##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to  .
 COMMISSION FILE NUMBER: 333-117362
 IASIS HEALTHCARE LLC
  DELAWARE
    
    20-1150104(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)DOVER CENTRE117 SEABOARD LANE, BUILDING EFRANKLIN, TENNESSEE
    
    37067(Address of principal executive offices)
    
    (Zip Code)
 (615) 844-2747
 Not Applicable
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o
 o þ




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TABLE OF CONTENTS
 PART I. FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Condensed Consolidated Balance Sheets  March 31, 2009 (Unaudited) and September 30, 2008
    
    
    1Condensed Consolidated Statements of Operations (Unaudited)  Quarters and Six Months
Ended March 31, 2009 and 2008
    
    
    2Condensed Consolidated Statements of Cash Flows (Unaudited)  Six Months Ended March 31,
2009 and 2008
    
    
    3Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    37Item 4. Controls and Procedures
    
    
    38PART II. OTHER INFORMATION
    
    
    38Item 6. Exhibits
    
    
    39Exhibit 31.1Exhibit 31.2
   i




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PART I.
FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 IASIS HEALTHCARE LLC
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In Thousands)
 March 31,
    
    
    September 30,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    121,936
    
    
    $
    80,738Accounts receivable, less allowance for doubtful accounts of
$116,164 and $108,500 at March 31, 2009 and September 30,
2008, respectively
    
    
    252,573
    
    
    
    224,138Inventories
    
    
    49,588
    
    
    
    49,454Deferred income taxes
    
    
    36,555
    
    
    
    38,860Prepaid expenses and other current assets
    
    
    53,559
    
    
    
    60,053Total current assets
    
    
    514,211
    
    
    
    453,243Property and equipment, net
    
    
    1,003,715
    
    
    
    1,004,248Goodwill
    
    
    780,578
    
    
    
    780,599Other intangible assets, net
    
    
    31,500
    
    
    
    33,000Other assets, net
    
    
    33,855
    
    
    
    37,057Total assets
    
    $
    2,363,859
    
    
    $
    2,308,147LIABILITIES AND MEMBERS EQUITYCurrent liabilities:Accounts payable
    
    $
    64,609
    
    
    $
    64,851Salaries and benefits payable
    
    
    36,897
    
    
    
    31,807Accrued interest payable
    
    
    12,523
    
    
    
    12,460Medical claims payable
    
    
    95,772
    
    
    
    97,343Other accrued expenses and other current liabilities
    
    
    65,296
    
    
    
    51,802Current portion of long-term debt and capital lease obligations
    
    
    8,630
    
    
    
    7,623Total current liabilities
    
    
    283,727
    
    
    
    265,886Long-term debt and capital lease obligations
    
    
    1,099,612
    
    
    
    1,106,999Deferred income taxes
    
    
    116,654
    
    
    
    111,092Other long-term liabilities
    
    
    49,541
    
    
    
    44,526Minority interests
    
    
    52,189
    
    
    
    51,875Members equity
    
    
    762,136
    
    
    
    727,769Total liabilities and members equity
    
    $
    2,363,859
    
    
    $
    2,308,147
   1




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IASIS HEALTHCARE LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 (In Thousands)
 Quarter Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Net revenue:Acute care revenue
    
    $
    421,179
    
    
    $
    392,648
    
    
    $
    819,626
    
    
    $
    758,758Premium revenue
    
    
    157,495
    
    
    
    132,172
    
    
    
    320,672
    
    
    
    258,799Total net revenue
    
    
    578,674
    
    
    
    524,820
    
    
    
    1,140,298
    
    
    
    1,017,557Costs and expenses:Salaries and benefits
    
    
    168,372
    
    
    
    160,068
    
    
    
    330,508
    
    
    
    315,634Supplies
    
    
    63,753
    
    
    
    60,965
    
    
    
    123,579
    
    
    
    117,217Medical claims
    
    
    126,598
    
    
    
    110,581
    
    
    
    263,600
    
    
    
    214,461Other operating expenses
    
    
    77,953
    
    
    
    68,624
    
    
    
    157,303
    
    
    
    133,994Provision for bad debts
    
    
    45,167
    
    
    
    42,657
    
    
    
    92,298
    
    
    
    80,806Rentals and leases
    
    
    9,734
    
    
    
    9,294
    
    
    
    19,213
    
    
    
    17,921Interest expense, net
    
    
    15,817
    
    
    
    19,665
    
    
    
    34,795
    
    
    
    40,844Depreciation and amortization
    
    
    24,296
    
    
    
    23,858
    
    
    
    49,292
    
    
    
    46,439Management fees
    
    
    1,250
    
    
    
    1,313
    
    
    
    2,500
    
    
    
    2,500Hurricane-related property damage
    
    
    938
    
    
    
    
    
    
    
    938
    
    
    
    Total costs and expenses
    
    
    533,878
    
    
    
    497,025
    
    
    
    1,074,026
    
    
    
    969,816Earnings from continuing operations before gain (loss) on
disposal of assets, minority interests and income taxes
    
    
    44,796
    
    
    
    27,795
    
    
    
    66,272
    
    
    
    47,741Gain (loss) on disposal of assets, net
    
    
    20
    
    
    
    (2
    )
    
    
    1,313
    
    
    
    60Minority interests
    
    
    (2,977
    )
    
    
    (1,112
    )
    
    
    (4,574
    )
    
    
    (1,870
    )Earnings from continuing operations before income taxes
    
    
    41,839
    
    
    
    26,681
    
    
    
    63,011
    
    
    
    45,931Income tax expense
    
    
    16,449
    
    
    
    10,630
    
    
    
    25,260
    
    
    
    18,417Net earnings from continuing operations
    
    
    25,390
    
    
    
    16,051
    
    
    
    37,751
    
    
    
    27,514Earnings (loss) from discontinued operations, net of income taxes
    
    
    211
    
    
    
    (1,335
    )
    
    
    (500
    )
    
    
    (2,083
    )Net earnings
    
    $
    25,601
    
    
    $
    14,716
    
    
    $
    37,251
    
    
    $
    25,431
   2




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IASIS HEALTHCARE LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 (In Thousands)
 Six Months EndedMarch 31,2009
    
    
    2008Cash flows from operating activitiesNet earnings
    
    $
    37,251
    
    
    $
    25,431Adjustments to reconcile net earnings to net cash provided by operating activities:Loss from discontinued operations
    
    
    500
    
    
    
    2,083Depreciation and amortization
    
    
    49,292
    
    
    
    46,439Amortization of loan costs
    
    
    1,498
    
    
    
    1,446Minority interests
    
    
    4,574
    
    
    
    1,870Deferred income taxes
    
    
    9,530
    
    
    
    14,211Gain on disposal of assets, net
    
    
    (1,313
    )
    
    
    (60
    )Hurricane-related property damage
    
    
    938
    
    
    
    Stock compensation costs
    
    
    279
    
    
    
    Changes in operating assets and liabilities, net of the effect of acquisition and
dispositions:Accounts receivable, net
    
    
    (29,695
    )
    
    
    (3,312
    )Inventories, prepaid expenses and other current assets
    
    
    6,383
    
    
    
    (12,304
    )Accounts payable, other accrued expenses and other accrued liabilities
    
    
    14,170
    
    
    
    (43,165
    )Net cash provided by operating activities  continuing operations
    
    
    93,407
    
    
    
    32,639Net cash provided by (used in) operating activities  discontinued operations
    
    
    1,124
    
    
    
    (2,111
    )Net cash provided by operating activities
    
    
    94,531
    
    
    
    30,528Cash flows from investing activitiesPurchases of property and equipment, net
    
    
    (49,272
    )
    
    
    (56,799
    )Cash paid for acquisition, net
    
    
    
    
    
    
    (16,822
    )Proceeds from sale of assets
    
    
    4,973
    
    
    
    353Change in other assets, net
    
    
    1,595
    
    
    
    1,914Net cash used in investing activities  continuing operations
    
    
    (42,704
    )
    
    
    (71,354
    )Net cash provided by (used in) investing activities  discontinued operations
    
    
    10
    
    
    
    (901
    )Net cash used in investing activities
    
    
    (42,694
    )
    
    
    (72,255
    )Cash flows from financing activitiesProceeds from debt borrowings
    
    
    
    
    
    
    337,200Payment of debt and capital lease obligations
    
    
    (6,379
    )
    
    
    (302,530
    )Distribution of minority interests
    
    
    (2,919
    )
    
    
    (2,779
    )Proceeds
received from (costs paid for) sale of partnership interests, net
    
    
    (1,341
    )
    
    
    15,752Net cash provided by (used in) financing activities  continuing operations
    
    
    (10,639
    )
    
    
    47,643Net cash used in financing activities  discontinued operations
    
    
    
    
    
    
    (255
    )Net cash provided by (used in) financing activities
    
    
    (10,639
    )
    
    
    47,388Change in cash and cash equivalents
    
    
    41,198
    
    
    
    5,661Cash and cash equivalents at beginning of period
    
    
    80,738
    
    
    
    Cash and cash equivalents at end of period
    
    $
    121,936
    
    
    $
    5,661Supplemental disclosure of cash flow informationCash paid for interest
    
    $
    33,969
    
    
    $
    43,082Cash
received for income taxes, net
    
    $
    (566
    )
    
    $
    (4,913
    )
   3




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IASIS HEALTHCARE LLC
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 1. ORGANIZATION AND BASIS OF PRESENTATION
   
