForfeitures

3.75% annually

4.25% annually

4.25% annually               share-for-share
   60




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##### Table of Contents



Determination of Fair Value.
    
    our financial condition, sales levels and results of operations
    during the relevant period;
    developments in our business;
    hiring of key personnel;
    forecasts of our financial results and market conditions
    affecting our industry;
    market values, sales levels and results of operations for public
    companies that we consider comparable in terms of size, service
    offerings and maturity;
    the superior rights and preferences of outstanding securities
    that were senior to our common stock; and
    the illiquid nature of our common stock      Legal
    Proceedings
  Contingencies
 61




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##### Table of Contents



Results
    of Operations
    Year Ended December 31,2008


2009


2010(In thousands)Statement of Operations Data:Net services revenue

$
398,469


$
510,192


$
606,294Costs of services


335,211



410,711



478,276Operating margin


63,258



99,481



128,018Infused management and technology expense


39,234



51,763



64,029Selling, general and administrative expense


21,227



30,153



41,671Total operating expenses


60,461



81,916



105,700Income from operations


2,797



17,565



22,318Net interest income (expense)


710



(9
)


29Income before provision for income taxes


3,507



17,556



22,347Provision for income taxes


2,264



2,966



9,729Net income

$
1,243


$
14,590


$
12,618Operating Expense Details:Infused management and technology expense, excluding
    depreciation and amortization expense and share-based
    compensation expense

$
35,079


$
45,365


$
53,230Selling, general and administrative expense, excluding
    depreciation and amortization expense and share-based
    compensation expense


16,879



22,940



32,280Depreciation and amortization expense(1)


2,540



3,921



4,866Share-based compensation expense(1)(2)


5,963



9,690



15,324Total operating expenses

$
60,461


$
81,916


$
105,700     (1)
    
    In 2010, as our shared services centers model adoption by
    customers increased, we started allocating a portion of our
    share-based compensation expense and depreciation and
    amortization expense to cost of services. For the year ended
    December 31, 2010, $1,291 of depreciation and amortization
    expense was allocated to cost of services.(2)
    
    Share-based compensation expense includes share-based
    compensation expense and warrant-related expense, exclusive of
    warrant expense of $921 and $1,736 which was classified as a
    reduction in base fee revenue for the years ended
    December 31, 2008 and 2009, respectively. No such reduction
    was recorded for the year ended December 31, 2010 as all
    warrants had been earned and therefore there was no stock
    warrant expense. For the year ended December 31, 2010,
    $1,225 of share-based compensation expense was allocated to cost
    of services. 62




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##### Table of Contents



Year
    Ended December 31, 2009 Compared to Year Ended
    December 31, 2010
  Net
    Services Revenue
    2009


2010(In thousands)Net base fees for managed service contracts

$
434,281


$
518,243Incentive payments for managed service contracts


64,033



74,663Other services


11,878



13,388Total

$
510,192


$
606,294     Costs
    of Services
    Operating
    Margin
    
    $10.6 million in additional incentive payments under
    managed service contracts;
    an increase of $16.5 million in the operating efficiencies
    associated with our revenue cycle operations including the
    impact of shared service center adoptions; and
    reduction of $1.7 million in costs related to the issuance
    of warrants to Ascension Health as there were no warrants issued
    to Ascension Health in the year ended December 31, 2010.   63




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##### Table of Contents



Operating
    Expenses
        
    Depreciation and Amortization expense increased by
    $0.9 million, or 24.1%, to $4.9 million for the year
    ended December 31, 2010 from $3.9 million for the year
    ended December 31, 2009, due to the addition of computer
    equipment, furniture and fixtures, and other property to support
    our growing operations. Amortization expense increased mainly
    due to amortization of internally developed software.
    Share-based compensation expense, which includes both
    stock-based compensation expense and stock warrant expense,
    increased $5.6 million, or 58.1%, to $15.3 million in
    the year ended December 31, 2010 from $9.7 million for
    the year ended December 31, 2009. The increase was due to
    an additional $8.4 million of option expense relating to
    stock option grants during the current year and vesting of
    previously granted stock options associated with the continued
    increase in the number of employees, offset by a decrease in
    stock warrant expense charge of $2.8 million.    Income
    Taxes
    Net
    Income
   64




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##### Table of Contents



Year
    Ended December 31, 2008 Compared to Year Ended
    December 31, 2009
  Net
    Services Revenue
    2008


2009(In thousands)Net base fees for managed service contracts

$
350,085


$
434,281Incentive payments for managed service contracts


38,971



64,033Other services


9,413



11,878Total

$
398,469


$
510,192     Costs
    of Services
    Operating
    Margin
    
    $25.1 million in additional incentive payments under
    managed service contracts;
    an increase of $0.6 million in the operating margin
    associated with our other services, as a result of the continued
    expansion of our dormant patient accounts receivable collection
    and other ancillary services; and
    a reduction of $11.3 million in revenue cycle operating
    costs under managed service contracts, net of customer cost
    sharing. 65




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##### Table of Contents



Operating
    Expenses
        
    Share-based compensation expense increased $3.4 million, or
    94.8%, to $6.9 million for the year ended December 31,
    2009 from $3.6 million for the year ended December 31,
    2008 due to employee option grants and vesting of previously
    granted stock options associated with the continued expansion of
    our personnel and the increase in the fair market value of our
    stock, which increases the cost of option grants calculated
    using the provisions of ASC 718.
    Depreciation expense increased $0.7 million, or 50.6%, to
    $2.0 million for the year ended December 31, 2009 from
    $1.3 million for the year ended December 31, 2008, due
    to the addition of computer equipment, furniture and fixtures,
    and other property to support our growing operations.
    Amortization expense increased $0.7 million, or 58.5%, to
    $1.9 million for the year ended December 31, 2009 from
    $1.2 million for the year ended December 31, 2008. The
    majority of this increase resulted from amortization of
    internally developed software.  Income
    Taxes
   66




