##### 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 December 31, 2010
 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 December 31, 2010 (Unaudited) and September 30, 2010
    
    
    1Condensed Consolidated Statements of Operations (Unaudited)  Quarters Ended December 31, 2010 
and 2009
    
    
    2Condensed Consolidated Statement of Equity (Unaudited)  Quarter Ended December 31, 2010
    
    
    3Condensed Consolidated Statements of Cash Flows (Unaudited)  Quarters Ended December 31, 2010 and 2009
    
    
    4Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    37PART II. OTHER INFORMATION
    
    
    37Item 1. Legal Proceedings
    
    
    37Item 1A. Risk Factors
    
    
    38Item 6. Exhibits
    
    
    38Exhibit 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)
 December 31,
    
    
    September 30,2010
    
    
    2010(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    129,246
    
    
    $
    144,511Accounts receivable, less allowance for doubtful accounts of
$133,467 and $125,406 at December 31, 2010 and September 30,
2010, respectively
    
    
    236,094
    
    
    
    209,173Inventories
    
    
    59,081
    
    
    
    53,842Deferred income taxes
    
    
    24,854
    
    
    
    15,881Prepaid expenses and other current assets
    
    
    71,821
    
    
    
    65,340Total current assets
    
    
    521,096
    
    
    
    488,747Property and equipment, net
    
    
    997,767
    
    
    
    985,291Goodwill
    
    
    798,394
    
    
    
    718,243Other intangible assets, net
    
    
    33,434
    
    
    
    27,000Deposit for acquisition
    
    
    
    
    
    
    97,891Other assets, net
    
    
    35,691
    
    
    
    36,022Total assets
    
    $
    2,386,382
    
    
    $
    2,353,194LIABILITIES AND EQUITYCurrent liabilities:Accounts payable
    
    $
    77,989
    
    
    $
    78,931Salaries and benefits payable
    
    
    35,580
    
    
    
    38,110Accrued interest payable
    
    
    2,108
    
    
    
    12,536Medical claims payable
    
    
    116,457
    
    
    
    111,373Other accrued expenses and other current liabilities
    
    
    100,261
    
    
    
    106,614Current portion of long-term debt and capital lease obligations
    
    
    7,693
    
    
    
    6,691Total current liabilities
    
    
    340,088
    
    
    
    354,255Long-term debt and capital lease obligations
    
    
    1,049,660
    
    
    
    1,044,887Deferred income taxes
    
    
    108,566
    
    
    
    109,272Other long-term liabilities
    
    
    64,317
    
    
    
    60,162Non-controlling interests with redemption rights
    
    
    88,433
    
    
    
    72,112Equity:Members equity
    
    
    725,056
    
    
    
    702,135Non-controlling interests
    
    
    10,262
    
    
    
    10,371Total equity
    
    
    735,318
    
    
    
    712,506Total liabilities and equity
    
    $
    2,386,382
    
    
    $
    2,353,194
   1




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IASIS HEALTHCARE LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)
 (In Thousands)
 Quarter EndedDecember 31,2010
    
    
    2009Net revenue:Acute care revenue
    
    $
    471,139
    
    
    $
    424,660Premium revenue
    
    
    202,192
    
    
    
    204,297Total net revenue
    
    
    673,331
    
    
    
    628,957Costs and expenses:Salaries and benefits (includes stock compensation of $496 and $121, respectively)
    
    
    189,913
    
    
    
    170,482Supplies
    
    
    76,436
    
    
    
    65,409Medical claims
    
    
    171,334
    
    
    
    178,567Other operating expenses
    
    
    97,126
    
    
    
    84,592Provision for bad debts
    
    
    59,614
    
    
    
    47,949Rentals and leases
    
    
    11,166
    
    
    
    10,275Interest expense, net
    
    
    16,877
    
    
    
    16,732Depreciation and amortization
    
    
    24,046
    
    
    
    23,877Management fees
    
    
    1,250
    
    
    
    1,250Total costs and expenses
    
    
    647,762
    
    
    
    599,133Earnings from continuing operations before gain on disposal of assets and income
taxes
    
    
    25,569
    
    
    
    29,824Gain on disposal of assets, net
    
    
    345
    
    
    
    104Earnings from continuing operations before income taxes
    
    
    25,914
    
    
    
    29,928Income tax expense
    
    
    9,189
    
    
    
    10,591Net earnings from continuing operations
    
    
    16,725
    
    
    