    
    Salt Lake City, Utah;
    
    Phoenix, Arizona;
    
    Tampa-St. Petersburg, Florida;
    
    three cities in Texas, including San Antonio;
    
    Las Vegas, Nevada; and
    
    West Monroe, Louisiana.
    Principles of Consolidation
  Use of Estimates
   4




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Reclassifications
  General and Administrative
  2. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
  March 31,
    
    
    September 30,2009
    
    
    2008Senior secured credit facilities
    
    $
    624,651
    
    
    $
    629,818Senior subordinated notes
    
    
    475,000
    
    
    
    475,000Capital leases and other obligations
    
    
    8,591
    
    
    
    9,8041,108,242
    
    
    
    1,114,622Less current maturities
    
    
    8,630
    
    
    
    7,623$
    1,099,612
    
    
    $
    1,106,999
 Senior Secured Credit Facilities
     5




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    8 3 / 4 % Senior Subordinated Notes
 3 4 3 4 3 4 3 4 3 4 3 4
 $300.0 Million Holdings Senior Paid-in-Kind Loans
  3. INTEREST RATE SWAPS
  Total NotionalDate Range
    
    Amounts(in thousands)March 2, 2009 to February 28, 2011
    
    $
    225,000March 2, 2009 to February 29, 2012
    
    
    200,000
  6




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Accounting for Derivative Instruments and
Hedging Activities Disclosure About Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133
 Fair Value
Measurements
   4. DISCONTINUED OPERATIONS
 Accounting for the Impairment or
Disposal of Long-Lived Asset
 Quarter Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Total net revenue
    
    $
    98
    
    
    $
    19,259
    
    
    $
    326
    
    
    $
    39,617Operating expenses
    
    
    (239
    )
    
    
    21,382
    
    
    
    1,124
    
    
    
    42,928Income tax expense (benefit)
    
    
    126
    
    
    
    (788
    )
    
    
    (298
    )
    
    
    (1,228
    )Earnings (loss) from
discontinued operations,
net of income taxes
    
    $
    211
    
    
    $
    (1,335
    )
    
    $
    (500
    )
    
    $
    (2,083
    )
  7




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   5.
OTHER COMPREHENSIVE LOSS
  Balance at September 30, 2008
    
    $
    Change in fair value of interest rate swaps, net of income tax effect of $1,897
    
    
    (3,172
    )Balance at March 31, 2009
    
    $
    (3,172
    )
 6. COMMITMENTS AND CONTINGENCIES
 Net Revenue
  Professional, General and Workers Compensation Liability Risks
    8




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Health Choice
   Capital Expenditure Commitments
  Minimum Revenue Guarantees
   Acquisitions
   9




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Other
 qui tam qui tam qui tam qui tam
  7. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 Business Combinations Business
Combinations
 Noncontrolling Interests in Consolidated
Financial Statements
  10




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 8. SEGMENT AND GEOGRAPHIC INFORMATION
  For the Quarter Ended March 31, 2009Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    421,179
    
    
    $
    
    
    
    $
    
    
    
    $
    421,179Premium revenue
    
    
    
    
    
    
    157,495
    
    
    
    
    
    
    
    157,495Revenue between segments
    
    
    2,312
    
    
    
    
    
    
    
    (2,312
    )
    
    
    Net revenue
    
    
    423,491
    
    
    
    157,495
    
    
    
    (2,312
    )
    
    
    578,674Salaries and benefits
    
    
    163,423
    
    
    
    4,949
    
    
    
    
    
    
    
    168,372Supplies
    
    
    63,670
    
    
    
    83
    
    
    
    
    
    
    
    63,753Medical claims
    
    
    
    
    
    
    128,910
    
    
    
    (2,312
    )
    
    
    126,598Other operating expenses
    
    
    70,611
    
    
    
    7,342
    
    
    
    
    
    
    
    77,953Provision for bad debts
    
    
    45,167
    
    
    
    
    
    
    
    
    
    
    
    45,167Rentals and leases
    
    
    9,302
    
    
    
    432
    
    
    
    
    
    
    
    9,734Hurricane-related property damage
    
    
    938
    
    
    
    
    
    
    
    
    
    
    
    938Adjusted EBITDA(1)
    
    
    70,380
    
    
    
    15,779
    
    
    
    
    
    
    
    86,159Interest expense, net
    
    
    15,817
    
    
    
    
    
    
    
    
    
    
    
    15,817Depreciation and amortization
    
    
    23,415
    
    
    
    881
    
    
    
    
    
    
    
    24,296Management fees
    
    
    1,250
    
    
    
    
    
    
    
    
    
    
    
    1,250Earnings from continuing
operations before gain on
disposal of assets, minority
interests and income taxes
    
    
    29,898
    
    
    
    14,898
    
    
    
    
    
    
    
    44,796Gain on disposal of assets, net
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    20Minority interests
    
    
    (2,977
    )
    
    
    
    
    
    
    
    
    
    
    (2,977
    )Earnings from continuing
operations before income
taxes
    
    $
    26,941
    
    
    $
    14,898
    
    
    $
    
    
    
    $
    41,839
 For the Quarter Ended March 31, 2008Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    392,648
    
    
    $
    
    
    
    $
    
    
    
    $
    392,648Premium revenue
    
    
    
    
    
    
    132,172
    
    
    
    
    
    
    
    132,172Revenue between segments
    
    
    2,348
    
    
    
    
    
    
    
    (2,348
    )
    
    
    Net revenue
    
    
    394,996
    
    
    
    132,172
    
    
    
    (2,348
    )
    
    
    524,820Salaries and benefits
    
    
    155,735
    
    
    
    4,333
    
    
    
    
    
    
    
    160,068Supplies
    
    
    60,921
    
    
    
    44
    
    
    
    
    
    
    
    60,965Medical claims
    
    
    
    
    
    
    112,929
    
    
    
    (2,348
    )
    
    
    110,581Other operating expenses
    
    
    64,286
    
    
    
    4,338
    
    
    
    
    
    
    
    68,624Provision for bad debts
    
    
    42,657
    
    
    
    
    
    
    
    
    
    
    
    42,657Rentals and leases
    
    
    9,005
    
    
    
    289
    
    
    
    
    
    
    
    9,294Adjusted EBITDA(1)
    
    
    62,392
    
    
    
    10,239
    
    
    
    
    
    
    
    72,631Interest expense, net
    
    
    19,665
    
    
    
    
    
    
    
    
    
    
    
    19,665Depreciation and amortization
    
    
    22,959
    
    
    
    899
    
    
    
    
    
    
    
    23,858Management fees
    
    
    1,313
    
    
    
    
    
    
    
    
    
    
    
    1,313Earnings from continuing
operations before loss on
disposal of assets, minority
interests and income taxes
    
    
    18,455
    
    
    
    9,340
    
    
    
    
    
    
    
    27,795Loss on disposal of assets, net
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )Minority interests
    
    
    (1,112
    )
    
    
    
    
    
    
    
    
    
    
    (1,112
    )Earnings from continuing
operations before income
taxes
    
    $
    17,341
    
    
    $
    9,340
    
    
    $
    
    
    
    $
    26,681
  11




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (1)
    
    Adjusted EBITDA represents net earnings from continuing operations before interest expense,
income tax expense, depreciation and amortization, gain (loss) on disposal of assets, minority
interests and management fees. Management fees represent monitoring and advisory fees paid to
TPG, the Companys majority financial sponsor, and certain other members of IASIS Investment
LLC, majority shareholder of IAS. Management routinely calculates and communicates adjusted
EBITDA and believes that it is useful to investors because it is commonly used as an
analytical indicator within the healthcare industry to evaluate hospital performance, allocate
resources and measure leverage capacity and debt service ability. In addition, the Company
uses adjusted EBITDA as a measure of performance for its business segments and for incentive
compensation purposes. Adjusted EBITDA should not be considered as a measure of financial
performance under GAAP, and the items excluded from adjusted EBITDA are significant components
in understanding and assessing financial performance. Adjusted EBITDA should not be considered
in isolation or as an alternative to net earnings, cash flows generated by operating,
investing, or financing activities or other financial statement data presented in the
condensed consolidated financial statements as an indicator of financial performance or
liquidity. Adjusted EBITDA, as presented, differs from what is defined under the Companys
senior secured credit facilities and may not be comparable to similarly titled measures of
other companies. For the Six Months Ended March 31, 2009Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    819,626
    
    
    $
    
    
    
    $
    
    
    
    $
    819,626Premium revenue
    
    
    
    
    
    
    320,672
    
    
    
    
    
    
    
    320,672Revenue between segments
    
    
    4,009
    
    
    
    
    
    
    
    (4,009
    )
    
    
    Net revenue
    
    
    823,635
    
    
    
    320,672
    
    
    
    (4,009
    )
    
    
    1,140,298Salaries and benefits
    
    
    320,655
    
    
    
    9,853
    
    
    
    
    
    
    
    330,508Supplies
    
    
    123,411
    
    
    
    168
    
    
    
    
    
    
    
    123,579Medical claims
    
    
    
    
    
    
    267,609
    
    
    
    (4,009
    )
    
    
    263,600Other operating expenses
    
    
    144,396
    
    
    
    12,907
    
    
    
    
    
    
    
    157,303Provision for bad debts
    
    
    92,298
    
    
    
    
    
    
    
    
    
    
    