---



##### Table of Contents



Net
    Income
    Liquidity
    and Capital Resources
        Operating
    Activities
    Investing
    Activities
   67




---



##### Table of Contents



Financing
    Activities
      Revolving
    Credit Facility
    Future
    Capital Needs
  day-to-day
  Contractual
    Obligations
    Year Ended December 31,2015 and2011

2012

2013

2014

Beyond

Total(In thousands)Minimum lease payments

$
3,196


$
2,593


$
2,470


$
2,466


$
12,751


$
23,476Total

$
3,196


$
2,593


$
2,470


$
2,466


$
12,751


$
23,476      68




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Recent
    Accounting Pronouncements
  No. 2010-09 , Subsequent Events,
  No. 09-13, Revenue Recognition  Multiple Deliverable Revenue
    Arrangements, 09-13. 09-13 ASC 605-25.
  No. 2010-06, Fair Value Measurements and Disclosures 2010-06 2010-06
  Item 7A.
    Qualitative
    and Quantitative Disclosures about Market Risk  Interest Rate Sensitivity.
  Foreign Currency Exchange Risk.
 69




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  page F-1
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15(e)
  Internal
    Control Over Financial Reporting
    Changes
    in Internal Control Over Financial Reporting
    Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance       70




---



##### Table of Contents



Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters      Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Financial Statements
  F-1.
 71




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##### Table of Contents



Financial Statement Schedules
    SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS
  ACCRETIVE
    HEALTH, INC.
    December 31, 2010
  Column A

Column B


Column C


Column D


Column EBalance at


Charged to


Charged to





Balance atBeginning of


Costs and


Other





End ofDescription

Period


Expenses


Accounts


Deductions


Period(In thousands)Allowance for Doubtful AccountsYear Ended December 31, 2010

$
82


$
1,500


$



$



$
1,582Year Ended December 31, 2009

$
82


$



$



$



$
82Year Ended December 31, 2008

$
432


$



$



$
350


$
82Deferred Tax Valuation AllowanceYear Ended December 31, 2010

$
139


$



$
18


$



$
157Year Ended December 31, 2009

$
3,629


$



$



$
3,490


$
139Year Ended December 31, 2008

$
4,733


$



$



$
1,104


$
3,629     Exhibits
  ExhibitNumber

Description3
.1

Restated Certificate of Incorporation of the Registrant, as
    amended (incorporated by reference to Exhibit 3.2 to
    Amendment No. 4 to the Registration Statement on
    Form S-1
    filed on April 26, 2010)3
.2

Amended and Restated Bylaws of the Registrant (incorporated by
    reference to Exhibit 3.4 to Amendment No. 4 to the
    Registration Statement on
    Form S-1
    filed on April 26, 2010)4
.1

Specimen Certificate evidencing shares of Common Stock
    (incorporated by reference to Exhibit 4.1 to Amendment
    No. 4 to the Registration Statement on
    Form S-1
    filed on April 26, 2010)10
.1*

Amended and Restated Stock Option Plan, as amended (incorporated
    by reference to Exhibit 10.1 to Amendment No. 4 to the
    Registration Statement on
    Form S-1
    filed on April 26, 2010)10
.2*

Form of Acknowledgement of Grant, used to evidence option grants
    under the Amended and Restated Stock Option Plan (incorporated
    by reference to Exhibit 10.2 to the Registration Statement
    on
    Form S-1
    filed on September 29, 2009)10
.3*

Restricted Stock Plan, as amended (incorporated by reference to
    Exhibit 10.3 to Amendment No. 4 to the Registration
    Statement on
    Form S-1
    filed on April 26, 2010)10
.4*

Form of Restricted Stock Award Agreement under the Restricted
    Stock Plan, as amended (incorporated by reference to
    Exhibit 10.4 to the Registration Statement on
    Form S-1
    filed on September 29, 2009)10
.5

Third Amended and Restated Stockholders Agreement, dated
    as of February 22, 2009, among the Registrant and the
    parties named therein, as amended (incorporated by reference to
    Exhibit 10.5 to the Registration Statement on
    Form S-1
    filed on March 9, 2011)10
.6

Form of Share Exchange Agreement, entered into in February 2009,
    with each of Etienne H. Deffarges, Steven N. Kaplan, Gregory N.
    Kazarian, The Shultz 1989 Family Trust, Spiegel Family LLC and
    John T. Staton Declaration of Trust (incorporated by reference
    to Exhibit 10.6 to the Registration Statement on
    Form S-1
    filed on September 29, 2009) 72




---



##### Table of Contents



ExhibitNumber

Description10
.7

Lease Agreement, dated as of May 4, 2005, between the
    Registrant and Zeller Management Corporation, as amended by
    First Lease Amendment, dated as of January 30, 2007, and
    Second Lease Amendment, dated as of November 26, 2008
    (incorporated by reference to Exhibit 10.7 to the
    Registration Statement on
    Form S-1
    filed on September 29, 2009)10
.8+