    19,337Earnings (loss) from discontinued operations, net of income taxes
    
    
    (3,208
    )
    
    
    46Net earnings
    
    
    13,517
    
    
    
    19,383Net earnings attributable to non-controlling interests
    
    
    (1,771
    )
    
    
    (2,028
    )Net earnings attributable to IASIS Healthcare LLC
    
    $
    11,746
    
    
    $
    17,355
   2




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IASIS HEALTHCARE LLC
 
 CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(UNAUDITED)
 (In Thousands)
 Non-controllingInterests with
    
    
    
    
    
    
    Non-Redemption
    
    
    Members
    
    
    controllingRights
    
    
    Equity
    
    
    Interests
    
    
    Total EquityBalance at September 30, 2010
    
    $
    72,112
    
    
    $
    702,135
    
    
    $
    10,371
    
    
    $
    712,506Net earnings (loss)
    
    
    1,847
    
    
    
    11,746
    
    
    
    (76
    )
    
    
    11,670Distributions to non-controlling interests
    
    
    (3,056
    )
    
    
    
    
    
    
    (33
    )
    
    
    (33
    )Acquisition of Brim Holdings, Inc.
    
    
    24,986
    
    
    
    
    
    
    
    
    
    
    
    Stock compensation
    
    
    
    
    
    
    496
    
    
    
    
    
    
    
    496Other comprehensive income
    
    
    
    
    
    
    983
    
    
    
    
    
    
    
    983Contribution from parent company related
to tax benefit from Holdings Senior PIK
Loans interest
    
    
    
    
    
    
    2,240
    
    
    
    
    
    
    
    2,240Adjustment to redemption value of
non-controlling interests with redemption
rights
    
    
    (7,456
    )
    
    
    7,456
    
    
    
    
    
    
    
    7,456Balance at December 31, 2010
    
    $
    88,433
    
    
    $
    725,056
    
    
    $
    10,262
    
    
    $
    735,318
   3




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IASIS HEALTHCARE LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)
 (In Thousands)
 Quarter EndedDecember 31,2010
    
    
    2009Cash flows from operating activitiesNet earnings
    
    $
    13,517
    
    
    $
    19,383Adjustments to reconcile net earnings to net cash provided by operating activities:Loss (earnings) from discontinued operations
    
    
    3,208
    
    
    
    (46
    )Depreciation and amortization
    
    
    24,046
    
    
    
    23,877Amortization of loan costs
    
    
    810
    
    
    
    775Deferred income taxes
    
    
    2,539
    
    
    
    2,652Income tax benefit from parent company interest
    
    
    2,240
    
    
    
    2,224Gain on disposal of assets, net
    
    
    (345
    )
    
    
    (104
    )Stock compensation
    
    
    496
    
    
    
    121Changes in
operating assets and liabilities, net of the effect of acquisitions
and dispositions:Accounts receivable, net
    
    
    (8,334
    )
    
    
    (4,332
    )Inventories, prepaid expenses and other current assets
    
    
    (5,956
    )
    
    
    4,486Accounts payable, other accrued expenses and other accrued liabilities
    
    
    (25,499
    )
    
    
    (39,373
    )Net cash provided by operating activities  continuing operations
    
    
    6,722
    
    
    
    9,663Net cash used in operating activities  discontinued operations
    
    
    (240
    )
    
    
    (125
    )Net cash provided by operating activities
    
    
    6,482
    
    
    
    9,538Cash flows from investing activitiesPurchases of property and equipment, net
    
    
    (15,360
    )
    
    
    (12,282
    )Payment for acquisitions
    
    
    (1,880
    )
    
    
    Proceeds from sale of assets
    
    
    
    
    
    
    31Change in other assets, net
    
    
    515
    
    
    
    659Net cash used in investing activities
    
    
    (16,725
    )
    
    
    (11,592
    )Cash flows from financing activitiesPayment of debt and capital lease obligations
    
    
    (1,933
    )
    
    
    (3,452
    )Distributions to non-controlling interests,
    
    
    (3,089
    )
    
    
    (3,934
    )Costs paid
for the repurchase of partnership interests, net
    
    
    
    
    
    
    (13
    )Net cash used in financing activities
    
    
    (5,022
    )
    
    
    (7,399
    )Change in cash and cash equivalents
    
    
    (15,265
    )
    
    
    (9,453
    )Cash and cash equivalents at beginning of period
    
    
    144,511
    
    
    