    92,298Rentals and leases
    
    
    18,403
    
    
    
    810
    
    
    
    
    
    
    
    19,213Hurricane-related property damage
    
    
    938
    
    
    
    
    
    
    
    
    
    
    
    938Adjusted EBITDA(1)
    
    
    123,534
    
    
    
    29,325
    
    
    
    
    
    
    
    152,859Interest expense, net
    
    
    34,795
    
    
    
    
    
    
    
    
    
    
    
    34,795Depreciation and amortization
    
    
    47,540
    
    
    
    1,752
    
    
    
    
    
    
    
    49,292Management fees
    
    
    2,500
    
    
    
    
    
    
    
    
    
    
    
    2,500Earnings from continuing
operations before gain on
disposal of assets, minority
interests and income taxes
    
    
    38,699
    
    
    
    27,573
    
    
    
    
    
    
    
    66,272Gain on disposal of assets, net
    
    
    1,313
    
    
    
    
    
    
    
    
    
    
    
    1,313Minority interests
    
    
    (4,574
    )
    
    
    
    
    
    
    
    
    
    
    (4,574
    )Earnings from continuing
operations before income
taxes
    
    $
    35,438
    
    
    $
    27,573
    
    
    $
    
    
    
    $
    63,011Segment assets
    
    $
    2,156,408
    
    
    $
    207,451
    
    
    
    
    
    
    $
    2,363,859Capital expenditures 
continuing operations
    
    $
    48,486
    
    
    $
    786
    
    
    
    
    
    
    $
    49,272Goodwill
    
    $
    774,821
    
    
    $
    5,757
    
    
    
    
    
    
    $
    780,578
  12




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##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 For the Six Months Ended March 31, 2008Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    758,758
    
    
    $
    
    
    
    $
    
    
    
    $
    758,758Premium revenue
    
    
    
    
    
    
    258,799
    
    
    
    
    
    
    
    258,799Revenue between segments
    
    
    4,678
    
    
    
    
    
    
    
    (4,678
    )
    
    
    Net revenue
    
    
    763,436
    
    
    
    258,799
    
    
    
    (4,678
    )
    
    
    1,017,557Salaries and benefits
    
    
    307,258
    
    
    
    8,376
    
    
    
    
    
    
    
    315,634Supplies
    
    
    117,096
    
    
    
    121
    
    
    
    
    
    
    
    117,217Medical claims
    
    
    
    
    
    
    219,139
    
    
    
    (4,678
    )
    
    
    214,461Other operating expenses
    
    
    125,184
    
    
    
    8,810
    
    
    
    
    
    
    
    133,994Provision for bad debts
    
    
    80,806
    
    
    
    
    
    
    
    
    
    
    
    80,806Rentals and leases
    
    
    17,347
    
    
    
    574
    
    
    
    
    
    
    
    17,921Adjusted EBITDA(1)
    
    
    115,745
    
    
    
    21,779
    
    
    
    
    
    
    
    137,524Interest expense, net
    
    
    40,844
    
    
    
    
    
    
    
    
    
    
    
    40,844Depreciation and amortization
    
    
    44,645
    
    
    
    1,794
    
    
    
    
    
    
    
    46,439Management fees
    
    
    2,500
    
    
    
    
    
    
    
    
    
    
    
    2,500Earnings from continuing
operations before gain on
disposal of assets, minority
interests and income taxes
    
    
    27,756
    
    
    
    19,985
    
    
    
    
    
    
    
    47,741Gain on disposal of assets, net
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    60Minority interests
    
    
    (1,870
    )
    
    
    
    
    
    
    
    
    
    
    (1,870
    )Earnings from continuing
operations before income
taxes
    
    $
    25,946
    
    
    $
    19,985
    
    
    $
    
    
    
    $
    45,931Segment assets
    
    $
    2,076,715
    
    
    $
    164,426
    
    
    
    
    
    
    $
    2,241,141Capital expenditures 
continuing operations
    
    $
    56,622
    
    
    $
    177
    
    
    
    
    
    
    $
    56,799Goodwill
    
    $
    764,448
    
    
    $
    5,757
    
    
    
    
    
    
    $
    770,205
 (1)
    
    Adjusted EBITDA represents net earnings from continuing operations before interest expense,
income tax expense, depreciation and amortization, gain on disposal of assets, minority
interests and management fees. Management fees represent monitoring and advisory fees paid to
TPG, the Companys majority financial sponsor, and certain other members of IASIS Investment
LLC, majority shareholder of IAS. Management routinely calculates and communicates adjusted
EBITDA and believes that it is useful to investors because it is commonly used as an
analytical indicator within the healthcare industry to evaluate hospital performance, allocate
resources and measure leverage capacity and debt service ability. In addition, the Company
uses adjusted EBITDA as a measure of performance for its business segments and for incentive
compensation purposes. Adjusted EBITDA should not be considered as a measure of financial
performance under GAAP, and the items excluded from adjusted EBITDA are significant components
in understanding and assessing financial performance. Adjusted EBITDA should not be considered
in isolation or as an alternative to net earnings, cash flows generated by operating,
investing, or financing activities or other financial statement data presented in the
condensed consolidated financial statements as an indicator of financial performance or
liquidity. Adjusted EBITDA, as presented, differs from what is defined under the Companys
senior secured credit facilities and may not be comparable to similarly titled measures of
other companies. 9. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
 3 4
   13




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##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (in thousands)
 Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    120,703
    
    
    $
    1,233
    
    
    $
    
    
    
    $
    121,936Accounts receivable, net
    
    
    
    
    
    
    102,346
    
    
    
    150,227
    
    
    
    
    
    
    
    252,573Inventories
    
    
    
    
    
    
    21,177
    
    
    
    28,411
    
    
    
    
    
    
    
    49,588Deferred income taxes
    
    
    36,555
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,555Prepaid expenses and other
current assets
    
    
    
    
    
    
    22,137
    
    
    
    31,422
    
    
    
    
    
    
    
    53,559Total current assets
    
    
    36,555
    
    
    
    266,363
    
    
    
    211,293
    
    
    
    
    
    
    
    514,211Property and equipment, net
    
    
    
    
    
    
    358,459
    
    
    
    645,256
    
    
    
    
    
    
    
    1,003,715Intercompany
    
    
    
    
    
    
    (174,794
    )
    
    
    174,794
    
    
    
    
    
    
    
    Net investment in and advances
to subsidiaries
    
    
    1,720,788
    
    
    
    
    
    
    
    
    
    
    
    (1,720,788
    )
    
    
    Goodwill
    
    
    18,569
    
    
    
    128,865
    
    
    
    633,144
    
    
    
    
    
    
    
    780,578Other intangible assets, net
    
    
    
    
    
    
    
    
    
    
    31,500
    
    
    
    
    
    
    
    31,500Other assets, net
    
    
    16,712
    
    
    
    12,148
    
    
    
    4,995
    
    
    
    
    
    
    
    33,855Total assets
    
    $
    1,792,624
    
    
    $
    591,041
    
    
    $
    1,700,982
    
    
    $
    (1,720,788
    )
    
    $
    2,363,859Liabilities and
Members EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    27,079
    
    
    $
    37,530
    
    
    $
    
    
    
    $
    64,609Salaries and benefits payable
    
    
    
    
    
    
    20,769
    
    
    
    16,128
    
    
    
    
    
    
    
    36,897Accrued interest payable
    
    
    12,523
    
    
    
    (3,239
    )
    
    
    3,239
    
    
    
    
    
    
    
    12,523Medical claims payable
    
    
    
    
    
    
    
    
    
    
    95,772
    
    
    
    
    
    
    
    95,772Other accrued expenses and
other current liabilities
    
    
    
    
    
    
    53,328
    
    
    
    11,968
    
    
    
    
    
    
    
    65,296Current portion of long-term
debt and capital lease
obligations
    
    
    7,507
    
    
    
    1,123
    
    
    
    20,122
    
    
    
    (20,122
    )
    
    
    8,630Total current liabilities
    
    
    20,030
    
    
    
    99,060
    
    
    
    184,759
    
    
    
    (20,122
    )
    
    
    283,727Long-term debt and capital
lease obligations
    
    
    1,093,761
    
    
    
    5,851
    
    
    
    574,533
    
    
    
    (574,533
    )
    
    
    1,099,612Deferred income taxes
    
    
    116,654
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116,654Other long-term liabilities
    
    
    
    
    
    
    48,891
    
    
    
    650
    
    
    
    
    
    
    
    49,541Minority interests
    
    
    
    
    
    
    52,189
    
    
    
    
    
    
    
    
    
    
    
    52,189Total liabilities
    
    
    1,230,445
    
    
    
    205,991
    
    
    
    759,942
    
    
    
    (594,655
    )
    
    
    1,601,723Members equity
    
    
    562,179
    
    
    
    385,050
    
    
    
    941,040
    
    
    
    (1,126,133
    )
    
    
    762,136Total liabilities and
members equity
    
    $
    1,792,624
    
    
    $
    591,041
    
    
    $
    1,700,982
    
    
    $
    (1,720,788
    )
    
    $
    2,363,859
  14




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##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (in thousands)
 Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    80,336
    
    
    $
    402
    
    
    $
    
    
    
    $
    80,738Accounts receivable, net
    
    
    
    
    
    
    101,455
    
    
    
    122,683
    
    
    
    
    
    
    
    224,138Inventories
    
    
    
    
    
