##### 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 June 30, 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
(State or other jurisdiction of 
incorporation or organization)
    
    20-1150104
(I.R.S. Employer
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
 YES o NO þ




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##### 



TABLE OF CONTENTS
 PART I. FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Condensed Consolidated Balance Sheets  June 30, 2009 (Unaudited) and September 30, 2008
    
    
    1Condensed Consolidated Statements of Operations (Unaudited)  Quarters and Nine Months
Ended June 30, 2009 and 2008
    
    
    2Condensed Consolidated Statements of Cash Flows (Unaudited)  Nine Months Ended June 30,
2009 and 2008
    
    
    3Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    39Item 4. Controls and Procedures
    
    
    40PART II. OTHER INFORMATION
    
    
    41Item 6. Exhibits
    
    
    41Exhibit 31.1Exhibit 31.2
   i




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##### Table of Contents



PART I.
 FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 IASIS HEALTHCARE LLC
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In Thousands)
 June 30,
    
    
    September 30,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    132,325
    
    
    $
    80,738Accounts receivable, less allowance for doubtful accounts of
$117,666 and $108,500 at June 30, 2009 and September 30, 2008,
respectively
    
    
    241,679
    
    
    
    224,138Inventories
    
    
    49,708
    
    
    
    49,454Deferred income taxes
    
    
    37,045
    
    
    
    38,860Prepaid expenses and other current assets
    
    
    62,270
    
    
    
    60,053Total current assets
    
    
    523,027
    
    
    
    453,243Property and equipment, net
    
    
    997,460
    
    
    
    1,004,248Goodwill
    
    
    782,098
    
    
    
    780,599Other intangible assets, net
    
    
    30,750
    
    
    
    33,000Other assets, net
    
    
    33,600
    
    
    
    37,057Total assets
    
    $
    2,366,935
    
    
    $
    2,308,147LIABILITIES AND MEMBERS EQUITYCurrent liabilities:Accounts payable
    
    $
    69,773
    
    
    $
    64,851Salaries and benefits payable
    
    
    48,598
    
    
    
    31,807Accrued interest payable
    
    
    2,114
    
    
    
    12,460Medical claims payable
    
    
    104,306
    
    
    
    97,343Other accrued expenses and other current liabilities
    
    
    72,865
    
    
    
    51,802Current portion of long-term debt and capital lease obligations
    
    
    8,426
    
    
    
    7,623Total current liabilities
    
    
    306,082
    
    
    
    265,886Long-term debt and capital lease obligations
    
    
    1,052,525
    
    
    
    1,106,999Deferred income taxes
    
    
    119,069
    
    
    
    111,092Other long-term liabilities
    
    
    51,455
    
    
    
    44,526Minority interests
    
    
    53,015
    
    
    
    51,875Members equity
    
    
    784,789
    
    
    
    727,769Total liabilities and members equity
    
    $
    2,366,935
    
    
    $
    2,308,147
   1




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IASIS HEALTHCARE LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 (In Thousands)
 Quarter Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net revenue:Acute care revenue
    
    $
    417,880
    
    
    $
    390,538
    
    
    $
    1,237,506
    
    
    $
    1,149,295Premium revenue
    
    
    183,738
    
    
    
    142,022
    
    
    
    504,410
    
    
    
    400,822Total net revenue
    
    
    601,618
    
    
    
    532,560
    
    
    
    1,741,916
    
    
    
    1,550,117Costs and expenses:Salaries and benefits
    
    
    164,879
    
    
    
    159,689
    
    
    
    495,387
    
    
    
    475,323Supplies
    
    
    63,950
    
    
    
    59,907
    
    
    
    187,529
    
    
    
    177,124Medical claims
    
    
    158,919
    
    
    
    119,190
    
    
    
    422,519
    
    
    
    333,652Other operating expenses
    
    
    79,708
    
    
    
    75,124
    
    
    
    237,011
    
    
    
    209,117Provision for bad debts
    
    
    45,594
    
    
    
    40,032
    
    
    
    137,892
    
    
    
    120,839Rentals and leases
    
    
    10,008
    
    
    
    9,277
    
    
    
    29,221
    
    
    
    27,198Interest expense, net
    
    
    16,334
    
    
    
    17,616
    
    
    
    51,129
    
    
    
    58,460Depreciation and amortization
    
    
    24,217
    
    
    
    24,704
    
    
    
    73,509
    
    
    
    71,143Management fees
    
    
    1,250
    
    
    
    1,250
    
    
    
    3,750
    
    
    
    3,750Hurricane-related property damage
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    Total costs and expenses
    
    
    564,859
    
    
    
    506,789
    
    
    
    1,638,885
    
    
    
    1,476,606Earnings from continuing operations
before gain (loss) on disposal of
assets, minority interests and income
taxes
    
    
    36,759
    
    
    
    25,771
    
    
    
    103,031
    
    
    
    73,511Gain (loss) on disposal of assets, net
    
    
    184
    
    
    
    (39
    )
    
    
    1,497
    
    
    
    20Minority interests
    
    
    (2,666
    )
    
    
    (1,239
    )
    
    
    (7,240
    )
    
    
    (3,108
    )Earnings from continuing operations
before income taxes
    
    
    34,277
    
    
    
    24,493
    
    
    
    97,288
    
    
    
    70,423Income tax expense
    
    
    13,715
    
    
    
    9,864
    
    
    
    38,975
    
    
    
    28,280Net earnings from continuing operations
    
    
    20,562
    
    
    
    14,629
    
    
    
    58,313
    
    
    
    42,143Earnings (loss) from discontinued
operations, net of income taxes
    
    
    167
    
    
    
    (4,265
    )
    
    
    (333
    )
    
    
    (6,348
    )Net earnings
    
    $
    20,729
    
    
    $
    10,364
    
    
    $
    57,980
    
    
    $
    35,795
   2




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IASIS HEALTHCARE LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 (In Thousands)
 Nine Months EndedJune 30,2009
    
    
    2008Cash flows from operating activitiesNet earnings
    
    $
    57,980
    
    
    $
    35,795Adjustments to reconcile net earnings to net cash provided by operating activities:Loss from discontinued operations
    
    
    333
    
    
    
    6,348Depreciation and amortization
    
    
    73,509
    
    
    
    71,143Amortization of loan costs
    
    
    2,257
    
    
    
    2,173Minority interests
    
    
    7,240
    
    
    
    3,108Deferred income taxes
    
    
    11,792
    
    
    
    11,588Gain on disposal of assets, net
    
    
    (1,497
    )
    
    
    (20
    )Hurricane-related property damage
    
    
    938
    
    
    
    Stock compensation costs
    
    
    420
    
    
    
    Changes in operating assets and liabilities, net of the effect of acquisition and
dispositions:Accounts receivable, net
    
    
    (18,854
    )
    
    
    (967
    )Inventories, prepaid expenses and other current assets
    
    
    (2,491
    )
    
    
    (34,117
    )Accounts payable, other accrued expenses and other accrued liabilities
    
    
    39,231
    
    
    
    (36,449
    )Net cash provided by operating activities  continuing operations
    
    
    170,858
    
    
    
    58,602Net cash provided by operating activities  discontinued operations
    
    
    1,548
    
    
    
    568Net cash provided by operating activities
    
    
    172,406
    
    
    
    59,170Cash flows from investing activitiesPurchases of property and equipment, net
    
    
    (66,608
    )
    
    
    (87,705
    )Cash paid
for acquisitions, net
    
    
    (1,521
    )
    
    
    (16,668
    )Proceeds from sale of assets
    
    
    5,240
    
    
    
    353Change in other assets, net
    
    
    1,832
    
    
    
    2,869Net cash used in investing activities  continuing operations
    
    
    (61,057
    )
    
    
    (101,151
    )Net cash provided by (used in) investing activities  discontinued operations
    
    
    10
    
    
    
    (899
    )Net cash used in investing activities
    
    
    (61,047
    )
    
    
    (102,050
    )Cash flows from financing activitiesProceeds from debt borrowings
    
    
    
    
    
    
    337,200Payment of debt and capital lease obligations
    
    
    (53,672
    )
    
    
    (304,587
    )Distribution of minority interests
    
    
    (4,721
    )
    
    
    (3,743
    )Proceeds received from sale (costs paid for repurchase) of partnership interests, net
    