    206,528Cash and cash equivalents at end of period
    
    $
    129,246
    
    
    $
    197,075Supplemental disclosure of cash flow informationCash paid for interest
    
    $
    26,514
    
    
    $
    26,393Cash paid for income taxes, net
    
    $
    5
    
    
    $
    4,000Supplemental
disclosure of non-cash investing and financing activitiesCapital lease obligations resulting from acquisition
    
    $
    7,708
    
    
    $
    
   4




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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;
 
    
    four cities in Texas, including San Antonio;
 
    
    Las Vegas, Nevada;
 
    
    West Monroe, Louisiana; and
 
    
    Woodland Park, Colorado.
    Principles of Consolidation
  Use of Estimates
  Reclassifications
   5




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 General and Administrative
  Subsequent Events Consideration
  2. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
  December 31,
    
    
    September 30,2010
    
    
    2010Senior secured credit facilities
    
    $
    568,788
    
    
    $
    570,260Senior subordinated notes
    
    
    475,000
    
    
    
    475,000Capital leases and other obligations
    
    
    13,565
    
    
    
    6,3181,057,353
    
    
    
    1,051,578Less current maturities
    
    
    7,693
    
    
    
    6,691$
    1,049,660
    
    
    $
    1,044,887
 Senior Secured Credit Facilities
     6




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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
 Holdings Senior Paid-in-Kind Loans
  3. INTEREST RATE SWAPS
  Total NotionalDate Range
    
    Amounts(in thousands)Expiring on February 28, 2011
    
    $
    225,000Expiring on February 29, 2012
    
    $
    200,000
   7




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##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    4. ACQUISITIONS
  5. GOODWILL
  Acute
    
    
    HealthCare
    
    
    Choice
    
    
    TotalBalance at September 30, 2010
    
    $
    712,486
    
    
    $
    5,757
    
    
    $
    718,243Brim acquisition
    
    
    78,183
    
    
    
    
    
    
    
    78,183Other acquisitions
    
    
    1,968
    
    
    
    
    
    
    
    1,968Balance at December 31, 2010
    
    $
    792,637
    
    
    $
    5,757
    
    
    $
    798,394
   8




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 6. COMPREHENSIVE INCOME
  Quarter EndedDecember 31,2010
    
    
    2009Net earnings
    
    $
    13,517
    
    
    $
    19,383Change in fair value of interest rate swaps
    
    
    1,560
    
    
    
    289Change in income tax expense
    
    
    (577
    )
    
    
    (109
    )Comprehensive income
    
    $
    14,500
    
    
    $
    19,563
  December 31,
    
    
    September 30,2010
    
    
    2010Fair value of interest rate swaps
    
    $
    (4,147
    )
    
    $
    (5,707
    )Income tax benefit
    
    
    1,551
    
    
    
    2,128Accumulated other comprehensive loss
    
    $
    (2,596
    )
    
    $
    (3,579
    )
 7. COMMITMENTS AND CONTINGENCIES
 Net Revenue
  Professional, General and Workers Compensation Liability Risks
    9




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Health Choice
  Acquisitions
  Other
 qui tam qui tam qui tam qui tam qui tam qui tam qui tam qui tam
  10




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   8. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 Health Care Entities Measuring Charity Care for Disclosure
  11




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 9. SEGMENT AND GEOGRAPHIC INFORMATION
  For the Quarter Ended December 31, 2010Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    471,139
    
    
    $
    
    
    
    $
    
    
    
    $
    471,139Premium revenue
    
    
    
    
    
    
    202,192
    
    
    
    
    
    
    
    202,192Revenue between segments
    
    
    2,660
    
    
    
    
    
    
    
    (2,660
    )
    
    
    Net revenue
    
    
    473,799
    
    
    
    202,192
    
    
    
    (2,660
    )
    
    
    673,331Salaries and benefits (excludes
stock compensation)
    
    
    184,394
    
    
    
    5,023
    
    
    
    
    
    
    
    189,417Supplies
    
    
    76,392
    
    
    
    44
    
    
    
    
    
    
    
    76,436Medical claims
    
    
    
    
    
    
    173,994
    
    
    
    (2,660
    )
    
    
    171,334Other operating expenses
    
    
    90,830
    
    
    
    6,296
    
    
    
    
    
    
    
    97,126Provision for bad debts
    
    
    59,614
    
    
    
    
    
    
    