    
    22,236
    
    
    
    27,218
    
    
    
    
    
    
    
    49,454Deferred income taxes
    
    
    38,860
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,860Prepaid expenses and other
current assets
    
    
    
    
    
    
    19,703
    
    
    
    40,350
    
    
    
    
    
    
    
    60,053Total current assets
    
    
    38,860
    
    
    
    223,730
    
    
    
    190,653
    
    
    
    
    
    
    
    453,243Property and equipment, net
    
    
    
    
    
    
    366,193
    
    
    
    638,055
    
    
    
    
    
    
    
    1,004,248Intercompany
    
    
    
    
    
    
    (186,907
    )
    
    
    186,907
    
    
    
    
    
    
    
    Net investment in and advances
to subsidiaries
    
    
    1,717,907
    
    
    
    
    
    
    
    
    
    
    
    (1,717,907
    )
    
    
    Goodwill
    
    
    18,609
    
    
    
    128,991
    
    
    
    632,999
    
    
    
    
    
    
    
    780,599Other intangible assets, net
    
    
    
    
    
    
    
    
    
    
    33,000
    
    
    
    
    
    
    
    33,000Other assets, net
    
    
    18,210
    
    
    
    12,944
    
    
    
    5,903
    
    
    
    
    
    
    
    37,057Total assets
    
    $
    1,793,586
    
    
    $
    544,951
    
    
    $
    1,687,517
    
    
    $
    (1,717,907
    )
    
    $
    2,308,147Liabilities and
Members EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    25,051
    
    
    $
    39,800
    
    
    $
    
    
    
    $
    64,851Salaries and benefits payable
    
    
    
    
    
    
    16,905
    
    
    
    14,902
    
    
    
    
    
    
    
    31,807Accrued interest payable
    
    
    12,460
    
    
    
    (3,242
    )
    
    
    3,242
    
    
    
    
    
    
    
    12,460Medical claims payable
    
    
    
    
    
    
    
    
    
    
    97,343
    
    
    
    
    
    
    
    97,343Other accrued expenses and
other current liabilities
    
    
    
    
    
    
    38,621
    
    
    
    13,181
    
    
    
    
    
    
    
    51,802Current portion of long-term
debt and capital lease
obligations
    
    
    6,042
    
    
    
    1,581
    
    
    
    15,255
    
    
    
    (15,255
    )
    
    
    7,623Total current liabilities
    
    
    18,502
    
    
    
    78,916
    
    
    
    183,723
    
    
    
    (15,255
    )
    
    
    265,886Long-term debt and capital
lease obligations
    
    
    1,098,928
    
    
    
    8,071
    
    
    
    588,172
    
    
    
    (588,172
    )
    
    
    1,106,999Deferred income taxes
    
    
    111,092
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111,092Other long-term liabilities
    
    
    
    
    
    
    43,871
    
    
    
    655
    
    
    
    
    
    
    
    44,526Minority interests
    
    
    
    
    
    
    51,875
    
    
    
    
    
    
    
    
    
    
    
    51,875Total liabilities
    
    
    1,228,522
    
    
    
    182,733
    
    
    
    772,550
    
    
    
    (603,427
    )
    
    
    1,580,378Members equity
    
    
    565,064
    
    
    
    362,218
    
    
    
    914,967
    
    
    
    (1,114,480
    )
    
    
    727,769Total liabilities and
members equity
    
    $
    1,793,586
    
    
    $
    544,951
    
    
    $
    1,687,517
    
    
    $
    (1,717,907
    )
    
    $
    2,308,147
  15




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##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (in thousands)
 Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet revenue:Acute care revenue
    
    $
    
    
    
    $
    163,677
    
    
    $
    259,814
    
    
    $
    (2,312
    )
    
    $
    421,179Premium revenue
    
    
    
    
    
    
    
    
    
    
    157,495
    
    
    
    
    
    
    
    157,495Total net revenue
    
    
    
    
    
    
    163,677
    
    
    
    417,309
    
    
    
    (2,312
    )
    
    
    578,674Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    84,594
    
    
    
    83,778
    
    
    
    
    
    
    
    168,372Supplies
    
    
    
    
    
    
    26,497
    
    
    
    37,256
    
    
    
    
    
    
    
    63,753Medical claims
    
    
    
    
    
    
    
    
    
    
    128,910
    
    
    
    (2,312
    )
    
    
    126,598Other operating expenses
    
    
    
    
    
    
    26,497
    
    
    
    51,456
    
    
    
    
    
    
    
    77,953Provision for bad debts
    
    
    
    
    
    
    21,660
    
    
    
    23,507
    
    
    
    
    
    
    
    45,167Rentals and leases
    
    
    
    
    
    
    3,970
    
    
    
    5,764
    
    
    
    
    
    
    
    9,734Interest expense, net
    
    
    15,817
    
    
    
    
    
    
    
    9,929
    
    
    
    (9,929
    )
    
    
    15,817Depreciation and
amortization
    
    
    
    
    
    
    10,495
    
    
    
    13,801
    
    
    
    
    
    
    
    24,296Management fees
    
    
    1,250
    
    
    
    (5,597
    )
    
    
    5,597
    
    
    
    
    
    
    
    1,250Hurricane-related property
damage
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    938Equity in earnings of
affiliates
    
    
    (49,314
    )
    
    
    
    
    
    
    
    
    
    
    49,314
    
    
    
    Total costs and expenses
    
    
    (32,247
    )
    
    
    168,116
    
    
    
    360,936
    
    
    
    37,073
    
    
    
    533,878Earnings (loss) from
continuing operations before
gain (loss) on disposal of assets,
minority interests and income
taxes
    
    
    32,247
    
    
    
    (4,439
    )
    
    
    56,373
    
    
    
    (39,385
    )
    
    
    44,796Gain (loss) on disposal of
assets, net
    
    
    
    
    
    
    21
    
    
    
    (1
    )
    
    
    
    
    
    
    20Minority interests
    
    
    
    
    
    
    (2,977
    )
    
    
    
    
    
    
    
    
    
    
    (2,977
    )Earnings (loss) from
continuing operations before
income taxes
    
    
    32,247
    
    
    
    (7,395
    )
    
    
    56,372
    
    
    
    (39,385
    )
    
    
    41,839Income tax expense
    
    
    16,449
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,449Net earnings (loss) from
continuing operations
    
    
    15,798
    
    
    
    (7,395
    )
    
    
    56,372
    
    
    
    (39,385
    )
    
    
    25,390Earnings (loss) from
discontinued operations, net
of income taxes
    
    
    (126
    )
    
    
    336
    
    
    
    1
    
    
    
    
    
    
    
    211Net earnings (loss)
    
    $
    15,672
    
    
    $
    (7,059
    )
    
    $
    56,373
    
    
    $
    (39,385
    )
    
    $
    25,601
  16




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##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (in thousands)
 Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet revenue:Acute care revenue
    
    $
    
    
    
    $
    169,461
    
    
    $
    225,535
    
    
    $
    (2,348
    )
    
    $
    392,648Premium revenue
    
    
    
    
    
    
    
    
    
    
    132,172
    
    
    
    
    
    
    
    132,172Total net revenue
    
    
    
    
    
    
    169,461
    
    
    
    357,707
    
    
    
    (2,348
    )
    
    
    524,820Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    80,740
    
    
    
    79,328
    
    
    
    
    
    
    
    160,068Supplies
    
    
    
    
    
    
    29,210
    
    
    
    31,755
    
    
    
    
    
    
    
    60,965Medical claims
    
    
    
    
    
    
    
    
    
    
    112,929
    
    
    
    (2,348
    )
    
    
    110,581Other operating expenses
    
    
    
    
    
    
    25,646
    
    
    
    42,978
    
    
    
    
    
    
    
    68,624Provision for bad debts
    
    
    
    
    
    
    23,727
    
    
    
    18,930
    
    
    
    
    
    
    
    42,657Rentals and leases
    
    
    
    
    
    
    3,851
    
    
    
    5,443
    
    
    
    
    
    
    
    9,294Interest expense, net
    
    
    19,665
    
    
    
    
    
    
    
    13,495
    
    
    
    (13,495
    )
    
    
    19,665Depreciation and
amortization
    
    
    
    
    
    
    10,795
    
    
    
    13,063
    
    
    
    
    
    
    
    23,858Management fees
    
    
    1,313
    
    
    
    (4,886
    )
    
    
    4,886
    
    
    
    
    
    
    
    1,313Equity in earnings of
affiliates
    
    
    (32,430
    )
    
    
    
    
    
    
    
    
    
    
    32,430
    
    
    
    Total costs and expenses
    
    
    (11,452
    )
    
    
    169,083
    
    
    
    322,807
    
    
    
    16,587
    
    
    
    497,025Earnings (loss) from
continuing operations before
gain (loss) on disposal of
assets, minority interests and
income taxes
    
    
    11,452
    
    
    
    378
    
    
    
    34,900
    
    
    
    (18,935
    )
    
    
    27,795Gain (loss) on disposal of
assets, net
    
    
    
    
    
    
    4
    
    
    
    (6
    )
    
    
    
    
    
    
    (2
    )Minority interests
    
    
    
    
    
    
    (1,112
    )
    
    
    
    
    
    
    
    
    
    
    (1,112
    )Earnings (loss) from
continuing operations before
income taxes
    
    
    11,452
    
    
    
    (730
    )
    
    
    34,894
    
    
    