    
    (1,379
    )
    
    
    15,648Net cash provided by (used in) financing activities  continuing operations
    
    
    (59,772
    )
    
    
    44,518Net cash used in financing activities  discontinued operations
    
    
    
    
    
    
    (304
    )Net cash provided by (used in) financing activities
    
    
    (59,772
    )
    
    
    44,214Change in cash and cash equivalents
    
    
    51,587
    
    
    
    1,334Cash and cash equivalents at beginning of period
    
    
    80,738
    
    
    
    Cash and cash equivalents at end of period
    
    $
    132,325
    
    
    $
    1,334Supplemental disclosure of cash flow informationCash paid for interest
    
    $
    60,519
    
    
    $
    75,911Cash paid (received) for income taxes, net
    
    $
    3,834
    
    
    $
    (3,286
    )
   3




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##### Table of Contents



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
  June 30,
    
    
    September 30,2009
    
    
    2008Senior secured credit facilities
    
    $
    577,623
    
    
    $
    629,818Senior subordinated notes
    
    
    475,000
    
    
    
    475,000Capital leases and other obligations
    
    
    8,328
    
    
    
    9,8041,060,951
    
    
    
    1,114,622Less current maturities
    
    
    8,426
    
    
    
    7,623$
    1,052,525
    
    
    $
    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. OTHER COMPREHENSIVE LOSS
  Balance at September 30, 2008
    
    $
    Change in fair value of interest rate swaps, net of income tax effect of $829
    
    
    1,389Balance at June 30, 2009
    
    $
    1,389
 5. DISCONTINUED OPERATIONS
 Accounting for the Impairment or Disposal of Long-Lived Assets
 Quarter Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Total net revenue
    
    $
    434
    
    
    $
    10,802
    
    
    $
    760
    
    
    $
    50,419Operating expenses
    
    
    167
    
    
    
    16,534
    
    
    
    1,291
    
    
    
    59,462Loss on disposal of assets
    
    
    
    
    
    
    1,106
    
    
    
    
    
    
    
    1,106Income tax expense (benefit)
    
    
    100
    
    
    
    (2,573
    )
    
    
    (198
    )
    
    
    (3,801
    )Earnings (loss) from
discontinued operations,
net of income taxes
    
    $
    167
    
    
    $
    (4,265
    )
    
    $
    (333
    )
    
    $
    (6,348
    )
  7




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##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   6. COMMITMENTS AND CONTINGENCIES
 Net Revenue
  Professional, General and Workers Compensation Liability Risks
   Health Choice
   8




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




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  7. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 Business Combinations Business
Combinations
 Noncontrolling Interests in Consolidated
Financial Statements
 Subsequent Events
 The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles  a replacement of FASB Statement No. 162
  10




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 8. SEGMENT AND GEOGRAPHIC INFORMATION
  For the Quarter Ended June 30, 2009Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    417,880
    
    
    $
    
    
    
    $
    
    
    
    $
    417,880Premium revenue
    
    
    
    
    
    
    183,738
    
    
    
    
    
    
    
    183,738Revenue between segments
    
    
    2,542
    
    
    
    
    
    
    
    (2,542
    )
    
    
    Net revenue
    
    
    420,422
    
    
    
    183,738
    
    
    
    (2,542
    )
    
    
    601,618Salaries and benefits
    
    
    159,979
    
    
    
    4,900
    
    
    
    
    
    
    
    164,879Supplies
    
    
    63,905
    
    
    
    45
    
    
    
    
    
    
    
    63,950Medical claims
    
    
    
    
    
    
    161,461
    
    
    
    (2,542
    )
    
    
    158,919Other operating expenses
    
    
    75,876
    
    
    
    3,832
    
    
    
    
    
    
    
    79,708Provision for bad debts
    
    
    45,594
    
    
    
    
    
    
    
    
    
    
    
    45,594Rentals and leases
    
    
    9,635
    
    
    
    373
    
    
    
    
    
    
    
    10,008Adjusted EBITDA(1)
    
    
    65,433
    
    
    
    13,127
    
    
    
    
    
    
    
    78,560Interest expense, net
    
    
    16,334
    
    
    
    
    
    
    
    
    
    
    
    16,334Depreciation and amortization
    
    
    23,320
    
    
    
    897
    
    
    
    
    
    
    
    24,217Management fees
    
    
    1,250
    
    
    
    
    
    
    
    
    
    
    
    1,250Earnings from continuing
operations before gain on
disposal of assets, minority
interests and income taxes
    
    
    24,529
    
    
    
    12,230
    
    
    
    
    
    
    
    36,759Gain on disposal of assets, net
    
    
    184
    
    
    
    
    
    
    
    
    
    
    
    184Minority interests
    
    
    (2,666
    )
    
    
    
    
    
    
    
    
    
    
    (2,666
    )Earnings from continuing
operations before income
taxes
    
    $
    22,047
    
    
    $
    12,230
    
    
    $
    
    
    
    $
    34,277
 For the Quarter Ended June 30, 2008Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    390,538
    
    
    $
    
    
    
    $
    
    
    
    $
    390,538Premium revenue
    
    
    
    
    
    
    142,022
    
    
    
    
    
    
    
    142,022Revenue between segments
    
    
    2,591
    
    
    
    
    
    
    
    (2,591
    )
    
    
    Net revenue
    
    
    393,129
    
    
    
    142,022
    
    
    
    (2,591
    )
    
    
    532,560Salaries and benefits
    
    
    155,221
    
    
    
    4,468
    
    
    
    
    
    
    
    159,689Supplies
    
    
    59,847
    
    
    
    60
    
    
    
    
    
    
    
    59,907Medical claims
    
    
    
    
    
    
    121,781
    
    
    
    (2,591
    )
    
    
    119,190Other operating expenses
    
    
    70,490
    
    
    
    4,634
    
    
    
    
    
    
    
    75,124Provision for bad debts
    
    
    40,032
    
    
    
    
    
    
    
    
    
    
    
    40,032Rentals and leases
    
    
    8,964
    
    
    
    313
    
    
    
    
    
    
    
    9,277Adjusted EBITDA(1)
    
    
    58,575
    
    
    
    10,766
    
    
    
    
    
    
    
    69,341Interest expense, net
    
    
    17,616
    
    
    
    
    
    
    
    
    
    
    
    17,616Depreciation and amortization
    
    
    23,780
    
    
    
    924
    
    
    
    
    
    
    
    24,704Management fees
    
    
    1,250
    
    
    
    
    
    
    
    
    
    
    
    1,250Earnings from continuing
operations before loss on
disposal of assets, minority
interests and income taxes
    
    
    15,929
    
    
    
    9,842
    
    
    
    
    
    
    
    25,771Loss on disposal of assets, net
    
    
    (39
    )
    
    
    
    
    
    
    
    
    
    
    (39
    )Minority interests
    
    
    (1,239
    )
    
    
    
    
    
    
    
    
    
    
    (1,239
    )Earnings from continuing
operations before income
taxes
    
    $
    14,651
    
    
    $
    9,842
    
    
    $
    
    
    
    $
    24,493
  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 Nine Months Ended June 30, 2009Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    1,237,506
    
    
    $
    
    
    
    $
    
    
    
    $
    1,237,506Premium revenue
    
    
    
    
    
    
    504,410
    
    
    
    
    
    
    
    504,410Revenue between segments
    
    
    6,551
    
    
    
    
    
    
    
    (6,551
    )
    
    
    Net revenue
    
    
    1,244,057
    
    
    
    504,410
    
    
    
    (6,551
    )
    
    
    1,741,916Salaries and benefits
    
    
    480,634
    
    
    
    14,753
    
    
    
    
    
    
    
    495,387Supplies
    
    
    187,316
    
    
    
    213
    
    
    
    
    
    
    
    187,529Medical claims
    
    
    
    
    
    
    429,070
    
    
    
    (6,551
    )
    
    
    422,519Other operating expenses
    
    
    220,272
    
    
    
    16,739
    
    
    
    
    
    
    
    237,011Provision for bad debts
    
    
    137,892
    
    
    
    
    
    
    
    
    
    
    
    137,892Rentals and leases
    
    
    28,038
    
    
    
    1,183
    
    
    
    
    
    
    
    29,221Hurricane-related property damage
    
    
    938
    
    
    