Amended and Restated Master Services Agreement, dated as of
    December 13, 2007, between the Registrant and Ascension
    Health (incorporated by reference to Exhibit 10.8 to
    Amendment No. 4 to the Registration Statement on
    Form S-1
    filed on April 26, 2010)10
.17*

Employment Agreement, dated as of January 2004, between the
    Registrant and Mary A. Tolan, as amended (incorporated by
    reference to Exhibit 10.18 to the Registration Statement on
    Form S-1
    filed on September 29, 2009)10
.18*

Employment Agreement, dated as of June 17, 2005, between
    the Registrant and John T. Staton, as amended (incorporated by
    reference to Exhibit 10.19 to the Registration Statement on
    Form S-1
    filed on September 29, 2009)10
.19*

Offer Letter, dated December 9, 2003, between the
    Registrant and Gregory N. Kazarian, as amended (incorporated by
    reference to Exhibit 10.20 to the Registration Statement on
    Form S-1
    filed on September 29, 2009)10
.20*

Form of Indemnification Agreement, entered into between the
    Registrant and each director and executive officer (incorporated
    by reference to Exhibit 10.20 to Amendment No. 1 to
    the Registration Statement on
    Form S-1
    filed on November 19, 2009)10
.21+

Credit Agreement, dated as of September 30, 2009, between
    the Registrant and Bank of Montreal (incorporated by reference
    to Exhibit 10.21 to Amendment No. 4 to the
    Registration Statement on
    Form S-1
    filed on April 26, 2010)10
.22+

Security Agreement, dated as of September 30, 2009, among
    the Registrant, Bank of Montreal and specified subsidiaries of
    the Registrant (incorporated by reference to Exhibit 10.22
    to Amendment No. 4 to the Registration Statement on
    Form S-1
    filed on April 26, 2010)10
.23*

2010 Stock Incentive Plan (incorporated by reference to
    Exhibit 10.23 to Amendment No. 4 to the Registration
    Statement on
    Form S-1
    filed on April 26, 2010)10
.24*

Form of Incentive Stock Option Agreement under the 2010 Stock
    Incentive Plan (incorporated by reference to Exhibit 10.24
    to Amendment No. 4 to the Registration Statement on
    Form S-1
    filed on April 26, 2010)10
.25*

Form of Nonstatutory Stock Option Agreement under the 2010 Stock
    Incentive Plan (incorporated by reference to Exhibit 10.25
    to Amendment No. 4 to the Registration Statement on
    Form S-1
    filed on April 26, 2010)21
.1

Subsidiaries of the Registrant (incorporated by reference to
    Exhibit 21.1 to Amendment No. 4 to the Registration
    Statement on
    Form S-1
    filed on April 26, 2010)23
.1

Consent of Ernst & Young LLP31
.1

Certification of Chief Executive Officer pursuant to
    Rules 13a-14(a)
    and 15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200231
.2

Certification of Chief Financial Officer pursuant to
    Rules 13a-14(a)
    and 15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200232
.1

Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200232
.2

Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     *
    
    Management contract or compensatory plan or arrangement required
    to be filed pursuant to Item 15(b) of
    Form 10-K.+
    
    Confidential treatment requested as to certain portions, which
    portions have been omitted and filed separately with the
    Securities and Exchange Commission. 73




---



##### Table of Contents



SIGNATURES      By:
    /s/  Mary
    A. Tolan  Mary A. Tolan
 Founder, President and Chief Executive Officer
    Signature

Title

Date/s/  Mary
    A. TolanMary
    A. Tolan

Director, Founder, President and Chief Executive Officer
    (Principal Executive Officer)

March 18, 2011/s/  John
    T. StatonJohn
    T. Staton

Chief Financial Officer and Treasurer (Principal Financial
    Officer)

March 18, 2011/s/  James
    M. BolotinJames
    M. Bolotin

Corporate Controller (Principal Accounting Officer)

March 18, 2011/s/  J.
    Michael ClineJ.
    Michael Cline

Founder and Chairman of the Board

March 18, 2011/s/  Edgar
    M. Bronfman, Jr.Edgar
    M. Bronfman, Jr.

Director

March 18, 2011/s/  Steven
    N. KaplanSteven
    N. Kaplan

Director

March 18, 2011/s/  Denis
    J. NaydenDenis
    J. Nayden

Director

March 18, 2011/s/  George
    P. ShultzGeorge
    P. Shultz

Director

March 18, 2011/s/  Arthur
    H. Spiegel, IIIArthur
    H. Spiegel, III

Director

March 18, 2011/s/  Mark
    A. WolfsonMark
    A. Wolfson

Director

March 18, 2011  74




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##### Table of Contents



Accretive
    Health, Inc.
  Index to
    Consolidated Financial Statements
  PageAudited Consolidated Financial StatementsReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets


F-3Consolidated Statements of Operations


F-4Consolidated Statements of Stockholders
    Equity


F-5Consolidated Statements of Cash Flows


F-7Notes to Consolidated Financial Statements


F-8  F-1




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm           Ernst &
    Young LLP
    F-2




---



##### Table of Contents



Accretive
    Health, Inc.
  Consolidated
    Balance Sheets
 (In
    thousands, except share and per share amounts)
  December 31,2009


2010AssetsCurrent assets:Cash and cash equivalents

$
43,659


$
155,573Accounts receivable, net of allowance for doubtful accounts of
    $82 and $1,582 at December 31, 2009 and 2010, respectively