    (18,935
    )
    
    
    26,681Income tax expense
    
    
    10,630
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,630Net earnings (loss) from
continuing operations
    
    
    822
    
    
    
    (730
    )
    
    
    34,894
    
    
    
    (18,935
    )
    
    
    16,051Earnings (loss) from
discontinued operations, net
of income taxes
    
    
    399
    
    
    
    (711
    )
    
    
    (1,023
    )
    
    
    
    
    
    
    (1,335
    )Net earnings (loss)
    
    $
    1,221
    
    
    $
    (1,441
    )
    
    $
    33,871
    
    
    $
    (18,935
    )
    
    $
    14,716
  17




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (in thousands)
 Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet revenue:Acute care revenue
    
    $
    
    
    
    $
    325,435
    
    
    $
    498,200
    
    
    $
    (4,009
    )
    
    $
    819,626Premium revenue
    
    
    
    
    
    
    
    
    
    
    320,672
    
    
    
    
    
    
    
    320,672Total net revenue
    
    
    
    
    
    
    325,435
    
    
    
    818,872
    
    
    
    (4,009
    )
    
    
    1,140,298Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    165,188
    
    
    
    165,320
    
    
    
    
    
    
    
    330,508Supplies
    
    
    
    
    
    
    51,571
    
    
    
    72,008
    
    
    
    
    
    
    
    123,579Medical claims
    
    
    
    
    
    
    
    
    
    
    267,609
    
    
    
    (4,009
    )
    
    
    263,600Other operating expenses
    
    
    
    
    
    
    55,595
    
    
    
    101,708
    
    
    
    
    
    
    
    157,303Provision for bad debts
    
    
    
    
    
    
    45,740
    
    
    
    46,558
    
    
    
    
    
    
    
    92,298Rentals and leases
    
    
    
    
    
    
    8,017
    
    
    
    11,196
    
    
    
    
    
    
    
    19,213Interest expense, net
    
    
    34,795
    
    
    
    
    
    
    
    23,773
    
    
    
    (23,773
    )
    
    
    34,795Depreciation and
amortization
    
    
    
    
    
    
    21,763
    
    
    
    27,529
    
    
    
    
    
    
    
    49,292Management fees
    
    
    2,500
    
    
    
    (10,736
    )
    
    
    10,736
    
    
    
    
    
    
    
    2,500Hurricane-related property
damage
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    938Equity in earnings of
affiliates
    
    
    (75,735
    )
    
    
    
    
    
    
    
    
    
    
    75,735
    
    
    
    Total costs and expenses
    
    
    (38,440
    )
    
    
    337,138
    
    
    
    727,375
    
    
    
    47,953
    
    
    
    1,074,026Earnings (loss) from
continuing operations before
gain on disposal of assets,
minority interests and income
taxes
    
    
    38,440
    
    
    
    (11,703
    )
    
    
    91,497
    
    
    
    (51,962
    )
    
    
    66,272Gain on disposal of assets, net
    
    
    
    
    
    
    1,292
    
    
    
    21
    
    
    
    
    
    
    
    1,313Minority interests
    
    
    
    
    
    
    (4,574
    )
    
    
    
    
    
    
    
    
    
    
    (4,574
    )Earnings (loss) from
continuing operations before
income taxes
    
    
    38,440
    
    
    
    (14,985
    )
    
    
    91,518
    
    
    
    (51,962
    )
    
    
    63,011Income tax expense
    
    
    25,260
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,260Net earnings (loss) from
continuing operations
    
    
    13,180
    
    
    
    (14,985
    )
    
    
    91,518
    
    
    
    (51,962
    )
    
    
    37,751Earnings (loss) from
discontinued operations, net
of income taxes
    
    
    298
    
    
    
    (814
    )
    
    
    16
    
    
    
    
    
    
    
    (500
    )Net earnings (loss)
    
    $
    13,478
    
    
    $
    (15,799
    )
    
    $
    91,534
    
    
    $
    (51,962
    )
    
    $
    37,251
  18




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##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (in thousands)
 Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet revenue:Acute care revenue
    
    $
    
    
    
    $
    329,396
    
    
    $
    434,040
    
    
    $
    (4,678
    )
    
    $
    758,758Premium revenue
    
    
    
    
    
    
    
    
    
    
    258,799
    
    
    
    
    
    
    
    258,799Total net revenue
    
    
    
    
    
    
    329,396
    
    
    
    692,839
    
    
    
    (4,678
    )
    
    
    1,017,557Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    160,310
    
    
    
    155,324
    
    
    
    
    
    
    
    315,634Supplies
    
    
    
    
    
    
    56,639
    
    
    
    60,578
    
    
    
    
    
    
    
    117,217Medical claims
    
    
    
    
    
    
    
    
    
    
    219,139
    
    
    
    (4,678
    )
    
    
    214,461Other operating expenses
    
    
    
    
    
    
    52,569
    
    
    
    81,425
    
    
    
    
    
    
    
    133,994Provision for bad debts
    
    
    
    
    
    
    42,702
    
    
    
    38,104
    
    
    
    
    
    
    
    80,806Rentals and leases
    
    
    
    
    
    
    7,420
    
    
    
    10,501
    
    
    
    
    
    
    
    17,921Interest expense, net
    
    
    40,844
    
    
    
    
    
    
    
    27,245
    
    
    
    (27,245
    )
    
    
    40,844Depreciation and
amortization
    
    
    
    
    
    
    20,913
    
    
    
    25,526
    
    
    
    
    
    
    
    46,439Management fees
    
    
    2,500
    
    
    
    (9,411
    )
    
    
    9,411
    
    
    
    
    
    
    
    2,500Equity in earnings of
affiliates
    
    
    (59,510
    )
    
    
    
    
    
    
    
    
    
    
    59,510
    
    
    
    Total costs and expenses
    
    
    (16,166
    )
    
    
    331,142
    
    
    
    627,253
    
    
    
    27,587
    
    
    
    969,816Earnings (loss) from
continuing operations before
gain (loss) on disposal of
assets, minority interests and
income taxes
    
    
    16,166
    
    
    
    (1,746
    )
    
    
    65,586
    
    
    
    (32,265
    )
    
    
    47,741Gain (loss) on disposal of
assets, net
    
    
    
    
    
    
    69
    
    
    
    (9
    )
    
    
    
    
    
    
    60Minority interests
    
    
    
    
    
    
    (1,870
    )
    
    
    
    
    
    
    
    
    
    
    (1,870
    )Earnings (loss) from
continuing operations before
income taxes
    
    
    16,166
    
    
    
    (3,547
    )
    
    
    65,577
    
    
    
    (32,265
    )
    
    
    45,931Income tax expense
    
    
    18,417
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,417Net earnings (loss) from
continuing operations
    
    
    (2,251
    )
    
    
    (3,547
    )
    
    
    65,577
    
    
    
    (32,265
    )
    
    
    27,514Earnings (loss) from
discontinued operations, net
of income taxes
    
    
    437
    
    
    
    (622
    )
    
    
    (1,898
    )
    
    
    
    
    
    
    (2,083
    )Net earnings (loss)
    
    $
    (1,814
    )
    
    $
    (4,169
    )
    
    $
    63,679
    
    
    $
    (32,265
    )
    
    $
    25,431
  19




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (in thousands)
 Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activitiesNet earnings (loss)
    
    $
    13,478
    
    
    $
    (15,799
    )
    
    $
    91,534
    
    
    $
    (51,962
    )
    
    $
    37,251Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities:Loss (earnings) from discontinued
operations
    
    
    (298
    )
    
    
    814
    
    
    
    (16
    )
    
    
    
    
    
    
    500Depreciation and amortization
    
    
    
    
    
    
    21,763
    
    
    
    27,529
    
    
    
    
    
    
    
    49,292Amortization of loan costs
    
    
    1,498
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,498Minority interests
    
    
    
    
    
    
    4,574
    
    
    
    
    
    
    
    
    
    
    
    4,574Deferred income taxes
    
    
    9,530
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,530Gain on disposal of assets, net
    
    
    
    
    
    
    (1,292
    )
    
    
    (21
    )
    
    
    
    
    
    
    (1,313
    )Hurricane-related
property damage
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    938Stock compensation costs
    
    
    279
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    279Equity in earnings of affiliates
    
    
    (75,735
    )
    
    
    
    
    
    
    
    
    
    
    75,735
    
    
    
    Changes in operating assets and
liabilities, net of the effect of
dispositions:Accounts receivable, net
    
    
    
    
    
    
    (2,161
    )
    
    
    (27,534
    )
    
    
    
    
    
    
    (29,695
    )Inventories, prepaid expenses and
other current assets
    
    
    
    
    
    
    (1,352
    )
    
    
    7,735
    
    
    
    
    
    
    
    6,383Accounts payable, other accrued
expenses and other accrued liabilities
    
    
    63
    
    
    
    28,585
    
    
    
    (14,478
    )
    
    
    
    
    
    
    14,170Net cash provided by (used in) operating
activities  continuing operations
    
    
    (51,185
    )
    
    
    35,132
    
    
    
    85,687
    
    
    
    23,773
    
    
    
    93,407Net cash provided by (used in) operating
activities  discontinued operations
    
    
    (298
    )
    
    
    1,611
    
    
    
    (189
    )
    
    
    
    
    
    
    1,124Net cash provided by (used in) operating
activities
    
    
    (51,483
    )
    
    
    36,743
    
    
    