    
    
    
    
    
    
    
    
    938Adjusted EBITDA(1)
    
    
    188,967
    
    
    
    42,452
    
    
    
    
    
    
    
    231,419Interest expense, net
    
    
    51,129
    
    
    
    
    
    
    
    
    
    
    
    51,129Depreciation and amortization
    
    
    70,860
    
    
    
    2,649
    
    
    
    
    
    
    
    73,509Management fees
    
    
    3,750
    
    
    
    
    
    
    
    
    
    
    
    3,750Earnings from continuing
operations before gain on
disposal of assets, minority
interests and income taxes
    
    
    63,228
    
    
    
    39,803
    
    
    
    
    
    
    
    103,031Gain on disposal of assets, net
    
    
    1,497
    
    
    
    
    
    
    
    
    
    
    
    1,497Minority interests
    
    
    (7,240
    )
    
    
    
    
    
    
    
    
    
    
    (7,240
    )Earnings from continuing
operations before income
taxes
    
    $
    57,485
    
    
    $
    39,803
    
    
    $
    
    
    
    $
    97,288Segment assets
    
    $
    2,141,103
    
    
    $
    225,832
    
    
    
    
    
    
    $
    2,366,935Capital expenditures 
continuing operations
    
    $
    65,810
    
    
    $
    798
    
    
    
    
    
    
    $
    66,608Goodwill
    
    $
    776,341
    
    
    $
    5,757
    
    
    
    
    
    
    $
    782,098
  12




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##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 For the Nine Months Ended June 30, 2008Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    1,149,295
    
    
    $
    
    
    
    $
    
    
    
    $
    1,149,295Premium revenue
    
    
    
    
    
    
    400,822
    
    
    
    
    
    
    
    400,822Revenue between segments
    
    
    7,270
    
    
    
    
    
    
    
    (7,270
    )
    
    
    Net revenue
    
    
    1,156,565
    
    
    
    400,822
    
    
    
    (7,270
    )
    
    
    1,550,117Salaries and benefits
    
    
    462,479
    
    
    
    12,844
    
    
    
    
    
    
    
    475,323Supplies
    
    
    176,943
    
    
    
    181
    
    
    
    
    
    
    
    177,124Medical claims
    
    
    
    
    
    
    340,922
    
    
    
    (7,270
    )
    
    
    333,652Other operating expenses
    
    
    195,672
    
    
    
    13,445
    
    
    
    
    
    
    
    209,117Provision for bad debts
    
    
    120,839
    
    
    
    
    
    
    
    
    
    
    
    120,839Rentals and leases
    
    
    26,311
    
    
    
    887
    
    
    
    
    
    
    
    27,198Adjusted EBITDA(1)
    
    
    174,321
    
    
    
    32,543
    
    
    
    
    
    
    
    206,864Interest expense, net
    
    
    58,460
    
    
    
    
    
    
    
    
    
    
    
    58,460Depreciation and amortization
    
    
    68,425
    
    
    
    2,718
    
    
    
    
    
    
    
    71,143Management fees
    
    
    3,750
    
    
    
    
    
    
    
    
    
    
    
    3,750Earnings from continuing operations
before gain on disposal of assets,
minority interests and income taxes
    
    
    43,686
    
    
    
    29,825
    
    
    
    
    
    
    
    73,511Gain on disposal of assets, net
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    20Minority interests
    
    
    (3,108
    )
    
    
    
    
    
    
    
    
    
    
    (3,108
    )Earnings from continuing operations
before income taxes
    
    $
    40,598
    
    
    $
    29,825
    
    
    $
    
    
    
    $
    70,423Segment assets
    
    $
    2,068,423
    
    
    $
    178,914
    
    
    
    
    
    
    $
    2,247,337Capital expenditures  continuing operations
    
    $
    87,425
    
    
    $
    280
    
    
    
    
    
    
    $
    87,705Goodwill
    
    $
    773,688
    
    
    $
    5,757
    
    
    
    
    
    
    $
    779,445
 (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
    
    $
    
    
    
    $
    132,078
    
    
    $
    247
    
    
    $
    
    
    
    $
    132,325Accounts receivable, net
    
    
    
    
    
    
    95,407
    
    
    
    146,272
    
    
    
    
    
    
    
    241,679Inventories
    
    
    
    
    
    
    21,204
    
    
    
    28,504
    
    
    
    
    
    
    
    49,708Deferred income taxes
    
    
    37,045
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,045Prepaid expenses and other
current assets
    
    
    
    
    
    
    21,221
    
    
    
    41,049
    
    
    
    
    
    
    
    62,270Total current assets
    
    
    37,045
    
    
    
    269,910
    
    
    
    216,072
    
    
    
    
    
    
    
    523,027Property and equipment, net
    
    
    
    
    
    
    352,261
    
    
    
    645,199
    
    
    
    
    
    
    
    997,460Intercompany
    
    
    
    
    
    
    (208,924
    )
    
    
    208,924
    
    
    
    
    
    
    
    Net investment in and advances
to subsidiaries
    
    
    1,667,922
    
    
    
    
    
    
    
    
    
    
    
    (1,667,922
    )
    
    
    Goodwill
    
    
    18,569
    
    
    
    130,385
    
    
    
    633,144
    
    
    
    
    
    
    
    782,098Other intangible assets, net
    
    
    
    
    
    
    
    
    
    
    30,750
    
    
    
    
    
    
    
    30,750Other assets, net
    
    
    15,954
    
    
    
    12,790
    
    
    
    4,856
    
    
    
    
    
    
    
    33,600Total assets
    
    $
    1,739,490
    
    
    $
    556,422
    
    
    $
    1,738,945
    
    
    $
    (1,667,922
    )
    
    $
    2,366,935Liabilities and Members EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    22,679
    
    
    $
    47,094
    
    
    $
    
    
    
    $
    69,773Salaries and benefits payable
    
    
    
    
    
    
    27,390
    
    
    
    21,208
    
    
    
    
    
    
    
    48,598Accrued interest payable
    
    
    2,114
    
    
    
    (3,223
    )
    
    
    3,223
    
    
    
    
    
    
    
    2,114Medical claims payable
    
    
    
    
    
    
    
    
    
    
    104,306
    
    
    
    
    
    
    
    104,306Other accrued expenses and
other current liabilities
    
    
    
    
    
    
    57,946
    
    
    
    14,919
    
    
    
    
    
    
    
    72,865Current portion of long-term
debt and capital lease
obligations
    
    
    7,469
    
    
    
    957
    
    
    
    20,292
    
    
    
    (20,292
    )
    
    
    8,426Total current liabilities
    
    
    9,583
    
    
    
    105,749
    
    
    
    211,042
    
    
    
    (20,292
    )
    
    
    306,082Long-term debt and capital
lease obligations
    
    
    1,046,733
    
    
    
    5,792
    
    
    
    569,530
    
    
    
    (569,530
    )
    
    
    1,052,525Deferred income taxes
    
    
    119,069
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119,069Other long-term liabilities
    
    
    
    
    
    
    50,807
    
    
    
    648
    
    
    
    
    
    
    
    51,455Minority interests
    
    
    
    
    
    
    53,015
    
    
    
    
    
    
    
    
    
    
    
    53,015Total liabilities
    
    
    1,175,385
    
    
    
    215,363
    
    
    
    781,220
    
    
    
    (589,822
    )
    
    
    1,582,146Members equity
    
    
    564,105
    
    
    
    341,059
    
    
    
    957,725
    
    
    
    (1,078,100
    )
    
    
    784,789Total liabilities and
members equity
    
    $
    1,739,490
    
    
    $
    556,422
    
    
    $
    1,738,945
    
    
    $
    (1,667,922
    )
    
    $
    2,366,935
  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
    
    $
    
    
    
    $
    162,850
    
    
    $
    257,572
    
    
    $
    (2,542
    )
    
    $
    417,880Premium revenue
    
    
    
    
    
    
    
    
    
    
    183,738
    
    
    
    
    
    
    
    183,738Total net revenue
    
    
    
    
    
    
    162,850
    
    
    
    441,310
    
    
    
    (2,542
    )
    
    
    601,618Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    81,176
    
    
    
    83,703
    
    
    
    
    
    
    
    164,879Supplies
    
    
    
    
    