    
    
    
    
    59,614Rentals and leases
    
    
    10,722
    
    
    
    444
    
    
    
    
    
    
    
    11,166Adjusted EBITDA(1)
    
    
    51,847
    
    
    
    16,391
    
    
    
    
    
    
    
    68,238Interest expense, net
    
    
    16,877
    
    
    
    
    
    
    
    
    
    
    
    16,877Depreciation and amortization
    
    
    23,151
    
    
    
    895
    
    
    
    
    
    
    
    24,046Stock compensation
    
    
    496
    
    
    
    
    
    
    
    
    
    
    
    496Management fees
    
    
    1,250
    
    
    
    
    
    
    
    
    
    
    
    1,250Earnings from continuing
operations before gain on
disposal of assets and income
taxes
    
    
    10,073
    
    
    
    15,496
    
    
    
    
    
    
    
    25,569Gain on disposal of assets, net
    
    
    345
    
    
    
    
    
    
    
    
    
    
    
    345Earnings from continuing
operations before income
taxes
    
    $
    10,418
    
    
    $
    15,496
    
    
    $
    
    
    
    $
    25,914Segment assets
    
    $
    2,059,986
    
    
    $
    326,396
    
    
    
    
    
    
    $
    2,386,382Capital expenditures
    
    $
    15,360
    
    
    $
    
    
    
    
    
    
    
    $
    15,360Goodwill
    
    $
    792,637
    
    
    $
    5,757
    
    
    
    
    
    
    $
    798,394
  12




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 For the Quarter Ended December 31, 2009Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    424,660
    
    
    $
    
    
    
    $
    
    
    
    $
    424,660Premium revenue
    
    
    
    
    
    
    204,297
    
    
    
    
    
    
    
    204,297Revenue between segments
    
    
    2,676
    
    
    
    
    
    
    
    (2,676
    )
    
    
    Net revenue
    
    
    427,336
    
    
    
    204,297
    
    
    
    (2,676
    )
    
    
    628,957Salaries and benefits (excludes
stock compensation)
    
    
    165,769
    
    
    
    4,592
    
    
    
    
    
    
    
    170,361Supplies
    
    
    65,362
    
    
    
    47
    
    
    
    
    
    
    
    65,409Medical claims
    
    
    
    
    
    
    181,243
    
    
    
    (2,676
    )
    
    
    178,567Other operating expenses
    
    
    78,325
    
    
    
    6,267
    
    
    
    
    
    
    
    84,592Provision for bad debts
    
    
    47,949
    
    
    
    
    
    
    
    
    
    
    
    47,949Rentals and leases
    
    
    9,904
    
    
    
    371
    
    
    
    
    
    
    
    10,275Adjusted EBITDA(1)
    
    
    60,027
    
    
    
    11,777
    
    
    
    
    
    
    
    71,804Interest expense, net
    
    
    16,732
    
    
    
    
    
    
    
    
    
    
    
    16,732Depreciation and amortization
    
    
    22,988
    
    
    
    889
    
    
    
    
    
    
    
    23,877Stock compensation
    
    
    121
    
    
    
    
    
    
    
    
    
    
    
    121Management fees
    
    
    1,250
    
    
    
    
    
    
    
    
    
    
    
    1,250Earnings from continuing
operations before gain on
disposal of assets and income
taxes
    
    
    18,936
    
    
    
    10,888
    
    
    
    
    
    
    
    29,824Gain on disposal of assets, net
    
    
    104
    
    
    
    
    
    
    
    
    
    
    
    104Earnings from continuing
operations before income
taxes
    
    $
    19,040
    
    
    $
    10,888
    
    
    $
    
    
    
    $
    29,928Segment assets
    
    $
    2,085,057
    
    
    $
    249,311
    
    
    
    
    
    
    $
    2,334,368Capital expenditures
    
    $
    12,272
    
    
    $
    10
    
    
    
    
    
    
    $
    12,282Goodwill
    
    $
    712,163
    
    
    $
    5,757
    
    
    
    
    
    
    $
    717,920
 (1)
    
    Adjusted EBITDA represents net earnings from continuing operations before interest expense,
income tax expense, depreciation and amortization, stock compensation, gain on
disposal of assets 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.  13




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IASIS HEALTHCARE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 10. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
 3 4
    14




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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
    
    $
    
    
    
    $
    123,011
    
    
    $
    6,235
    
    
    $
    
    
    