27,519



53,894Prepaid assets


4,283



13,336Due from related party


1,273



1,283Other current assets


1,337



1,659Total current assets


78,071



225,745Deferred income tax


7,739



11,405Furniture and equipment, net


12,901



21,698Goodwill


1,468



1,468Other, net


3,293



2,303Total assets

$
103,472


$
262,619Liabilities and stockholders equityCurrent liabilities:Accounts payable

$
11,967


$
30,073Accrued service costs


27,742



38,649Accrued compensation and benefits


12,114



13,331Deferred income tax


4,188



6,016Accrued income taxes


41



Other accrued expenses


3,531



6,062Deferred revenue


22,610



21,857Total current liabilities


82,193



115,988Non-current liabilities:Other non-current liabilities






3,912Total non-current liabilities






3,912Total liabilities

$
82,193


$
119,900Commitments and contingencies






Stockholders equity:Convertible preferred stock, Series A, $0.01 par
    value, 32,317 shares authorized, issued and outstanding at
    December 31, 2009; no shares authorized, issued or
    outstanding at December 31, 2010






Convertible preferred stock, Series D, $0.01 par
    value, 1,267,224 shares authorized, issued, and outstanding
    at December 31, 2009; no shares authorized, issued or
    outstanding at December 31, 2010


13



Preferred stock, $0.01 par value; no shares authorized; issued
    or outstanding, at December 31, 2009; 5,000,000 shares
    authorized and no shares issued or outstanding at
    December 31, 2010






Series B common stock, $0.01 par value,
    68,600,000 shares authorized, 32,156,932 shares issued
    and outstanding at December 31, 2009; no shares authorized,
    issued or outstanding at December 31, 2010


82



Series C common stock, $0.01 par value,
    31,360,000 shares authorized, 5,257,727 shares issued
    and outstanding at December 31, 2009; no shares authorized,
    issued or outstanding at December 31, 2010


13



Common Stock, $0.01 par value, no shares authorized, issued or
    outstanding at December 31, 2009;
    500,000,000 shares
    authorized, 94,826,509 shares issued and outstanding as of
    December 31, 2010






948Additional paid-in capital


51,777



159,780Non-executive employee loans for stock option exercises


(120
)


(41
)Accumulated deficit


(30,452
)


(17,834
)Cumulative translation adjustment


(34
)


(134
)Total stockholders equity


21,279



142,719Total liabilities and stockholders equity

$
103,472


$
262,619    F-3




---



##### Table of Contents



Accretive
    Health, Inc.
  Consolidated
    Statements of Operations
 (In
    thousands, except share and per share amounts)
  Year Ended December 31,2008


2009


2010Net services revenue

$
398,469


$
510,192


$
606,294Costs of services


335,211



410,711



478,276Operating margin


63,258



99,481



128,018Other operating expenses:Infused management and technology


39,234



51,763



64,029Selling, general and administrative


21,227



30,153



41,671Total operating expenses


60,461



81,916



105,700Income from operations


2,797



17,565



22,318Net interest income (expense)


710



(9
)


29Net income before provision for income taxes


3,507



17,556



22,347Provision for income taxes


2,264



2,966



9,729Net income

$
1,243


$
14,590


$
12,618Dividends on preferred shares


(8,048
)


(8,044
)


Net income (loss) applicable to common shareholders

$
(6,805
)

$
6,546


$
12,618Net income (loss) per common shareBasic

$
(0.19
)

$
0.17


$
0.18Diluted


(0.19
)


0.15



0.13Weighted-average shares used in calculating net income (loss)
    per common shareBasic


36,122,470



36,725,194



70,732,791Diluted


36,122,470



43,955,167



94,206,677Cash dividends declared per common share

$
0.18


$
0.18


$
    F-4




---



##### Table of Contents



Accretive
    Health, Inc.
  Consolidated
    Statements of Stockholders Equity
 (In
    thousands, except share amounts)
  Non-ExecutiveEmployeeConvertible


Convertible























LoansPreferred Stock


Preferred Stock


Series B


Series C








Additional


for Stock





CumulativeSeries A


Series D


Common Stock


Common Stock


Common Stock


Paid-In


Option


Accumulated


Translation





ComprehensiveShares


Amount


Shares


Amount


Shares


Amount


Shares


Amount


Shares


Amount


Capital


Exercises


Deficit


Adjustment


Total


IncomeBalance at December 31, 2007

32,317


$




1,267,224


$
13



18,756,251


$
48



17,491,592


$
44






$



$
32,361


$
(320
)

$
(16,246
)

$
10


$
15,910


$
784Implementation of FASB Interpretation No. 48

















































(97
)






(97
)


Exchange of Series C to Series B Stock

















12,975,007



33



(12,975,007
)


(33
)






























Issuance of class B common stock

















261,277



1



































1



Exercise of vested stock options

























14,700















18















18



Vesting of previously exercised options

























589,470



2











649















651



Repayments of amounts loaned to employees related to stock
    option exercises, net













































57











57



Share repurchases

























(135,566
)














(1,510
)














(1,510
)


Issuance of stock warrants









































3,332















3,332



Compensation expense related to restricted common stock









































5















5



Compensation expense related to stock options









































3,546















3,546



Currency translation adjustment





















































(232
)


(232
)


(232
)Dividends declared

















































(15,001
)






(15,001
)


Net income

















































1,243







1,243



1,243Balance at December 31, 2008

32,317


$




1,267,224


$
13



31,992,535


$
82



4,985,189


$
13






$



$
38,401


$
(263
)

$
(30,101
)

$
(222
)