    
    26,629
    
    
    
    37,321
    
    
    
    
    
    
    
    63,950Medical claims
    
    
    
    
    
    
    
    
    
    
    161,461
    
    
    
    (2,542
    )
    
    
    158,919Other operating expenses
    
    
    
    
    
    
    31,174
    
    
    
    48,534
    
    
    
    
    
    
    
    79,708Provision for bad debts
    
    
    
    
    
    
    22,557
    
    
    
    23,037
    
    
    
    
    
    
    
    45,594Rentals and leases
    
    
    
    
    
    
    3,925
    
    
    
    6,083
    
    
    
    
    
    
    
    10,008Interest expense, net
    
    
    16,334
    
    
    
    
    
    
    
    9,464
    
    
    
    (9,464
    )
    
    
    16,334Depreciation and amortization
    
    
    
    
    
    
    10,064
    
    
    
    14,153
    
    
    
    
    
    
    
    24,217Management fees
    
    
    1,250
    
    
    
    (5,531
    )
    
    
    5,531
    
    
    
    
    
    
    
    1,250Equity in earnings of affiliates
    
    
    (41,599
    )
    
    
    
    
    
    
    
    
    
    
    41,599
    
    
    
    Total costs and expenses
    
    
    (24,015
    )
    
    
    169,994
    
    
    
    389,287
    
    
    
    29,593
    
    
    
    564,859Earnings (loss) from continuing
operations before gain (loss) on
disposal of assets, minority
interests and income taxes
    
    
    24,015
    
    
    
    (7,144
    )
    
    
    52,023
    
    
    
    (32,135
    )
    
    
    36,759Gain (loss) on disposal of assets,
net
    
    
    
    
    
    
    187
    
    
    
    (3
    )
    
    
    
    
    
    
    184Minority interests
    
    
    
    
    
    
    (2,666
    )
    
    
    
    
    
    
    
    
    
    
    (2,666
    )Earnings (loss) from continuing
operations before income taxes
    
    
    24,015
    
    
    
    (9,623
    )
    
    
    52,020
    
    
    
    (32,135
    )
    
    
    34,277Income tax expense
    
    
    12,650
    
    
    
    
    
    
    
    1,065
    
    
    
    
    
    
    
    13,715Net earnings (loss) from
continuing operations
    
    
    11,365
    
    
    
    (9,623
    )
    
    
    50,955
    
    
    
    (32,135
    )
    
    
    20,562Earnings (loss) from discontinued
operations, net of income taxes
    
    
    (100
    )
    
    
    253
    
    
    
    14
    
    
    
    
    
    
    
    167Net earnings (loss)
    
    $
    11,265
    
    
    $
    (9,370
    )
    
    $
    50,969
    
    
    $
    (32,135
    )
    
    $
    20,729
  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
    
    $
    
    
    
    $
    165,990
    
    
    $
    227,139
    
    
    $
    (2,591
    )
    
    $
    390,538Premium revenue
    
    
    
    
    
    
    
    
    
    
    142,022
    
    
    
    
    
    
    
    142,022Total net revenue
    
    
    
    
    
    
    165,990
    
    
    
    369,161
    
    
    
    (2,591
    )
    
    
    532,560Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    82,145
    
    
    
    77,544
    
    
    
    
    
    
    
    159,689Supplies
    
    
    
    
    
    
    28,243
    
    
    
    31,664
    
    
    
    
    
    
    
    59,907Medical claims
    
    
    
    
    
    
    
    
    
    
    121,781
    
    
    
    (2,591
    )
    
    
    119,190Other operating expenses
    
    
    
    
    
    
    28,961
    
    
    
    46,163
    
    
    
    
    
    
    
    75,124Provision for bad debts
    
    
    
    
    
    
    18,749
    
    
    
    21,283
    
    
    
    
    
    
    
    40,032Rentals and leases
    
    
    
    
    
    
    3,844
    
    
    
    5,433
    
    
    
    
    
    
    
    9,277Interest expense, net
    
    
    17,616
    
    
    
    
    
    
    
    13,796
    
    
    
    (13,796
    )
    
    
    17,616Depreciation and amortization
    
    
    
    
    
    
    10,985
    
    
    
    13,719
    
    
    
    
    
    
    
    24,704Management fees
    
    
    1,250
    
    
    
    (4,994
    )
    
    
    4,994
    
    
    
    
    
    
    
    1,250Equity in earnings of affiliates
    
    
    (23,067
    )
    
    
    
    
    
    
    
    
    
    
    23,067
    
    
    
    Total costs and
expenses
    
    
    (4,201
    )
    
    
    167,933
    
    
    
    336,377
    
    
    
    6,680
    
    
    
    506,789Earnings (loss) from continuing
operations before gain (loss) on
disposal of assets, minority
interests and income taxes
    
    
    4,201
    
    
    
    (1,943
    )
    
    
    32,784
    
    
    
    (9,271
    )
    
    
    25,771Gain (loss) on disposal of assets,
net
    
    
    
    
    
    
    (49
    )
    
    
    10
    
    
    
    
    
    
    
    (39
    )Minority interests
    
    
    
    
    
    
    (1,239
    )
    
    
    
    
    
    
    
    
    
    
    (1,239
    )Earnings (loss) from continuing
operations before income taxes
    
    
    4,201
    
    
    
    (3,231
    )
    
    
    32,794
    
    
    
    (9,271
    )
    
    
    24,493Income tax expense
    
    
    9,864
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,864Net earnings (loss) from
continuing operations
    
    
    (5,663
    )
    
    
    (3,231
    )
    
    
    32,794
    
    
    
    (9,271
    )
    
    
    14,629Earnings (loss) from discontinued
operations, net of income taxes
    
    
    2,231
    
    
    
    (5,339
    )
    
    
    (1,157
    )
    
    
    
    
    
    
    (4,265
    )Net earnings (loss)
    
    $
    (3,432
    )
    
    $
    (8,570
    )
    
    $
    31,637
    
    
    $
    (9,271
    )
    
    $
    10,364
  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
    
    $
    
    
    
    $
    488,285
    
    
    $
    755,772
    
    
    $
    (6,551
    )
    
    $
    1,237,506Premium revenue
    
    
    
    
    
    
    
    
    
    
    504,410
    
    
    
    
    
    
    
    504,410Total net revenue
    
    
    
    
    
    
    488,285
    
    
    
    1,260,182
    
    
    
    (6,551
    )
    
    
    1,741,916Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    246,364
    
    
    
    249,023
    
    
    
    
    
    
    
    495,387Supplies
    
    
    
    
    
    
    78,200
    
    
    
    109,329
    
    
    
    
    
    
    
    187,529Medical claims
    
    
    
    
    
    
    
    
    
    
    429,070
    
    
    
    (6,551
    )
    
    
    422,519Other operating expenses
    
    
    
    
    
    
    86,769
    
    
    
    150,242
    
    
    
    
    
    
    
    237,011Provision for bad debts
    
    
    
    
    
    
    68,297
    
    
    
    69,595
    
    
    
    
    
    
    
    137,892Rentals and leases
    
    
    
    
    
    
    11,942
    
    
    
    17,279
    
    
    
    
    
    
    
    29,221Interest expense, net
    
    
    51,129
    
    
    
    
    
    
    
    33,237
    
    
    
    (33,237
    )
    
    
    51,129Depreciation and amortization
    
    
    
    
    
    
    31,827
    
    
    
    41,682
    
    
    
    
    
    
    
    73,509Management fees
    
    
    3,750
    
    
    
    (16,267
    )
    
    
    16,267
    
    
    
    
    
    
    
    3,750Hurricane-related property
damage
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    938Equity in earnings of affiliates
    
    
    (117,334
    )
    
    
    
    
    
    
    
    
    
    
    117,334
    
    
    
    Total costs and expenses
    
    
    (62,455
    )
    
    
    507,132
    
    
    
    1,116,662
    
    
    
    77,546
    
    
    
    1,638,885Earnings (loss) from continuing
operations before gain on disposal
of assets, minority interests and
income taxes
    
    
    62,455
    
    
    
    (18,847
    )
    
    
    143,520
    
    
    
    (84,097
    )
    
    
    103,031Gain on disposal of assets, net
    
    
    
    
    
    
    1,479
    
    
    
    18
    
    
    