    $
    129,246Accounts receivable, net
    
    
    
    
    
    
    91,964
    
    
    
    144,130
    
    
    
    
    
    
    
    236,094Inventories
    
    
    
    
    
    
    23,575
    
    
    
    35,506
    
    
    
    
    
    
    
    59,081Deferred income taxes
    
    
    24,854
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,854Prepaid expenses and other
current assets
    
    
    
    
    
    
    32,202
    
    
    
    39,619
    
    
    
    
    
    
    
    71,821Total current assets
    
    
    24,854
    
    
    
    270,752
    
    
    
    225,490
    
    
    
    
    
    
    
    521,096Property and equipment, net
    
    
    
    
    
    
    349,082
    
    
    
    648,685
    
    
    
    
    
    
    
    997,767Intercompany
    
    
    
    
    
    
    (292,257
    )
    
    
    292,257
    
    
    
    
    
    
    
    Net investment in and advances
to subsidiaries
    
    
    1,835,755
    
    
    
    
    
    
    
    
    
    
    
    (1,835,755
    )
    
    
    Goodwill
    
    
    7,701
    
    
    
    83,257
    
    
    
    707,436
    
    
    
    
    
    
    
    798,394Other intangible assets, net
    
    
    
    
    
    
    7,184
    
    
    
    26,250
    
    
    
    
    
    
    
    33,434Other assets, net
    
    
    11,208
    
    
    
    17,535
    
    
    
    6,948
    
    
    
    
    
    
    
    35,691Total assets
    
    $
    1,879,518
    
    
    $
    435,553
    
    
    $
    1,907,066
    
    
    $
    (1,835,755
    )
    
    $
    2,386,382Liabilities and EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    22,520
    
    
    $
    55,469
    
    
    $
    
    
    
    $
    77,989Salaries and benefits
payable
    
    
    
    
    
    
    18,319
    
    
    
    17,261
    
    
    
    
    
    
    
    35,580Accrued interest payable
    
    
    2,108
    
    
    
    (3,222
    )
    
    
    3,222
    
    
    
    
    
    
    
    2,108Medical claims payable
    
    
    
    
    
    
    
    
    
    
    116,457
    
    
    
    
    
    
    
    116,457Other accrued expenses and
other current liabilities
    
    
    
    
    
    
    37,966
    
    
    
    62,295
    
    
    
    
    
    
    
    100,261Current portion of
long-term debt and capital
lease obligations
    
    
    5,890
    
    
    
    1,803
    
    
    
    24,855
    
    
    
    (24,855
    )
    
    
    7,693Total current liabilities
    
    
    7,998
    
    
    
    77,386
    
    
    
    279,559
    
    
    
    (24,855
    )
    
    
    340,088Long-term debt and capital
lease obligations
    
    
    1,037,898
    
    
    
    11,762
    
    
    
    545,198
    
    
    
    (545,198
    )
    
    
    1,049,660Deferred income taxes
    
    
    108,566
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,566Other long-term liabilities
    
    
    
    
    
    
    63,684
    
    
    
    633
    
    
    
    
    
    
    
    64,317Total liabilities
    
    
    1,154,462
    
    
    
    152,832
    
    
    
    825,390
    
    
    
    (570,053
    )
    
    
    1,562,631Non-controlling interests with
redemption rights
    
    
    
    
    
    
    88,433
    
    
    
    
    
    
    
    
    
    
    
    88,433Equity:Members equity
    
    
    725,056
    
    
    
    184,026
    
    
    
    1,081,676
    
    
    
    (1,265,702
    )
    
    
    725,056Non-controlling interests
    
    
    
    
    
    
    10,262
    
    
    
    
    
    
    
    
    
    
    
    10,262Total equity
    
    
    725,056
    
    
    
    194,288
    
    
    
    1,081,676
    
    
    
    (1,265,702
    )
    
    
    735,318Total liabilities and equity
    
    $
    1,879,518
    
    
    $
    435,553
    
    
    $
    1,907,066
    
    
    $
    (1,835,755
    )
    
    $
    2,386,382
  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
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    143,599
    
    
    $
    912
    
    
    $
    
    
    
    $
    144,511Accounts receivable, net
    
    
    
    
    
    
    81,649
    
    
    
    127,524
    
    
    
    
    
    
    
    209,173Inventories
    
    
    
    
    
    
    22,793
    
    
    
    31,049
    
    
    
    
    