$
7,923


$
1,011Exercise of vested stock options

























116,620















209















209



Vesting of previously exercised options

























161,210















215















215



Issuance of class B common stock

















164,397











































Repayments of amounts loaned to employees related to stock
    option exercises, net













































143











143



Share repurchases

























(5,292
)














(13
)














(13
)


Issuance of stock warrants









































4,509















4,509



Compensation expense related to stock options









































6,917















6,917



Excess tax benefit from equity-based awards









































1,539















1,539



Currency translation adjustment





















































188



188



188Dividends declared

















































(14,941
)






(14,941
)


Net income

















































14,590







14,590



14,590Balance at December 31, 2009

32,317


$




1,267,224


$
13



32,156,932


$
82



5,257,727


$
13






$



$
51,777


$
(120
)

$
(30,452
)

$
(34
)

$
21,279


$
14,778  F-5




---



##### Table of Contents



Accretive
    Health, Inc.
  Consolidated
    Statements of Stockholders Equity 
    (Continued)
 (In
    thousands, except share amounts)
  Non-ExecutiveEmployeeConvertible


Convertible























LoansPreferred Stock


Preferred Stock


Series B


Series C








Additional


for Stock





CumulativeSeries A


Series D


Common Stock


Common Stock


Common Stock


Paid-In


Option


Accumulated


Translation





ComprehensiveShares


Amount


Shares


Amount


Shares


Amount


Shares


Amount


Shares


Amount


Capital


Exercises


Deficit


Adjustment


Total


IncomeBalance at December 31, 2009


32,317


$




1,267,224


$
13



32,156,932


$
82



5,257,727


$
13






$



$
51,777


$
(120
)

$
(30,452
)

$
(34
)

$
21,279



Issuance of Class B common stock


















29,926











































Exercise of vested stock options


























33,320







517,375



5



1,248















1,253Vesting of previously exercised options


























81,830







23,806







169















169Conversion to common stock


(32,317
)






(1,267,224
)


(13
)


(32,186,858
)


(82
)


(5,372,877
)


(13
)


81,356,333



814



(706
)


















Issuance of shares in the initial public offering


































7,666,667



77



86,403















86,480



Liquidation preference payment


































1,265,012



13



(879
)














(866
)


Initial public offering costs


































115,000



1



(5,664
)














(5,663
)


Repayments of amounts loaned to employees related to stock
    option exercises, net














































79











79Exercise of stock warrants


































3,882,316



38



896















934



Compensation expense related to stock options










































16,549















16,549



Excess tax benefit from equity-based awards










































9,987















9,987Currency translation adjustment






















































(100
)


(100
)


(100
)Net income


















































12,618







12,618



12,618Balance at December 31, 2010





$







$







$







$




94,826,509


$
948


$
159,780


$
(41
)

$
(17,834
)

$
(134
)

$
142,719


$
12,518    F-6




---



##### Table of Contents



Accretive
    Health, Inc.
  Consolidated
    Statements of Cash Flows
 (In
    thousands)
  Year Ended December 31,2008


2009


2010Operating activitiesNet income

$
1,243


$
14,590


$
12,618Adjustments to reconcile net income to net cash provided by
    operations:Depreciation and amortization


2,540



3,921



6,157Employee stock based compensation


3,551



6,917



16,549Expense associated with the issuance of stock warrants


3,332



4,509



Deferred income taxes






(3,552
)


(3,736
)Excess tax benefit from equity based awards






(1,539
)


(11,910
)Loss on disposal of equipment


70







Changes in operating assets and liabilities:Accounts receivable


(4,309
)


(7,313
)


(26,374
)Prepaid and other current assets


(1,381
)


(1,678
)


2,560Accounts payable


15,546



(6,113
)


18,093Accrued service costs


3,715



4,195



10,907Accrued compensation and benefits


3,563



2,960



1,210Other accrued expenses


173



(253
)


3,517Accrued income taxes


1,208



(1,168
)


(41
)Deferred rent expense










3,199Deferred revenue


10,275



(377
)


(753
)Net cash provided by operating activities


39,525



15,099



31,996Investing activitiesPurchases of furniture and equipment


(1,843
)


(3,514
)


(9,670
)Acquisition of software


(4,988
)


(4,348
)


(5,355
)Collection (issuance) of note receivable


698



618



(1,844
)Net cash used in investing activities


(6,133
)


(7,244
)


(16,869
)Financing activitiesProceeds from initial public offering, net of issuance costs










83,756Liquidation preference payment










(866
)Proceeds from issuance of common stock from warrant exercises


1







934Proceeds from issuance of common stock from employee stock
    option exercise


150



214



1,253Collection of non-executive employee notes receivable


57



143



79Excess tax benefit from equity based awards






1,539



11,910Deferred offering costs






(2,939
)


Payment of dividends


(15,001
)


(14,941
)


Repurchase of common stock


(1,510
)


(13
)


Net cash provided by (used in) financing activities


(16,303
)


(15,997
)


97,066Effect of exchange rate changes in cash


(178
)


145



(279
)Net increase (decrease) in cash and cash equivalents


16,911



(7,997
)


111,914Cash and cash equivalents at beginning of period


34,745



51,656



43,659Cash and cash equivalents at end of period

$
51,656


$
43,659


$
155,573Supplemental disclosures of cash flow informationInterest paid

$



$
160


$
Taxes paid


1,137



8,254



9,460Exercise of unvested stock options


132



5



Supplemental disclosures of noncash financing transactionsIssuance of notes receivable to non-executive employees

$
(585
)