    
    
    
    
    1,497Minority interests
    
    
    
    
    
    
    (7,240
    )
    
    
    
    
    
    
    
    
    
    
    (7,240
    )Earnings (loss) from continuing
operations before income taxes
    
    
    62,455
    
    
    
    (24,608
    )
    
    
    143,538
    
    
    
    (84,097
    )
    
    
    97,288Income tax expense
    
    
    37,910
    
    
    
    
    
    
    
    1,065
    
    
    
    
    
    
    
    38,975Net earnings (loss) from
continuing operations
    
    
    24,545
    
    
    
    (24,608
    )
    
    
    142,473
    
    
    
    (84,097
    )
    
    
    58,313Earnings (loss) from discontinued
operations, net of income taxes
    
    
    198
    
    
    
    (561
    )
    
    
    30
    
    
    
    
    
    
    
    (333
    )Net earnings (loss)
    
    $
    24,743
    
    
    $
    (25,169
    )
    
    $
    142,503
    
    
    $
    (84,097
    )
    
    $
    57,980
  18




---



##### 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
    
    $
    
    
    
    $
    495,386
    
    
    $
    661,179
    
    
    $
    (7,270
    )
    
    $
    1,149,295Premium revenue
    
    
    
    
    
    
    
    
    
    
    400,822
    
    
    
    
    
    
    
    400,822Total net revenue
    
    
    
    
    
    
    495,386
    
    
    
    1,062,001
    
    
    
    (7,270
    )
    
    
    1,550,117Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    242,455
    
    
    
    232,868
    
    
    
    
    
    
    
    475,323Supplies
    
    
    
    
    
    
    84,882
    
    
    
    92,242
    
    
    
    
    
    
    
    177,124Medical claims
    
    
    
    
    
    
    
    
    
    
    340,922
    
    
    
    (7,270
    )
    
    
    333,652Other operating expenses
    
    
    
    
    
    
    81,530
    
    
    
    127,587
    
    
    
    
    
    
    
    209,117Provision for bad debts
    
    
    
    
    
    
    61,451
    
    
    
    59,388
    
    
    
    
    
    
    
    120,839Rentals and leases
    
    
    
    
    
    
    11,264
    
    
    
    15,934
    
    
    
    
    
    
    
    27,198Interest expense, net
    
    
    58,460
    
    
    
    
    
    
    
    41,041
    
    
    
    (41,041
    )
    
    
    58,460Depreciation and amortization
    
    
    
    
    
    
    31,898
    
    
    
    39,245
    
    
    
    
    
    
    
    71,143Management fees
    
    
    3,750
    
    
    
    (14,405
    )
    
    
    14,405
    
    
    
    
    
    
    
    3,750Equity in earnings of affiliates
    
    
    (82,576
    )
    
    
    
    
    
    
    
    
    
    
    82,576
    
    
    
    Total costs and
expenses
    
    
    (20,366
    )
    
    
    499,075
    
    
    
    963,632
    
    
    
    34,265
    
    
    
    1,476,606Earnings (loss) from continuing
operations before gain on
disposal of assets, minority
interests and income taxes
    
    
    20,366
    
    
    
    (3,689
    )
    
    
    98,369
    
    
    
    (41,535
    )
    
    
    73,511Gain on disposal of assets,
net
    
    
    
    
    
    
    19
    
    
    
    1
    
    
    
    
    
    
    
    20Minority interests
    
    
    
    
    
    
    (3,108
    )
    
    
    
    
    
    
    
    
    
    
    (3,108
    )Earnings (loss) from continuing
operations before income taxes
    
    
    20,366
    
    
    
    (6,778
    )
    
    
    98,370
    
    
    
    (41,535
    )
    
    
    70,423Income tax expense
    
    
    28,280
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,280Net earnings (loss) from
continuing operations
    
    
    (7,914
    )
    
    
    (6,778
    )
    
    
    98,370
    
    
    
    (41,535
    )
    
    
    42,143Earnings (loss) from discontinued
operations, net of income taxes
    
    
    2,668
    
    
    
    (5,961
    )
    
    
    (3,055
    )
    
    
    
    
    
    
    (6,348
    )Net earnings (loss)
    
    $
    (5,246
    )
    
    $
    (12,739
    )
    
    $
    95,315
    
    
    $
    (41,535
    )
    
    $
    35,795
  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)
    
    $
    24,743
    
    
    $
    (25,169
    )
    
    $
    142,503
    
    
    $
    (84,097
    )
    
    $
    57,980Adjustments to reconcile net earnings
(loss) to net cash provided by (used in)
operating activities:Loss (earnings) from discontinued
operations
    
    
    (198
    )
    
    
    561
    
    
    
    (30
    )
    
    
    
    
    
    
    333Depreciation and amortization
    
    
    
    
    
    
    31,827
    
    
    
    41,682
    
    
    
    
    
    
    
    73,509Amortization of loan costs
    
    
    2,257
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,257Minority interests
    
    
    
    
    
    
    7,240
    
    
    
    
    
    
    
    
    
    
    
    7,240Deferred income taxes
    
    
    11,792
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,792Gain on disposal of assets, net
    
    
    
    
    
    
    (1,479
    )
    
    
    (18
    )
    
    
    
    
    
    
    (1,497
    )Hurricane-related property damage
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    938Stock compensation costs
    
    
    420
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    420Equity in earnings of affiliates
    
    
    (117,334
    )
    
    
    
    
    
    
    
    
    
    
    117,334
    
    
    
    Changes in operating assets and
liabilities, net of the effect of acquisition and
dispositions:Accounts receivable, net
    
    
    
    
    
    
    4,724
    
    
    
    (23,578
    )
    
    
    
    
    
    
    (18,854
    )Inventories, prepaid expenses and
other current assets
    
    
    
    
    
    
    (505
    )
    
    
    (1,986
    )
    
    
    
    
    
    
    (2,491
    )Accounts payable, other accrued
expenses and other accrued
liabilities
    
    
    (10,346
    )
    
    
    42,896
    
    
    
    6,681
    
    
    
    
    
    
    
    39,231Net cash provided by (used in)
operating activities  continuing
operations
    
    
    (88,666
    )
    
    
    60,095
    
    
    
    166,192
    
    
    
    33,237
    
    
    
    170,858Net cash provided by (used in)
operating activities  discontinued
operations
    
    
    (198
    )
    
    
    1,905
    
    
    
    (159
    )
    
    
    
    
    
    
    1,548Net cash provided by (used in)
operating activities
    
    
    (88,864
    )
    
    
    62,000
    
    
    
    166,033
    
    
    
    33,237
    
    
    
    172,406Cash flows from investing activitiesPurchases of property and equipment, net
    
    
    
    
    
    
    (18,835
    )
    
    
    (47,773
    )
    
    
    
    
    
    
    (66,608
    )Cash paid for acquisition, net
    
    
    
    
    
    
    (1,521
    )
    
    
    
    
    
    
     
    
    
    
    (1,521
    )Proceeds from sale of assets
    
    
    
    
    
    
    3,007
    
    
    
    2,233
    
    
    
    
    
    
    
    5,240Change in other assets, net
    
    
    
    
    
    
    (173
    )
    
    
    2,005
    
    
    
    
    
    
    
    1,832Net cash used in investing activities
 continuing operations
    
    
    
    
    
    
    (17,522
    )
    
    
    (43,535
    )
    
    
    
    
    
    
    (61,057
    )Net cash provided by investing
activities  discontinued operations
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10Net cash used in investing activities
    
    
    
    
    
    
    (17,512
    )
    
    
    (43,535
    )
    
    
    
    
    
    
    (61,047
    )Cash flows from financing activitiesPayment of debt and capital lease
obligations
    
    
    (52,813
    )
    
    
    125
    
    
    
    (984
    )
    
    
    
    
    
    
    (53,672
    )Distribution of minority interests
    
    
    
    
    
    
    (209
    )
    
    
    (4,512
    )
    
    
    
    
    
    
    (4,721
    )Costs paid
for repurchase of partnership
interests, net
    
    
    
    
    
    
    (1,379
    )
    
    
    
    
    
    
    
    
    
    
    (1,379
    )Change in intercompany balances with
affiliates, net
    
    
    141,677
    
    
    
    8,717
    
    
    