    
    
    53,842Deferred income taxes
    
    
    15,881
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,881Prepaid expenses and other
current assets
    
    
    
    
    
    
    23,577
    
    
    
    41,763
    
    
    
    
    
    
    
    65,340Total current assets
    
    
    15,881
    
    
    
    271,618
    
    
    
    201,248
    
    
    
    
    
    
    
    488,747Property and equipment, net
    
    
    
    
    
    
    351,265
    
    
    
    634,026
    
    
    
    
    
    
    
    985,291Intercompany
    
    
    
    
    
    
    (297,257
    )
    
    
    297,257
    
    
    
    
    
    
    
    Net investment in and advances
to subsidiaries
    
    
    1,823,973
    
    
    
    
    
    
    
    
    
    
    
    (1,823,973
    )
    
    
    Goodwill
    
    
    17,331
    
    
    
    65,504
    
    
    
    635,408
    
    
    
    
    
    
    
    718,243Other intangible assets, net
    
    
    
    
    
    
    
    
    
    
    27,000
    
    
    
    
    
    
    
    27,000Deposit for acquisition
    
    
    
    
    
    
    97,891
    
    
    
    
    
    
    
    
    
    
    
    97,891Other assets, net
    
    
    12,018
    
    
    
    17,967
    
    
    
    6,037
    
    
    
    
    
    
    
    36,022Total assets
    
    $
    1,869,203
    
    
    $
    506,988
    
    
    $
    1,800,976
    
    
    $
    (1,823,973
    )
    
    $
    2,353,194Liabilities and EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    32,400
    
    
    $
    46,531
    
    
    $
    
    
    
    $
    78,931Salaries and benefits payable
    
    
    
    
    
    
    19,916
    
    
    
    18,194
    
    
    
    
    
    
    
    38,110Accrued interest payable
    
    
    12,536
    
    
    
    (3,237
    )
    
    
    3,237
    
    
    
    
    
    
    
    12,536Medical claims payable
    
    
    
    
    
    
    
    
    
    
    111,373
    
    
    
    
    
    
    
    111,373Other accrued expenses and
other current liabilities
    
    
    
    
    
    
    32,326
    
    
    
    74,288
    
    
    
    
    
    
    
    106,614Current portion of long-term
debt and capital lease
obligations
    
    
    5,890
    
    
    
    801
    
    
    
    20,570
    
    
    
    (20,570
    )
    
    
    6,691Total current liabilities
    
    
    18,426
    
    
    
    82,206
    
    
    
    274,193
    
    
    
    (20,570
    )
    
    
    354,255Long-term debt and capital
lease obligations
    
    
    1,039,370
    
    
    
    5,517
    
    
    
    547,170
    
    
    
    (547,170
    )
    
    
    1,044,887Deferred income taxes
    
    
    109,272
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109,272Other long-term liabilities
    
    
    
    
    
    
    59,527
    
    
    
    635
    
    
    
    
    
    
    
    60,162Total liabilities
    
    
    1,167,068
    
    
    
    147,250
    
    
    
    821,998
    
    
    
    (567,740
    )
    
    
    1,568,576Non-controlling interests with
redemption rights
    
    
    
    
    
    
    72,112
    
    
    
    
    
    
    
    
    
    
    
    72,112Equity:Members equity
    
    
    702,135
    
    
    
    277,255
    
    
    
    978,978
    
    
    
    (1,256,233
    )
    
    
    702,135Non-controlling interests
    
    
    
    
    
    
    10,371
    
    
    
    
    
    
    
    
    
    
    
    10,371Total equity
    
    
    702,135
    
    
    
    287,626
    
    
    
    978,978
    
    
    
    (1,256,233
    )
    
    
    712,506Total liabilities and equity
    
    $
    1,869,203
    
    
    $
    506,988
    
    
    $
    1,800,976
    
    
    $
    (1,823,973
    )
    
    $
    2,353,194
  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
    
    $
    
    
    
    $
    184,286
    
    
    $
    289,513
    
    
    $
    (2,660
    )
    
    $
    471,139Premium revenue
    
    
    
    
    
    
    
    
    
    
    202,192
    
    
    
    
    
    
    
    202,192Total net revenue
    
    
    
    
    
    
    184,286
    
    
    
    491,705
    
    
    
    (2,660
    )
    
    
    673,331Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    93,343
    
    
    
    96,570
    
    
    
    
    
    
    