$



$
Vesting of previously exercised stock options


651



215



169    F-7




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes
    to Consolidated Financial Statements
  1.
    Description
    of Business    2.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
    Stock
    Split
    Use of
    Estimates
      Revenue
    Recognition
     F-8




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
            Cash
    and Cash Equivalents
    Accounts
    Receivable and Allowance for Uncollectible
    Accounts
      account-by-account
 F-9




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
      Year Ended December 31,2008


2009


2010Beginning balance

$
432


$
82


$
82Provision










1,500Write-offs and adjustments


(350
)






Ending balance

$
82


$
82


$
1,582   Accrued
    Service Costs
    Fair
    Value of Financial Instruments
      
    Level 1: Observable inputs such as quoted prices in active
    markets for identical assets and liabilities;
    Level 2: Inputs other than quoted prices but are observable
    for the asset or liability, either directly or indirectly. These
    include quoted prices for similar assets or liabilities in
    active markets and quoted prices for identical or similar assets
    or liabilities in markets that are not active; and model-derived
    valuations in which all significant inputs and significant value
    drivers are observable in active markets; and
    Level 3: Valuations derived from valuation techniques in
    which one or more significant inputs or significant value
    drivers are unobservable.   F-10




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  Furniture
    and Equipment
    Leasehold improvements

Shorter of 10 years or lease termOffice furniture

5 yearsCapitalized software

3 to 5 yearsComputers and other equipment

3 years   Software
    Development
  (ASC) 350-40, Intangibles  Goodwill and
    Other  Internal Use Software,
  Goodwill
  Intangibles  Goodwill and Other,
    Foreign
    Currency
     F-11




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  Impairments
    of Long-Lived Assets
  Property, Plant
    and Equipment
  Income
    Taxes
      ASC 740-10 Income Taxes  Overall
  ASC 740-10,
    Share-Based
    Compensation
  Compensation  Stock
    Compensation
  Legal
    Proceedings
  Contingencies
 F-12




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
    New
    Accounting Standards and Disclosures
  No. 2010-09 Subsequent Events
  No. 09-13, Revenue Recognition  Multiple Deliverable Revenue
    Arrangements 09-13). 09-13 605-25.
  No. 2010-06, Fair Value Measurements and Disclosures 2010-06 2010-06
  Reclassifications
   F-13




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  3.
    Net
    Services Revenue    2008


2009


2010Net base fees for managed service contracts

$
350,085


$
434,281


$
518,243Incentive payments for managed service contracts


38,971



64,033



74,663Other services


9,413



11,878



13,388Total

$
398,469


$
510,192


$
606,294   4.
    Infused
    Management and Technology Expenses  share-based
  5.
    Segments
    and Concentrations  U.S.-based Segment Reporting
       F-14




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  6.
    Due from
    Related Party    7.
    Furniture
    and Equipment    December 31,2009


2010Construction in progress

$
845


$
464Capitalized software


13,575



20,270Computer equipment


3,582



5,750Leasehold improvements


1,770



6,376Other equipment


608



1,017Office furniture


709



2,16321,089



36,040Less accumulated depreciation and amortization


(8,188
)


(14,342
)$
12,901


$
21,698     8.
    Non-Executive
    Employee Loans       F-15




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  9.
    Stockholders
    Equity  Preferred
    Stock
    Conversion
    of Preferred Stock to Common Stock
    Common
    Stock
    Dividends
      Warrants
  Supplemental
    Warrants
   F-16




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
            Protection
    Warrants
        Consulting
    Warrant
   F-17




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
        Year Ended December 31,2008

2009

2010Future dividends





Risk-free interest rate

3.45%

2.91%

Expected volatility

50%

50%

Expected life

6.6 years

5.6 years

   Stock
    Options
      Black-Scholes
  Year Ended December 31,2008

2009

2010Future dividends





Risk-free interest rate

2.8% to 4.0%

1.6% to 3.2%

1.6% to 2.6%Expected volatility

50%

50%

50%Expected life

6.25 years

6.25 years

6.25 yearsForfeitures

3.75% annually

4.25% annually

4.25% annually  F-18




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
            Weighted-AverageWeighted-


RemainingAverage


ContractualExercise


Term


AggregateShares


Price


(in years)


Intrinsic Value(In thousands)Outstanding at January 1, 2008


6,824,955


$
1.97



8.5


$
16,836Granted


1,736,560



10.52Exercised  vested


(14,700
)


1.21Exercised  non-vested


(33,516
)


3.96Cancelled


(44,100
)


1.48Forfeited


(309,680
)


2.32Outstanding at December 31, 2008


8,159,519


$
3.77



7.9


$
85,342Granted


2,757,720



13.37Exercised  vested


(116,620
)


1.80Exercised  non-vested


(4,900
)


0.80Cancelled


(136,220
)


1.33Forfeited


(457,405
)


9.50Outstanding at December 31, 2009


10,202,094


$
6.16



7.5


$
86,074Granted


6,763,529



14.06Exercised  vested


(550,695
)


2.28Cancelled


(107,904
)


10.93Forfeited


(557,620
)


11.76Outstanding at December 31, 2010


15,749,404


$
9.45



7.5


$
107,120Outstanding and vested at December 31, 2010


6,440,139


$
4.08



5.7


$
78,350    F-19




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
      approximately
  10.
    401(k) Retirement
    Plan    11.
    Operating
    Leases       F-20