    (117,157
    )
    
    
    (33,237
    )
    
    
    Net cash provided by (used in)
financing activities
    
    
    88,864
    
    
    
    7,254
    
    
    
    (122,653
    )
    
    
    (33,237
    )
    
    
    (59,772
    )Change in cash and cash equivalents
    
    
    
    
    
    
    51,742
    
    
    
    (155
    )
    
    
    
    
    
    
    51,587Cash and cash equivalents at beginning of
period
    
    
    
    
    
    
    80,336
    
    
    
    402
    
    
    
    
    
    
    
    80,738Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    132,078
    
    
    $
    247
    
    
    $
    
    
    
    $
    132,325
 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)
    
    $
    (5,246
    )
    
    $
    (12,739
    )
    
    $
    95,315
    
    
    $
    (41,535
    )
    
    $
    35,795Adjustments to reconcile net
earnings (loss) to net cash
provided by (used in) operating
activities:Loss (earnings) from
discontinued operations
    
    
    (2,668
    )
    
    
    5,961
    
    
    
    3,055
    
    
    
    
    
    
    
    6,348Depreciation and amortization
    
    
    
    
    
    
    31,898
    
    
    
    39,245
    
    
    
    
    
    
    
    71,143Amortization of loan costs
    
    
    2,173
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,173Minority interests
    
    
    
    
    
    
    3,108
    
    
    
    
    
    
    
    
    
    
    
    3,108Deferred income taxes
    
    
    11,588
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,588Gain on disposal of
assets, net
    
  
    

    
    
    
    (19
    )
    
    
    (1
    )
    
    
    
    
    
    
    (20
    )Equity in earnings of affiliates
    
    
    (82,576
    )
    
    
    
    
    
    
    
    
    
    
    82,576
    
    
    
    Changes in operating assets and
liabilities, net of the effect
of acquisition and dispositions:Accounts receivable, net
    
    
    
    
    
    
    14,546
    
    
    
    (15,513
    )
    
    
    
    
    
    
    (967
    )Inventories, prepaid
expenses and other current
assets
    
    
    
    
    
    
    (856
    )
    
    
    (33,261
    )
    
    
    
    
    
    
    (34,117
    )Accounts payable, other
accrued expenses and other
accrued liabilities
    
    
    (21,453
    )
    
    
    (6,305
    )
    
    
    (8,691
    )
    
    
    
    
    
    
    (36,449
    )Net cash provided by (used in)
operating activities
 continuing operations
    
    
    (98,182
    )
    
    
    35,594
    
    
    
    80,149
    
    
    
    41,041
    
    
    
    58,602Net cash provided by (used in)
operating activities  discontinued operations
    
    
    (2,232
    )
    
    
    4,939
    
    
    
    (2,139
    )
    
    
    
    
    
    
    568Net cash provided by (used in)
operating activities
    
    
    (100,414
    )
    
    
    40,533
    
    
    
    78,010
    
    
    
    41,041
    
    
    
    59,170Cash flows from investing activitiesPurchases of property and
equipment, net
    
    
    
    
    
    
    (28,338
    )
    
    
    (59,367
    )
    
    
    
    
    
    
    (87,705
    )Cash paid for acquisition, net
    
    
    
    
    
    
    (16,668
    )
    
    
    
    
    
    
    
    
    
    
    (16,668
    )Proceeds from sale of
assets
    
    
    
    
    
    
    87
    
    
    
    266
    
    
    
    
    
    
    
    353Change in other assets,
net
    
    
    
    
    
    
    2,340
    
    
    
    529
    
    
    
    
    
    
    
    2,869Net cash used in investing
activities  continuing
operations
    
    
    
    
    
    
    (42,579
    )
    
    
    (58,572
    )
    
    
    
    
    
    
    (101,151
    )Net cash used in investing
activities  discontinued
operations
    
    
    
    
    
    
    (899
    )
    
    
    
    
    
    
    
    
    
    
    (899
    )Net cash used in investing
activities
    
    
    
    
    
    
    (43,478
    )
    
    
    (58,572
    )
    
    
    
    
    
    
    (102,050
    )
  21




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##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from financing activitiesProceeds from debt borrowings
    
    
    337,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    337,200Payment of debt and capital lease
obligations
    
    
    (301,678
    )
    
    
    (674
    )
    
    
    (2,235
    )
    
    
    
    
    
    
    (304,587
    )Distribution of minority interests
    
    
    
    
    
    
    (341
    )
    
    
    (3,402
    )
    
    
    
    
    
    
    (3,743
    )Proceeds from sale of partnership
interests, net
    
    
    
    
    
    
    15,648
    
    
    
    
    
    
    
    
    
    
    
    15,648Change in intercompany balances
with affiliates, net
    
    
    64,892
    
    
    
    (6,286
    )
    
    
    (17,565
    )
    
    
    (41,041
    )
    
    
    Net cash provided by (used in)
financing activities 
continuing operations
    
    
    100,414
    
    
    
    8,347
    
    
    
    (23,202
    )
    
    
    (41,041
    )
    
    
    44,518Net cash used in financing
activities  discontinued
operations
    
    
    
    
    
    
    (304
    )
    
    
    
    
    
    
    
    
    
    
    (304
    )Net cash
provided by (used in) financing
activities
    
    
    100,414
    
    
    
    8,043
    
    
    
    (23,202
    )
    
    
    (41,041
    )
    
    
    44,214Change in cash and cash equivalents
    
    
    
    
    
    
    5,098
    
    
    
    (3,764
    )
    
    
    
    
    
    
    1,334Cash and cash equivalents at
beginning of period
    
    
    
    
    
    
    (4,052
    )
    
    
    4,052
    
    
    
    
    
    
    
    Cash and cash equivalents at end of
period
    
    $
    
    
    
    $
    1,046
    
    
    $
    288
    
    
    $
    
    
    
    $
    1,334
  22




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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
   23




---



##### 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
   24




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##### Table of Contents



Acute Care Revenue
     Quarter Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Medicare
    
    
    30.2
    %
    
    
    31.8
    %
    
    
    31.6
    %
    
    
    32.5
    %Managed Medicare
    
    
    11.8
    %
    
    
    11.2
    %
    
    
    11.6
    %
    
    
    10.9
    %Medicaid
    
    
    8.3
    %
    
    
    7.4
    %
    
    
    8.1
    %
    
    
    7.1
    %Managed Medicaid
    
    
    10.8
    %
    
    
    10.2
    %
    
    
    10.6
    %
    
    
    10.3
    %Managed care and other
    
    
    34.0
    %
    
    
    34.8
    %
    
    
    33.2
    %
    
    
    34.6
    %Self-pay
    
    
    4.9
    %
    
    
    4.6
    %
    
    
    4.9
    %
    
    
    4.6
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
   25




---



##### Table of Contents



Premium Revenue
      26




---



##### Table of Contents



Significant Industry Trends
  General Economic Environment
  Healthcare Reform
  Decreased Federal and State Funding for Medicaid Programs
   Value-Based Reimbursement
   27




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##### Table of Contents



Physician Integration
    28




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##### Table of Contents



Growth in Uncompensated Care
   June 30,
    
    
    September 30,2009
    
    
    2008Insured receivables
    
    
    65.7
    %
    
    
    64.8
    %Uninsured receivables
    
    
    34.3
    %
    
    
    35.2
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
   June 30,
    
    
    September 30,2009
    
    
    20080 to 90 days
    
    
    70.7
    %
    
    
    67.5
    %91 to 180 days
    
    
    18.0
    %
    
    
    17.9
    %Over 180 days
    
    
    11.3
    %
    
    
    14.6
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
  29




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  SELECTED OPERATING DATA
  Quarter Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2009
    
    
    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)
    
    
    2,789
    
    
    
    2,644
    
    
    
    2,789
    
    
    
    2,644Average length of stay (days) (3)
    
    
    4.7
    
    
    
    4.7
    
    
    
    4.7
    
    
    
    4.7Occupancy rates (average beds in service)
    
    
    46.2
    %
    
    
    48.8
    %
    
    
    47.5
    %
    
    
    50.1
    %Admissions (4)
    
    
    25,229
    
    
    
    25,004
    
    
    
    75,628
    
    
    
    76,883Adjusted admissions (5)
    
    
    42,780
    
    
    