    85,498
    
    
    
    23,773
    
    
    
    94,531Cash flows from investing activitiesPurchases of property and equipment, net
    
    
    
    
    
    
    (14,835
    )
    
    
    (34,437
    )
    
    
    
    
    
    
    (49,272
    )Proceeds
from sale of assets
    
    
    
    
    
    
    2,741
    
    
    
    2,232
    
    
    
    
    
    
    
    4,973Change in other assets, net
    
    
    
    
    
    
    (309
    )
    
    
    1,904
    
    
    
    
    
    
    
    1,595Net cash used in investing activities 
continuing operations
    
    
    
    
    
    
    (12,403
    )
    
    
    (30,301
    )
    
    
    
    
    
    
    (42,704
    )Net cash provided by investing activities
 discontinued operations
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10Net cash used in investing activities
    
    
    
    
    
    
    (12,393
    )
    
    
    (30,301
    )
    
    
    
    
    
    
    (42,694
    )Cash flows from financing activitiesPayment of debt and capital lease obligations
    
    
    (5,723
    )
    
    
    158
    
    
    
    (814
    )
    
    
    
    
    
    
    (6,379
    )Distribution of minority interests
    
    
    
    
    
    
    (140
    )
    
    
    (2,779
    )
    
    
    
    
    
    
    (2,919
    )Costs paid
for sale of partnership interests, net
    
    
    
    
    
    
    (1,341
    )
    
    
    
    
    
    
    
    
    
    
    (1,341
    )Change in intercompany balances with
affiliates, net
    
    
    57,206
    
    
    
    17,340
    
    
    
    (50,773
    )
    
    
    (23,773
    )
    
    
    Net cash provided by (used in) financing
activities
    
    
    51,483
    
    
    
    16,017
    
    
    
    (54,366
    )
    
    
    (23,773
    )
    
    
    (10,639
    )Increase in cash and cash equivalents
    
    
    
    
    
    
    40,367
    
    
    
    831
    
    
    
    
    
    
    
    41,198Cash and cash equivalents at beginning of
period
    
    
    
    
    
    
    80,336
    
    
    
    402
    
    
    
    
    
    
    
    80,738Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    120,703
    
    
    $
    1,233
    
    
    $
    
    
    
    $
    121,936
  20




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (in thousands)
 Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activitiesNet earnings (loss)
    
    $
    (1,814
    )
    
    $
    (4,169
    )
    
    $
    63,679
    
    
    $
    (32,265
    )
    
    $
    25,431Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities:Loss (earnings) from discontinued
operations
    
    
    (437
    )
    
    
    622
    
    
    
    1,898
    
    
    
    
    
    
    
    2,083Depreciation and amortization
    
    
    
    
    
    
    20,913
    
    
    
    25,526
    
    
    
    
    
    
    
    46,439Amortization of loan costs
    
    
    1,446
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,446Minority interests
    
    
    
    
    
    
    1,870
    
    
    
    
    
    
    
    
    
    
    
    1,870Deferred income taxes
    
    
    14,211
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,211Loss (gain) on disposal of assets, net
    
    
    
    
    
    
    (69
    )
    
    
    9
    
    
    
    
    
    
    
    (60
    )Equity in earnings of affiliates
    
    
    (59,510
    )
    
    
    
    
    
    
    
    
    
    
    59,510
    
    
    
    Changes in operating assets and
liabilities, net of the effect of acquisition and
dispositions:Accounts receivable, net
    
    
    
    
    
    
    8,302
    
    
    
    (11,614
    )
    
    
    
    
    
    
    (3,312
    )Inventories, prepaid expenses and
other current assets
    
    
    
    
    
    
    1,086
    
    
    
    (13,390
    )
    
    
    
    
    
    
    (12,304
    )Accounts payable, other accrued
expenses and other accrued liabilities
    
    
    (6,606
    )
    
    
    (31,098
    )
    
    
    (5,461
    )
    
    
    
    
    
    
    (43,165
    )Net cash provided by (used in) operating
activities  continuing operations
    
    
    (52,710
    )
    
    
    (2,543
    )
    
    
    60,647
    
    
    
    27,245
    
    
    
    32,639Net cash provided by (used in) operating
activities  discontinued operations
    
    
    437
    
    
    
    (1,225
    )
    
    
    (1,323
    )
    
    
    
    
    
    
    (2,111
    )Net cash provided by (used in) operating
activities
    
    
    (52,273
    )
    
    
    (3,768
    )
    
    
    59,324
    
    
    
    27,245
    
    
    
    30,528Cash flows from investing activitiesPurchases of property and equipment, net
    
    
    
    
    
    
    (21,961
    )
    
    
    (34,838
    )
    
    
    
    
    
    
    (56,799
    )Cash paid for acquisition, net
    
    
    
    
    
    
    (16,822
    )
    
    
    
    
    
    
    
    
    
    
    (16,822
    )Proceeds from the sale of assets
    
    
    
    
    
    
    87
    
    
    
    266
    
    
    
    
    
    
    
    353Change in other assets, net
    
    
    
    
    
    
    1,416
    
    
    
    498
    
    
    
    
    
    
    
    1,914Net cash used in investing activities 
continuing operations
    
    
    
    
    
    
    (37,280
    )
    
    
    (34,074
    )
    
    
    
    
    
    
    (71,354
    )Net cash used in investing activities 
discontinued operations
    
    
    
    
    
    
    (901
    )
    
    
    
    
    
    
    
    
    
    
    (901
    )Net cash used in investing activities
    
    
    
    
    
    
    (38,181
    )
    
    
    (34,074
    )
    
    
    
    
    
    
    (72,255
    )Cash flows from financing activitiesProceeds from debt borrowings
    
    
    337,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    337,200Payment of debt and capital lease obligations
    
    
    (300,562
    )
    
    
    (351
    )
    
    
    (1,617
    )
    
    
    
    
    
    
    (302,530
    )Distribution of minority interests
    
    
    
    
    
    
    (241
    )
    
    
    (2,538
    )
    
    
    
    
    
    
    (2,779
    )Proceeds received from sale of partnership
interests, net
    
    
    
    
    
    
    15,752
    
    
    
    
    
    
    
    
    
    
    
    15,752Change in intercompany balances with
affiliates, net
    
    
    15,635
    
    
    
    35,119
    
    
    
    (23,509
    )
    
    
    (27,245
    )
    
    
    Net cash provided by (used in) financing
activities  continuing operations
    
    
    52,273
    
    
    
    50,279
    
    
    
    (27,664
    )
    
    
    (27,245
    )
    
    
    47,643Net cash used in financing activities 
discontinued operations
    
    
    
    
    
    
    (255
    )
    
    
    
    
    
    
    
    
    
    
    (255
    )Net cash provided by (used in) financing
activities
    
    
    52,273
    
    
    
    50,024
    
    
    
    (27,664
    )
    
    
    (27,245
    )
    
    
    47,388Increase (decrease) in cash and cash
equivalents
    
    
    
    
    
    
    8,075
    
    
    
    (2,414
    )
    
    
    
    
    
    
    5,661Cash and cash equivalents at beginning of
period
    
    
    
    
    
    
    (4,052
    )
    
    
    4,052
    
    
    
    
    
    
    
    Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    4,023
    
    
    $
    1,638
    
    
    $
    
    
    
    $
    5,661
 
  21




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  FORWARD LOOKING STATEMENTS
 qui tam
   22




---



##### Table of Contents



EXECUTIVE OVERVIEW
  
    
    Salt Lake City, Utah;
    
    Phoenix, Arizona;
    
    Tampa-St. Petersburg, Florida;
    
    three cities in Texas, including San Antonio;
    
    Las Vegas, Nevada; and
    
    West Monroe, Louisiana.
     Revenue and Volume Trends
   23




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##### Table of Contents



Acute Care Revenue
     Quarter
    
    
    Six MonthsEnded March 31,
    
    
    Ended March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Medicare
    
    
    32.8
    %
    
    
    33.6
    %
    
    
    32.3
    %
    
    
    32.9
    %Managed Medicare
    
    
    12.1
    %
    
    
    11.6
    %
    
    
    11.6
    %
    
    
    10.8
    %Medicaid
    
    
    8.1
    %
    
    
    6.9
    %
    
    
    7.8
    %
    
    
    6.9
    %Managed Medicaid
    
    
    10.0
    %
    
    
    10.4
    %
    
    
    10.3
    %
    
    
    10.3
    %Managed care
    
    
    32.2
    %
    
    
    33.1
    %
    
    
    33.1
    %
    
    
    34.5
    %Self-pay and other
    
    
    4.8
    %
    
    
    4.4
    %
    
    
    4.9
    %
    
    
    4.6
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
   24




---



##### Table of Contents



Premium Revenue
      25




---



##### Table of Contents



Significant Industry Trends
  General Economic Environment
  Decreased Federal and State Funding for Medicaid Programs
    26




---



##### Table of Contents



Value-Based Reimbursement
      Physician Integration
    27




---



##### Table of Contents



Growth in Uncompensated Care
   March 31,
    
    
    September 30,2009
    
    
    2008Insured receivables
    
    
    67.4
    %
    
    
    64.8
    %Uninsured receivables
    
    
    32.6
    %
    
    
    35.2
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
   March 31,
    
    
    September 30,2009
    
    
    20080 to 90 days
    
    
    72.3
    %
    
    
    67.5
    %91 to 180 days
    
    
    16.1
    %
    
    
    17.9
    %Over 180 days
    
    
    11.6
    %
    
    
    14.6
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
   28




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  SELECTED OPERATING DATA
  Quarter
    