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
    2011

$
3,1962012


2,5932013


2,4702014


2,466Thereafter


12,751Total

$
23,476   12.
    Income
    Taxes    Current


Deferred


TotalYear ended December 31, 2008:U.S. federal

$
66


$



$
66State and local


2,177







2,177Foreign


21







21$
2,264


$



$
2,264Year ended December 31, 2009U.S. federal

$
4,377


$
(3,206
)

$
1,171State and local


2,095



(339
)


1,756Foreign


137



(98
)


39$
6,609


$
(3,643
)

$
2,966Year ended December 31, 2010U.S. federal

$
10,454


$
(3,340
)

$
7,114State and local


2,881



(283
)


2,598Foreign


157



(140
)


17$
13,492


$
(3,763
)

$
9,729     2008


2009


2010Federal statutory tax rate


34
%


35
%


35
%Increase (reduction) in income tax rate resulting from:State and local income taxes, net of federal benefits


42



6



9Change in the valuation allowance


(15
)


(23
)


India tax holiday


(5
)


(2
)


(2
)Meals and entertainment and other permanent differences


3



1



1Alternative minimum tax


(4
)






(1
)Anti-dilution warrants issued to customers


9







Other, net


1







2Actual tax rate


65
%


17
%


44
%  F-21




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
    2009


2010Deferred tax assets:Alternative minimum tax creditcarryover

$



$
113Net operating loss carryforwards


143



152Employee stock compensation


4,186



10,111Stock warrants


4,159



268Bad debt






579Research and development credit






101Minimum alternative tax






238Other


74



Total gross deferred tax assets


8,562



11,562Less valuation allowance


(139
)


(157
)Net deferred tax assets


8,423



11,405Deferred tax liabilities:Deferred revenue


(2,056
)


(2,388
)Fixed assets and intangibles


(2,816
)


(3,628
)Total deferred tax liabilities


(4,872
)


(6,016
)Net deferred tax asset

$
3,551


$
5,389            F-22




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
    Unrecognized tax benefits as of December 31, 2008

$
248Increases in positions taken in a current period


196Decreases in positions taken in prior period


(139
)Unrecognized tax benefits as of December 31, 2009

$
305Increases in positions taken in a current period


325Increases (decreases) in positions taken in prior period


Unrecognized tax benefits as of December 31, 2010

$
630       13.
    Legal
    Proceedings    14.
    Earnings
    (Loss) Per Common Share  Earnings Per Share
       F-23




---



##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
    Year Ended December 31,2008


2009


2010Net income as reported

$
1,243


$
14,590


$
12,618Less: Distributed earnings available to participating securities


8,148



8,174



Less: Undistributed earnings available to participating
    securities










Numerator for basic earnings (loss) per share - Undistributed
    and distributed earnings available to common shareholders


(6,905
)


6,416



12,618Add: Undistributed earnings allocated to participating securities










Less: Undistributed earnings reallocated to participating
    securities










Numerator for diluted earnings (loss) per share - Undistributed
    and distributed earnings available to common shareholders

$
(6,905
)

$
6,416



12,618Denominator for basic earnings (loss) per share -
    Weighted-average common shares


36,122,470



36,725,194



70,732,791Effect of dilutive securities






7,229,973



23,473,886Denominator for diluted earnings (loss) per share -
    Weighted-average common shares adjusted for dilutive securities


36,122,470



43,955,167



94,206,677Earnings (loss) per share:Basic net income (loss) per share

$
(0.19
)

$
0.17


$
0.18Diluted net income (loss) per share


(0.19
)


0.15



0.13     15.
    Revolving
    Credit Facility and Other Commitments       F-24




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##### Table of Contents



Accretive
    Health, Inc.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  16.
    Quarterly
    Financial Information  (Unaudited)    Quarter EndedMar. 31,


June 30,


Sept. 30,


Dec. 31,


Mar. 31,


June 30,


Sept. 30,


Dec. 31,2009


2009


2009


2009


2010


2010


2010


2010(In thousands, except share and per share data)Net services revenue

$
112,467


$
125,682


$
134,512


$
137,531


$
125,937


$
151,905


$
158,424


$
170,029Operating margin


19,764



22,718



28,627



28,372



23,648



33,891



32,152



38,327Income (loss) from operations


(228
)


2,919



6,984



7,889



1,172



7,434



4,481



9,232Net income (loss)

$
(638
)

$
5,851


$
4,270


$
5,106


$
314


$
3,919


$
2,858


$
5,528Net income applicable to common shareholders(1)

$
(638
)

$
2,647


$
(3,774
)

$
2,318


$
314


$
3,919


$
2,858


$
5,528Net income per common shareBasic

$
(0.02
)

$
0.07


$
(0.11
)

$
0.06


$
0.00


$
0.06


$
0.03


$
0.06Diluted


(0.02
)


0.06



(0.11
)


0.05



0.00



0.04



0.03



0.06     (1)
    
    Prior to our initial public offering in May 2010, we allocated
    net income between common stock and other participating
    securities, primarily preferred stock shares. Therefore, at each
    reporting period, income related to other participating
    securities was excluded from net income available for common
    shareholders. F-25




---



##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description3
.1

Restated Certificate of Incorporation of the Registrant, as
    amended (incorporated by reference to Exhibit 3.2 to
    Amendment No. 4 to the Registration Statement on
    Form S-1
    filed on April 26, 2010)3
.2

Amended and Restated Bylaws of the Registrant (incorporated by
    reference to Exhibit 3.4 to Amendment No. 4 to the
    Registration Statement on
    Form S-1
    filed on April 26, 2010)4
.1