    41,371
    
    
    
    126,615
    
    
    
    124,667Patient days (6)
    
    
    117,378
    
    
    
    117,304
    
    
    
    354,332
    
    
    
    361,372Adjusted patient days (5)
    
    
    191,157
    
    
    
    186,242
    
    
    
    569,299
    
    
    
    562,959Net patient revenue per adjusted
admission
    
    $
    9,668
    
    
    $
    9,317
    
    
    $
    9,671
    
    
    $
    9,118Health Choice:Medicaid covered lives
    
    
    177,933
    
    
    
    129,067
    
    
    
    177,933
    
    
    
    129,067Dual-eligible lives (7)
    
    
    3,580
    
    
    
    3,352
    
    
    
    3,580
    
    
    
    3,352Medical loss ratio (8)
    
    
    87.9
    %
    
    
    85.7
    %
    
    
    85.1
    %
    
    
    85.1
    %
 (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.  30




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##### Table of Contents



RESULTS OF OPERATIONS SUMMARY
 Consolidated
  Quarter Ended
    
    
    Quarter Ended
    
    
    Nine Months Ended
    
    
    Nine Months EndedJune 30, 2009
    
    
    June 30, 2008
    
    
    June 30, 2009
    
    
    June 30, 2008($ in thousands):
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageNet revenue:Acute care revenue
    
    $
    417,880
    
    
    
    69.5
    %
    
    $
    390,538
    
    
    
    73.3
    %
    
    $
    1,237,506
    
    
    
    71.0
    %
    
    $
    1,149,295
    
    
    
    74.1
    %Premium revenue
    
    
    183,738
    
    
    
    30.5
    %
    
    
    142,022
    
    
    
    26.7
    %
    
    
    504,410
    
    
    
    29.0
    %
    
    
    400,822
    
    
    
    25.9
    %Total net revenue
    
    
    601,618
    
    
    
    100.0
    %
    
    
    532,560
    
    
    
    100.0
    %
    
    
    1,741,916
    
    
    
    100.0
    %
    
    
    1,550,117
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    164,879
    
    
    
    27.4
    %
    
    
    159,689
    
    
    
    30.0
    %
    
    
    495,387
    
    
    
    28.4
    %
    
    
    475,323
    
    
    
    30.7
    %Supplies
    
    
    63,950
    
    
    
    10.6
    %
    
    
    59,907
    
    
    
    11.3
    %
    
    
    187,529
    
    
    
    10.8
    %
    
    
    177,124
    
    
    
    11.4
    %Medical claims
    
    
    158,919
    
    
    
    26.4
    %
    
    
    119,190
    
    
    
    22.4
    %
    
    
    422,519
    
    
    
    24.3
    %
    
    
    333,652
    
    
    
    21.5
    %Other operating expenses
    
    
    79,708
    
    
    
    13.3
    %
    
    
    75,124
    
    
    
    14.1
    %
    
    
    237,011
    
    
    
    13.6
    %
    
    
    209,117
    
    
    
    13.5
    %Provision for bad debts
    
    
    45,594
    
    
    
    7.6
    %
    
    
    40,032
    
    
    
    7.5
    %
    
    
    137,892
    
    
    
    7.9
    %
    
    
    120,839
    
    
    
    7.8
    %Rentals and leases
    
    
    10,008
    
    
    
    1.7
    %
    
    
    9,277
    
    
    
    1.7
    %
    
    
    29,221
    
    
    
    1.7
    %
    
    
    27,198
    
    
    
    1.7
    %Interest expense, net
    
    
    16,334
    
    
    
    2.7
    %
    
    
    17,616
    
    
    
    3.3
    %
    
    
    51,129
    
    
    
    2.9
    %
    
    
    58,460
    
    
    
    3.8
    %Depreciation and
amortization
    
    
    24,217
    
    
    
    4.0
    %
    
    
    24,704
    
    
    
    4.7
    %
    
    
    73,509
    
    
    
    4.2
    %
    
    
    71,143
    
    
    
    4.6
    %Management fees
    
    
    1,250
    
    
    
    0.2
    %
    
    
    1,250
    
    
    
    0.2
    %
    
    
    3,750
    
    
    
    0.2
    %
    
    
    3,750
    
    
    
    0.3
    %Hurricane-related
property damage
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    938
    
    
    
    0.1
    %
    
    
    
    
    
    
    0.0
    %Total costs and
expenses
    
    
    564,859
    
    
    
    93.9
    %
    
    
    506,789
    
    
    
    95.2
    %
    
    
    1,638,885
    
    
    
    94.1
    %
    
    
    1,476,606
    
    
    
    95.3
    %Earnings from continuing
operations before gain
(loss) on disposal of
assets, minority
interests and income
taxes
    
    
    36,759
    
    
    
    6.1
    %
    
    
    25,771
    
    
    
    4.8
    %
    
    
    103,031
    
    
    
    5.9
    %
    
    
    73,511
    
    
    
    4.7
    %Gain (loss) on disposal
of assets, net
    
    
    184
    
    
    
    0.0
    %
    
    
    (39
    )
    
    
    (0.0
    )%
    
    
    1,497
    
    
    
    0.1
    %
    
    
    20
    
    
    
    0.0
    %Minority interests
    
    
    (2,666
    )
    
    
    (0.4
    )%
    
    
    (1,239
    )
    
    
    (0.2
    )%
    
    
    (7,240
    )
    
    
    (0.4
    )%
    
    
    (3,108
    )
    
    
    (0.2
    )%Earnings from continuing
operations before income
taxes
    
    
    34,277
    
    
    
    5.7
    %
    
    
    24,493
    
    
    
    4.6
    %
    
    
    97,288
    
    
    
    5.6
    %
    
    
    70,423
    
    
    
    4.5
    %Income tax expense
    
    
    13,715
    
    
    
    2.3
    %
    
    
    9,864
    
    
    
    1.9
    %
    
    
    38,975
    
    
    
    2.3
    %
    
    
    28,280
    
    
    
    1.8
    %Net earnings from
continuing operations
    
    
    20,562
    
    
    
    3.4
    %
    
    
    14,629
    
    
    
    2.7
    %
    
    
    58,313
    
    
    
    3.3
    %
    
    
    42,143
    
    
    
    2.7
    %Earnings (loss) from
discontinued operations,
net of income taxes
    
    
    167
    
    
    
    0.0
    %
    
    
    (4,265
    )
    
    
    (0.8
    )%
    
    
    (333
    )
    
    
    0.0
    %
    
    
    (6,348
    )
    
    
    (0.4
    )%Net earnings
    
    $
    20,729
    
    
    
    3.4
    %
    
    $
    10,364
    
    
    
    1.9
    %
    
    $
    57,980
    
    
    
    3.3
    %
    
    $
    35,795
    
    
    
    2.3
    %
  31




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##### Table of Contents



Acute Care
  Quarter Ended
    
    
    Quarter Ended
    
    
    Nine Months Ended
    
    
    Nine Months EndedJune 30, 2009
    
    
    June 30, 2008
    
    
    June 30, 2009
    
    
    June 30, 2008($ in thousands):
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageNet revenue:Acute care revenue
    
    $
    417,880
    
    
    
    99.4
    %
    
    $
    390,538
    
    
    
    99.3
    %
    
    $
    1,237,506
    
    
    
    99.5
    %
    
    $
    1,149,295
    
    
    
    99.4
    %Revenue between segments
(1)
    
    
    2,542
    
    
    
    0.6
    %
    
    
    2,591
    
    
    
    0.7
    %
    
    
    6,551
    
    
    
    0.5
    %
    
    
    7,270
    
    
    
    0.6
    %Total net revenue
    
    
    420,422
    
    
    
    100.0
    %
    
    
    393,129
    
    
    
    100.0
    %
    
    
    1,244,057
    
    
    
    100.0
    %
    
    
    1,156,565
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    159,979
    
    
    
    38.1
    %
    
    
    155,221
    
    
    
    39.5
    %
    
    
    480,634
    
    
    
    38.6
    %
    
    
    462,479
    
    
    
    40.0
    %Supplies
    
    
    63,905
    
    
    
    15.2
    %
    
    
    59,847
    
    
    
    15.2
    %
    
    
    187,316
    
    
    
    15.1
    %
    
    
    176,943
    
    
    