    
    Six MonthsEnded March 31,
    
    
    Ended March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Acute Care(1):Number of acute care hospital facilities
at end of period
    
    
    15
    
    
    
    15
    
    
    
    15
    
    
    
    15Beds in service at end of period (2)
    
    
    2,796
    
    
    
    2,644
    
    
    
    2,796
    
    
    
    2,644Average length of stay (days) (3)
    
    
    4.7
    
    
    
    4.8
    
    
    
    4.7
    
    
    
    4.7Occupancy rates (average beds in service)
    
    
    49.7
    %
    
    
    53.3
    %
    
    
    48.2
    %
    
    
    50.8
    %Admissions (4)
    
    
    26,249
    
    
    
    26,797
    
    
    
    50,399
    
    
    
    51,879Adjusted admissions (5)
    
    
    43,101
    
    
    
    42,457
    
    
    
    83,835
    
    
    
    83,296Patient days (6)
    
    
    123,257
    
    
    
    128,344
    
    
    
    236,954
    
    
    
    244,068Adjusted patient days (5)
    
    
    194,311
    
    
    
    196,090
    
    
    
    378,142
    
    
    
    376,717Net patient revenue per adjusted admission
    
    $
    9,679
    
    
    $
    9,146
    
    
    $
    9,673
    
    
    $
    9,019Health Choice:Medicaid covered lives
    
    
    164,551
    
    
    
    126,398
    
    
    
    164,551
    
    
    
    126,398Dual-eligible lives (7)
    
    
    3,417
    
    
    
    3,437
    
    
    
    3,417
    
    
    
    3,437Medical loss ratio (8)
    
    
    81.9
    %
    
    
    85.4
    %
    
    
    83.5
    %
    
    
    84.7
    %
 (1)
    
    Excludes Mesa General Hospital, which was closed during fiscal 2008.(2)
    
    Includes St. Lukes Behavioral Hospital.(3)
    
    Represents the average number of days that a patient stayed in our hospitals.(4)
    
    Represents the total number of patients admitted to our hospitals for stays in excess of 23
hours. Management and investors use this number as a general measure of inpatient volume.(5)
    
    Adjusted admissions and adjusted patient days are general measures of combined inpatient and
outpatient volume. We compute adjusted admissions/patient days by multiplying
admissions/patient days by gross patient revenue and then dividing that number by gross
inpatient revenue.(6)
    
    Represents the number of days our beds were occupied by inpatients over the period.(7)
    
    Represents members eligible for Medicare and Medicaid benefits under Health Choices contract
with CMS to provide coverage as a MAPD SNP.(8)
    
    Represents medical claims expense as a percentage of premium revenue, including claims paid
to our hospitals.  29




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##### Table of Contents



RESULTS OF OPERATIONS SUMMARY
 Consolidated
  Quarter Ended
    
    
    Quarter Ended
    
    
    Six Months Ended
    
    
    Six Months EndedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2009
    
    
    March 31, 2008($ in thousands):
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageNet revenue:Acute care revenue
    
    $
    421,179
    
    
    
    72.8
    %
    
    $
    392,648
    
    
    
    74.8
    %
    
    $
    819,626
    
    
    
    71.9
    %
    
    $
    758,758
    
    
    
    74.6
    %Premium revenue
    
    
    157,495
    
    
    
    27.2
    %
    
    
    132,172
    
    
    
    25.2
    %
    
    
    320,672
    
    
    
    28.1
    %
    
    
    258,799
    
    
    
    25.4
    %Total net revenue
    
    
    578,674
    
    
    
    100.0
    %
    
    
    524,820
    
    
    
    100.0
    %
    
    
    1,140,298
    
    
    
    100.0
    %
    
    
    1,017,557
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    168,372
    
    
    
    29.1
    %
    
    
    160,068
    
    
    
    30.5
    %
    
    
    330,508
    
    
    
    29.0
    %
    
    
    315,634
    
    
    
    31.0
    %Supplies
    
    
    63,753
    
    
    
    11.0
    %
    
    
    60,965
    
    
    
    11.6
    %
    
    
    123,579
    
    
    
    10.8
    %
    
    
    117,217
    
    
    
    11.5
    %Medical claims
    
    
    126,598
    
    
    
    21.9
    %
    
    
    110,581
    
    
    
    21.1
    %
    
    
    263,600
    
    
    
    23.1
    %
    
    
    214,461
    
    
    
    21.1
    %Other operating expenses
    
    
    77,953
    
    
    
    13.5
    %
    
    
    68,624
    
    
    
    13.1
    %
    
    
    157,303
    
    
    
    13.8
    %
    
    
    133,994
    
    
    
    13.2
    %Provision for bad debts
    
    
    45,167
    
    
    
    7.8
    %
    
    
    42,657
    
    
    
    8.1
    %
    
    
    92,298
    
    
    
    8.1
    %
    
    
    80,806
    
    
    
    7.9
    %Rentals and leases
    
    
    9,734
    
    
    
    1.7
    %
    
    
    9,294
    
    
    
    1.8
    %
    
    
    19,213
    
    
    
    1.7
    %
    
    
    17,921
    
    
    
    1.8
    %Interest expense, net
    
    
    15,817
    
    
    
    2.7
    %
    
    
    19,665
    
    
    
    3.7
    %
    
    
    34,795
    
    
    
    3.1
    %
    
    
    40,844
    
    
    
    4.0
    %Depreciation and amortization
    
    
    24,296
    
    
    
    4.2
    %
    
    
    23,858
    
    
    
    4.5
    %
    
    
    49,292
    
    
    
    4.3
    %
    
    
    46,439
    
    
    
    4.6
    %Management fees
    
    
    1,250
    
    
    
    0.2
    %
    
    
    1,313
    
    
    
    0.3
    %
    
    
    2,500
    
    
    
    0.2
    %
    
    
    2,500
    
    
    
    0.2
    %Hurricane-related property damage
    
    
    938
    
    
    
    0.2
    %
    
    
    
    
    
    
    0.0
    %
    
    
    938
    
    
    
    0.1
    %
    
    
    
    
    
    
    0.0
    %Total costs and expenses
    
    
    533,878
    
    
    
    92.3
    %
    
    
    497,025
    
    
    
    94.7
    %
    
    
    1,074,026
    
    
    
    94.2
    %
    
    
    969,816
    
    
    
    95.3
    %Earnings from continuing operations
before gain (loss) on disposal of
assets, minority interests and income
taxes
    
    
    44,796
    
    
    
    7.7
    %
    
    
    27,795
    
    
    
    5.3
    %
    
    
    66,272
    
    
    
    5.8
    %
    
    
    47,741
    
    
    
    4.7
    %Gain (loss) on disposal of assets, net
    
    
    20
    
    
    
    0.0
    %
    
    
    (2
    )
    
    
    0.0
    %
    
    
    1,313
    
    
    
    0.1
    %
    
    
    60
    
    
    
    0.0
    %Minority interests
    
    
    (2,977
    )
    
    
    0.5
    %
    
    
    (1,112
    )
    
    
    (0.2
    )%
    
    
    (4,574
    )
    
    
    (0.4
    )%
    
    
    (1,870
    )
    
    
    (0.2
    )%Earnings from continuing operations
before income taxes
    
    
    41,839
    
    
    
    7.2
    %
    
    
    26,681
    
    
    
    5.1
    %
    
    
    63,011
    
    
    
    5.5
    %
    
    
    45,931
    
    
    
    4.5
    %Income tax expense
    
    
    16,449
    
    
    
    2.8
    %
    
    
    10,630
    
    
    
    2.0
    %
    
    
    25,260
    
    
    
    2.2
    %
    
    
    18,417
    
    
    
    1.8
    %Net earnings from continuing operations
    
    
    25,390
    
    
    
    4.4
    %
    
    
    16,051
    
    
    
    3.1
    %
    
    
    37,751
    
    
    
    3.3
    %
    
    
    27,514
    
    
    
    2.7
    %Earnings (loss) from discontinued
operations, net of income taxes
    
    
    211
    
    
    
    0.0
    %
    
    
    (1,335
    )
    
    
    (0.3
    )%
    
    
    (500
    )
    
    
    (0.0
    )%
    
    
    (2,083
    )
    
    
    (0.2
    )%Net earnings
    
    $
    25,601
    
    
    
    4.4
    %
    
    $
    14,716
    
    
    
    2.8
    %
    
    $
    37,251
    
    
    
    3.3
    %
    
    $
    25,431
    
    
    
    2.5
    %
  30




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##### Table of Contents



Acute Care
  Quarter Ended
    
    
    Quarter Ended
    
    
    Six Months Ended
    
    
    Six Months EndedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2009
    
    
    March 31, 2008($ in thousands):
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageNet revenue:Acute care revenue
    
    $
    421,179
    
    
    
    99.5
    %
    
    $
    392,648
    
    
    
    99.4
    %
    
    $
    819,626
    
    
    
    99.5
    %
    
    $
    758,758
    
    
    
    99.4
    %Revenue between segments (1)
    
    
    2,312
    
    
    
    0.5
    %
    
    
    2,348
    
    
    
    0.6
    %
    
    
    4,009
    
    
    
    0.5
    %
    
    
    4,678
    
    
    