Specimen Certificate evidencing shares of Common Stock
    (incorporated by reference to Exhibit 4.1 to Amendment
    No. 4 to the Registration Statement on
    Form S-1
    filed on April 26, 2010)10
.1*

Amended and Restated Stock Option Plan, as amended (incorporated
    by reference to Exhibit 10.1 to Amendment No. 4 to the
    Registration Statement on
    Form S-1
    filed on April 26, 2010)10
.2*

Form of Acknowledgement of Grant, used to evidence option grants
    under the Amended and Restated Stock Option Plan (incorporated
    by reference to Exhibit 10.2 to the Registration Statement
    on
    Form S-1
    filed on September 29, 2009)10
.3*

Restricted Stock Plan, as amended (incorporated by reference to
    Exhibit 10.3 to Amendment No. 4 to the Registration
    Statement on
    Form S-1
    filed on April 26, 2010)10
.4*

Form of Restricted Stock Award Agreement under the Restricted
    Stock Plan, as amended (incorporated by reference to
    Exhibit 10.4 to the Registration Statement on
    Form S-1
    filed on September 29, 2009)10
.5

Third Amended and Restated Stockholders Agreement, dated
    as of February 22, 2009, among the Registrant and the
    parties named therein, as amended (incorporated by reference to
    Exhibit 10.5 to the Registration Statement on
    Form S-1
    filed on March 9, 2011)10
.6

Form of Share Exchange Agreement, entered into in February 2009,
    with each of Etienne H. Deffarges, Steven N. Kaplan, Gregory N.
    Kazarian, The Shultz 1989 Family Trust, Spiegel Family LLC and
    John T. Staton Declaration of Trust (incorporated by reference
    to Exhibit 10.6 to the Registration Statement on
    Form S-1
    filed on September 29, 2009)10
.7

Lease Agreement, dated as of May 4, 2005, between the
    Registrant and Zeller Management Corporation, as amended by
    First Lease Amendment, dated as of January 30, 2007, and
    Second Lease Amendment, dated as of November 26, 2008
    (incorporated by reference to Exhibit 10.7 to the
    Registration Statement on
    Form S-1
    filed on September 29, 2009)10
.8+

Amended and Restated Master Services Agreement, dated as of
    December 13, 2007, between the Registrant and Ascension
    Health (incorporated by reference to Exhibit 10.8 to
    Amendment No. 4 to the Registration Statement on
    Form S-1
    filed on April 26, 2010)10
.17*

Employment Agreement, dated as of January 2004, between the
    Registrant and Mary A. Tolan, as amended (incorporated by
    reference to Exhibit 10.18 to the Registration Statement on
    Form S-1
    filed on September 29, 2009)10
.18*

Employment Agreement, dated as of June 17, 2005, between
    the Registrant and John T. Staton, as amended (incorporated by
    reference to Exhibit 10.19 to the Registration Statement on
    Form S-1
    filed on September 29, 2009)10
.19*

Offer Letter, dated December 9, 2003, between the
    Registrant and Gregory N. Kazarian, as amended (incorporated by
    reference to Exhibit 10.20 to the Registration Statement on
    Form S-1
    filed on September 29, 2009)10
.20*

Form of Indemnification Agreement, entered into between the
    Registrant and each director and executive officer (incorporated
    by reference to Exhibit 10.20 to Amendment No. 1 to
    the Registration Statement on
    Form S-1
    filed on November 19, 2009)10
.21+

Credit Agreement, dated as of September 30, 2009, between
    the Registrant and Bank of Montreal (incorporated by reference
    to Exhibit 10.21 to Amendment No. 4 to the
    Registration Statement on
    Form S-1
    filed on April 26, 2010)10
.22+

Security Agreement, dated as of September 30, 2009, among
    the Registrant, Bank of Montreal and specified subsidiaries of
    the Registrant (incorporated by reference to Exhibit 10.22
    to Amendment No. 4 to the Registration Statement on
    Form S-1
    filed on April 26, 2010)10
.23*

2010 Stock Incentive Plan (incorporated by reference to
    Exhibit 10.23 to Amendment No. 4 to the Registration
    Statement on
    Form S-1
    filed on April 26, 2010)




---



##### Table of Contents



ExhibitNumber

Description10
.24*

Form of Incentive Stock Option Agreement under the 2010 Stock
    Incentive Plan (incorporated by reference to Exhibit 10.24
    to Amendment No. 4 to the Registration Statement on
    Form S-1
    filed on April 26, 2010)10
.25*

Form of Nonstatutory Stock Option Agreement under the 2010 Stock
    Incentive Plan (incorporated by reference to Exhibit 10.25
    to Amendment No. 4 to the Registration Statement on
    Form S-1
    filed on April 26, 2010)21
.1

Subsidiaries of the Registrant (incorporated by reference to
    Exhibit 21.1 to Amendment No. 4 to the Registration
    Statement on
    Form S-1
    filed on April 26, 2010)23
.1

Consent of Ernst & Young LLP31
.1

Certification of Chief Executive Officer pursuant to
    Rules 13a-14(a)
    and 15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200231
.2

Certification of Chief Financial Officer pursuant to
    Rules 13a-14(a)
    and 15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200232
.1

Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200232
.2

Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     *
    
    Management contract or compensatory plan or arrangement required
    to be filed pursuant to Item 15(b) of
    Form 10-K.+
    
    Confidential treatment requested as to certain portions, which
    portions have been omitted and filed separately with the
    Securities and Exchange Commission.