    15.3
    %Other operating expenses
    
    
    75,876
    
    
    
    18.0
    %
    
    
    70,490
    
    
    
    17.9
    %
    
    
    220,272
    
    
    
    17.7
    %
    
    
    195,672
    
    
    
    16.9
    %Provision for bad debts
    
    
    45,594
    
    
    
    10.8
    %
    
    
    40,032
    
    
    
    10.2
    %
    
    
    137,892
    
    
    
    11.1
    %
    
    
    120,839
    
    
    
    10.4
    %Rentals and leases
    
    
    9,635
    
    
    
    2.3
    %
    
    
    8,964
    
    
    
    2.3
    %
    
    
    28,038
    
    
    
    2.2
    %
    
    
    26,311
    
    
    
    2.3
    %Interest expense, net
    
    
    16,334
    
    
    
    3.9
    %
    
    
    17,616
    
    
    
    4.5
    %
    
    
    51,129
    
    
    
    4.1
    %
    
    
    58,460
    
    
    
    5.1
    %Depreciation and
amortization
    
    
    23,320
    
    
    
    5.6
    %
    
    
    23,780
    
    
    
    6.0
    %
    
    
    70,860
    
    
    
    5.7
    %
    
    
    68,425
    
    
    
    5.9
    %Management fees
    
    
    1,250
    
    
    
    0.3
    %
    
    
    1,250
    
    
    
    0.3
    %
    
    
    3,750
    
    
    
    0.3
    %
    
    
    3,750
    
    
    
    0.3
    %Hurricane-related
property damage
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    938
    
    
    
    0.1
    %
    
    
    
    
    
    
    0.0
    %Total costs and expenses
    
    
    395,893
    
    
    
    94.2
    %
    
    
    377,200
    
    
    
    95.9
    %
    
    
    1,180,829
    
    
    
    94.9
    %
    
    
    1,112,879
    
    
    
    96.2
    %Earnings from continuing
operations before gain
(loss) on disposal of
assets, minority interests
and income taxes
    
    
    24,529
    
    
    
    5.8
    %
    
    
    15,929
    
    
    
    4.1
    %
    
    
    63,228
    
    
    
    5.1
    %
    
    
    43,686
    
    
    
    3.8
    %Gain (loss) on disposal of
assets, net
    
    
    184
    
    
    
    0.0
    %
    
    
    (39
    )
    
    
    (0.0
    )%
    
    
    1,497
    
    
    
    0.1
    %
    
    
    20
    
    
    
    0.0
    %Minority interests
    
    
    (2,666
    )
    
    
    (0.6
    )%
    
    
    (1,239
    )
    
    
    (0.3
    )%
    
    
    (7,240
    )
    
    
    (0.6
    )%
    
    
    (3,108
    )
    
    
    (0.3
    )%Earnings from continuing
operations before income
taxes
    
    $
    22,047
    
    
    
    5.2
    %
    
    $
    14,651
    
    
    
    3.8
    %
    
    $
    57,485
    
    
    
    4.6
    %
    
    $
    40,598
    
    
    
    3.5
    %
 (1)
    
    Revenue between segments is eliminated in our consolidated results. Quarters Ended June 30, 2009 and 2008
 Acute care revenue
  Salaries and benefits
  32




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##### Table of Contents



Other operating expenses
 Provision for bad debts
 Interest expense, net
 Nine Months Ended June 30, 2009 and 2008
 Acute care revenue
  Salaries and benefits
 Other operating expenses
  33




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##### Table of Contents



Provision for bad debts
 Interest expense, net
 Health Choice
  Quarter Ended
    
    
    Quarter Ended
    
    
    Nine Months Ended
    
    
    Nine Months EndedJune 30, 2009
    
    
    June 30, 2008
    
    
    June 30, 2009
    
    
    June 30, 2008($ in thousands):
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentagePremium revenue
    
    $
    183,738
    
    
    
    100.0
    %
    
    $
    142,022
    
    
    
    100.0
    %
    
    $
    504,410
    
    
    
    100.0
    %
    
    $
    400,822
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    4,900
    
    
    
    2.6
    %
    
    
    4,468
    
    
    
    3.2
    %
    
    
    14,753
    
    
    
    3.0
    %
    
    
    12,844
    
    
    
    3.2
    %Supplies
    
    
    45
    
    
    
    0.0
    %
    
    
    60
    
    
    
    0.0
    %
    
    
    213
    
    
    
    0.0
    %
    
    
    181
    
    
    
    0.0
    %Medical claims (1)
    
    
    161,461
    
    
    
    87.9
    %
    
    
    121,781
    
    
    
    85.7
    %
    
    
    429,070
    
    
    
    85.1
    %
    
    
    340,922
    
    
    
    85.1
    %Other operating expenses
    
    
    3,832
    
    
    
    2.1
    %
    
    
    4,634
    
    
    
    3.3
    %
    
    
    16,739
    
    
    
    3.3
    %
    
    
    13,445
    
    
    
    3.4
    %Rentals and leases
    
    
    373
    
    
    
    0.2
    %
    
    
    313
    
    
    
    0.2
    %
    
    
    1,183
    
    
    
    0.2
    %
    
    
    887
    
    
    
    0.2
    %Depreciation and amortization
    
    
    897
    
    
    
    0.5
    %
    
    
    924
    
    
    
    0.7
    %
    
    
    2,649
    
    
    
    0.5
    %
    
    
    2,718
    
    
    
    0.7
    %Total costs and expenses
    
    
    171,508
    
    
    
    93.3
    %
    
    
    132,180
    
    
    
    93.1
    %
    
    
    464,607
    
    
    
    92.1
    %
    
    
    370,997
    
    
    
    92.6
    %Earnings before income taxes
    
    $
    12,230
    
    
    
    6.7
    %
    
    $
    9,842
    
    
    
    6.9
    %
    
    $
    39,803
    
    
    
    7.9
    %
    
    $
    29,825
    
    
    
    7.4
    %
 (1)
    
    Medical claims paid to our hospitals of $2.5 million and $2.6 million for the quarters
ended June 30, 2009 and 2008, respectively, and $6.6 million and $7.3 million for the nine
months ended June 30, 2009 and 2008, respectively, are eliminated in our consolidated results. Quarters Ended June 30, 2009 and 2008
 Premium revenue
 Medical
claims
  34




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##### Table of Contents



Nine Months Ended June 30, 2009 and 2008
 Premium revenue
 LIQUIDITY AND CAPITAL RESOURCES
 Overview of Cash Flow Activities for the Nine Months Ended June 30, 2009 and 2008
  Nine Months EndedJune 30,2009
    
    
    2008Cash flow from operating activities  continuing operations
    
    $
    170,858
    
    
    $
    58,602Cash flow from investing activities  continuing operations
    
    
    (61,057
    )
    
    
    (101,151
    )Cash flow from financing activities  continuing operations
    
    
    (59,772
    )
    
    
    44,518
 Operating Activities
   Investing Activities
   Financing Activities
   35




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##### Table of Contents



Capital Resources
 $854.0 Million Senior Secured Credit Facilities
        36




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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;
 
    
    $35.0 million to $40.0 million for other growth and new business projects;
 
    
    $30.0 million to $35.0 million in replacement or maintenance related projects at our
hospitals; and
 
    
    $10.0 million in hardware and software costs related to information systems projects.
 Liquidity
   37




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##### Table of Contents



Cash and cash equivalents
    
    $
    132.3Available capacity under our senior secured revolving credit facility
    
    
    204.1Net available liquidity at June 30, 2009
    
    $
    336.4
   3 4
 3 4
 OFF-BALANCE SHEET ARRANGEMENTS
   SEASONALITY
   38




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##### Table of Contents



RECENT ACCOUNTING PRONOUNCEMENTS
 Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements
 Subsequent Events
 The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles  a replacement of FASB Statement No. 162
 
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    3 4 3 4
   39




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##### Table of Contents



Item 4.
    
    Controls and Procedures
 Evaluations of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
   40




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 6.
    
    Exhibits
 (a)
    
    List of 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.
  41




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##### Table of Contents



SIGNATURES
  IASIS HEALTHCARE LLCDate: August 6, 2009
    By:
    /s/ John M. DoyleJohn M. DoyleChief Accounting Officer  42




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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.
  43