    0.6
    %Total net revenue
    
    
    423,491
    
    
    
    100.0
    %
    
    
    394,996
    
    
    
    100.0
    %
    
    
    823,635
    
    
    
    100.0
    %
    
    
    763,436
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    163,423
    
    
    
    38.6
    %
    
    
    155,735
    
    
    
    39.4
    %
    
    
    320,655
    
    
    
    38.9
    %
    
    
    307,258
    
    
    
    40.2
    %Supplies
    
    
    63,670
    
    
    
    15.0
    %
    
    
    60,921
    
    
    
    15.4
    %
    
    
    123,411
    
    
    
    15.0
    %
    
    
    117,096
    
    
    
    15.3
    %Other operating expenses
    
    
    70,611
    
    
    
    16.7
    %
    
    
    64,286
    
    
    
    16.3
    %
    
    
    144,396
    
    
    
    17.6
    %
    
    
    125,184
    
    
    
    16.4
    %Provision for bad debts
    
    
    45,167
    
    
    
    10.7
    %
    
    
    42,657
    
    
    
    10.8
    %
    
    
    92,298
    
    
    
    11.2
    %
    
    
    80,806
    
    
    
    10.6
    %Rentals and leases
    
    
    9,302
    
    
    
    2.2
    %
    
    
    9,005
    
    
    
    2.3
    %
    
    
    18,403
    
    
    
    2.2
    %
    
    
    17,347
    
    
    
    2.3
    %Interest expense, net
    
    
    15,817
    
    
    
    3.7
    %
    
    
    19,665
    
    
    
    5.0
    %
    
    
    34,795
    
    
    
    4.2
    %
    
    
    40,844
    
    
    
    5.4
    %Depreciation and amortization
    
    
    23,415
    
    
    
    5.5
    %
    
    
    22,959
    
    
    
    5.8
    %
    
    
    47,540
    
    
    
    5.8
    %
    
    
    44,645
    
    
    
    5.9
    %Management fees
    
    
    1,250
    
    
    
    0.3
    %
    
    
    1,313
    
    
    
    0.3
    %
    
    
    2,500
    
    
    
    0.3
    %
    
    
    2,500
    
    
    
    0.3
    %Hurricane-related property damage
    
    
    938
    
    
    
    0.2
    %
    
    
    
    
    
    
    0.0
    %
    
    
    938
    
    
    
    0.1
    %
    
    
    
    
    
    
    0.0
    %Total costs and expenses
    
    
    393,593
    
    
    
    92.9
    %
    
    
    376,541
    
    
    
    95.3
    %
    
    
    784,936
    
    
    
    95.3
    %
    
    
    735,680
    
    
    
    96.4
    %Earnings from continuing operations
before gain (loss) on disposal of
assets, minority interests and income
taxes
    
    
    29,898
    
    
    
    7.1
    %
    
    
    18,455
    
    
    
    4.7
    %
    
    
    38,699
    
    
    
    4.7
    %
    
    
    27,756
    
    
    
    3.6
    %Gain (loss) on disposal of assets, net
    
    
    20
    
    
    
    0.0
    %
    
    
    (2
    )
    
    
    0.0
    %
    
    
    1,313
    
    
    
    0.2
    %
    
    
    60
    
    
    
    0.0
    %Minority interests
    
    
    (2,977
    )
    
    
    (0.7
    )%
    
    
    (1,112
    )
    
    
    (0.3
    )%
    
    
    (4,574
    )
    
    
    (0.6
    )%
    
    
    (1,870
    )
    
    
    (0.2
    )%Earnings from continuing operations
before income taxes
    
    $
    26,941
    
    
    
    6.4
    %
    
    $
    17,341
    
    
    
    4.4
    %
    
    $
    35,438
    
    
    
    4.3
    %
    
    $
    25,946
    
    
    
    3.4
    %
 (1)
    
    Revenue between segments is eliminated in our consolidated results. Quarters Ended March 31, 2009 and 2008
 Acute care revenue




---



##### Table of Contents



Salaries and benefits
 Supplies
 Other operating expenses
 Provision for bad debts
 Interest expense, net
 Six Months Ended March 31, 2009 and 2008
 Acute care revenue
  31




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##### Table of Contents



Salaries and benefits
 Supplies
 Other operating expenses
 Provision for bad debts
 Interest expense, net
 Health Choice
  Quarter Ended
    
    
    Quarter Ended
    
    
    Six Months Ended
    
    
    Six Months EndedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2009
    
    
    March 31, 2008($ in thousands):
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentagePremium revenue
    
    $
    157,495
    
    
    
    100.0
    %
    
    $
    132,172
    
    
    
    100.0
    %
    
    $
    320,672
    
    
    
    100.0
    %
    
    $
    258,799
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    4,949
    
    
    
    3.1
    %
    
    
    4,333
    
    
    
    3.3
    %
    
    
    9,853
    
    
    
    3.1
    %
    
    
    8,376
    
    
    
    3.2
    %Supplies
    
    
    83
    
    
    
    0.0
    %
    
    
    44
    
    
    
    0.0
    %
    
    
    168
    
    
    
    0.0
    %
    
    
    121
    
    
    
    0.0
    %Medical claims (1)
    
    
    128,910
    
    
    
    81.9
    %
    
    
    112,929
    
    
    
    85.4
    %
    
    
    267,609
    
    
    
    83.5
    %
    
    
    219,139
    
    
    
    84.7
    %Other operating expenses
    
    
    7,342
    
    
    
    4.7
    %
    
    
    4,338
    
    
    
    3.3
    %
    
    
    12,907
    
    
    
    4.0
    %
    
    
    8,810
    
    
    
    3.4
    %Rentals and leases
    
    
    432
    
    
    
    0.2
    %
    
    
    289
    
    
    
    0.2
    %
    
    
    810
    
    
    
    0.3
    %
    
    
    574
    
    
    
    0.2
    %Depreciation and amortization
    
    
    881
    
    
    
    0.6
    %
    
    
    899
    
    
    
    0.7
    %
    
    
    1,752
    
    
    
    0.5
    %
    
    
    1,794
    
    
    
    0.7
    %Total costs and expenses
    
    
    142,597
    
    
    
    90.5
    %
    
    
    122,832
    
    
    
    92.9
    %
    
    
    293,099
    
    
    
    91.4
    %
    
    
    238,814
    
    
    
    92.2
    %Earnings before income taxes
    
    $
    14,898
    
    
    
    9.5
    %
    
    $
    9,340
    
    
    
    7.1
    %
    
    $
    27,573
    
    
    
    8.6
    %
    
    $
    19,985
    
    
    
    7.8
    %
 (1)
    
    Medical claims paid to our hospitals of $2.3 million for
each of the quarters ended
March 31, 2009 and 2008, and $4.0 million and $4.7 million for the six months
ended March 31, 2009 and 2008,
respectively, are eliminated in our consolidated results.  32




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##### Table of Contents



Quarters Ended March 31, 2009 and 2008
 Premium revenue
 Medical claims
 Six Months Ended March 31, 2009 and 2008
 Premium revenue
 Medical claims
 LIQUIDITY AND CAPITAL RESOURCES
 Overview of Cash Flow Activities for the Six Months Ended March 31, 2009 and 2008
  Six MonthsEnded March 31,2009
    
    
    2008Cash flow from operating activities  continuing operations
    
    $
    93,407
    
    
    $
    32,639Cash flow from investing activities  continuing operations
    
    
    (42,704
    )
    
    
    (71,354
    )Cash flow from financing activities  continuing operations
    
    
    (10,639
    )
    
    
    47,643
 Operating Activities
   33




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##### Table of Contents



Investing Activities
   Financing Activities
   Capital Resources
 $854.0 Million Senior Secured Credit Facilities
      34




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##### Table of Contents



$475.0 Million 8 3 / 4 % Senior Subordinated Notes Due 2014
 3 4 3 4 3 4 3 4 3 4 3 4
 $300.0 Million Holdings Senior PIK Loans
  Capital Expenditures
  ,
 
    
    $25.0 million to $30.0 million for the two patient tower expansions in Utah;
    
    $50.0 million to $55.0 million for other growth and new business projects;
    
    $35.0 million to $40.0 million in replacement or maintenance related projects at our
hospitals; and
    
    $10.0 million in hardware and software costs related to information
systems projects.
  35




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##### Table of Contents



Liquidity
   Cash and cash equivalents
    
    $
    121.9Available capacity under our senior secured revolving credit facility
    
    
    157.5Net
available liquidity at March 31, 2009
    
    $
    279.4
   3 4
 3 4
  36




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##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
   SEASONALITY
  RECENT ACCOUNTING PRONOUNCEMENTS
 Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
    37




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##### Table of Contents



3 4 3 4
  
 Item 4. Controls and Procedures
 Evaluations of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
   38




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 6. Exhibits
  31.1
    
    
    Certification of Principal Executive Officer Pursuant to Rule 15d-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    
    Certification of Principal Financial Officer pursuant to Rule 15d-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
  39




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##### Table of Contents



SIGNATURES
  IASIS HEALTHCARE LLCDate: May 14, 2009
    By:
    /s/ John M. DoyleJohn M. DoyleChief Accounting Officer  40




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    
    Certification of Principal Executive Officer Pursuant to Rule
15d-14(a) under the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    
    Certification of Principal Financial Officer pursuant to Rule
15d-14(a) under the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
  41