    189,913Supplies
    
    
    
    
    
    
    30,767
    
    
    
    45,669
    
    
    
    
    
    
    
    76,436Medical claims
    
    
    
    
    
    
    
    
    
    
    173,994
    
    
    
    (2,660
    )
    
    
    171,334Other operating expenses
    
    
    
    
    
    
    32,728
    
    
    
    64,398
    
    
    
    
    
    
    
    97,126Provision for bad debts
    
    
    
    
    
    
    25,493
    
    
    
    34,121
    
    
    
    
    
    
    
    59,614Rentals and leases
    
    
    
    
    
    
    4,590
    
    
    
    6,576
    
    
    
    
    
    
    
    11,166Interest expense, net
    
    
    16,877
    
    
    
    
    
    
    
    10,390
    
    
    
    (10,390
    )
    
    
    16,877Depreciation and
amortization
    
    
    
    
    
    
    9,996
    
    
    
    14,050
    
    
    
    
    
    
    
    24,046Management fees
    
    
    1,250
    
    
    
    (6,181
    )
    
    
    6,181
    
    
    
    
    
    
    
    1,250Equity in earnings of
affiliates
    
    
    (26,789
    )
    
    
    
    
    
    
    
    
    
    
    26,789
    
    
    
    Total costs and expenses
    
    
    (8,662
    )
    
    
    190,736
    
    
    
    451,949
    
    
    
    13,739
    
    
    
    647,762Earnings (loss) from
continuing operations before
gain (loss) on disposal of assets and
income taxes
    
    
    8,662
    
    
    
    (6,450
    )
    
    
    39,756
    
    
    
    (16,399
    )
    
    
    25,569Gain (loss) on disposal of assets, net
    
    
    
    
    
    
    364
    
    
    
    (19
    )
    
    
    
    
    
    
    345Earnings (loss) from
continuing operations before
income taxes
    
    
    8,662
    
    
    
    (6,086
    )
    
    
    39,737
    
    
    
    (16,399
    )
    
    
    25,914Income tax expense
    
    
    9,189
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,189Net earnings (loss) from
continuing operations
    
    
    (527
    )
    
    
    (6,086
    )
    
    
    39,737
    
    
    
    (16,399
    )
    
    
    16,725Earnings (loss) from
discontinued operations, net
of income taxes
    
    
    1,883
    
    
    
    (5,031
    )
    
    
    (60
    )
    
    
    
    
    
    
    (3,208
    )Net earnings (loss)
    
    
    1,356
    
    
    
    (11,117
    )
    
    
    39,677
    
    
    
    (16,399
    )
    
    
    13,517Net earnings attributable to
non-controlling interests
    
    
    
    
    
    
    (1,771
    )
    
    
    
    
    
    
    
    
    
    
    (1,771
    )Net earnings (loss)
attributable to IASIS
Healthcare LLC
    
    $
    1,356
    
    
    $
    (12,888
    )
    
    $
    39,677
    
    
    $
    (16,399
    )
    
    $
    11,746
  17




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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
    
    $
    
    
    
    $
    171,301
    
    
    $
    256,035
    
    
    $
    (2,676
    )
    
    $
    424,660Premium revenue
    
    
    
    
    
    
    
    
    
    
    204,297
    
    
    
    
    
    
    
    204,297Total net revenue
    
    
    
    
    
    
    171,301
    
    
    
    460,332
    
    
    
    (2,676
    )
    
    
    628,957Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    86,609
    
    
    
    83,873
    
    
    
    
    
    
    
    170,482Supplies
    
    
    
    
    
    
    27,438
    
    
    
    37,971
    
    
    
    
    
    
    
    65,409Medical claims
    
    
    
    
    
    
    
    
    
    
    181,243
    
    
    
    (2,676
    )
    
    
    178,567Other operating expenses
    
    
    
    
    
    
    29,889
    
    
    
    54,703
    
    
    
    
    
    
    
    84,592Provision for bad debts
    
    
    
    
    
    
    22,323
    
    
    
    25,626
    
    
    
    
    
    
    
    47,949Rentals and leases
    
    
    
    
    
    
    4,426
    
    
    
    5,849
    
    
    
    
    
    
    
    10,275Interest expense, net
    
    
    16,732
    
    
    
    
    
    
    
    9,744
    
    
    
    (9,744
    )
    
    
    16,732Depreciation and
amortization
    
    
    
    
    
    
    9,910
    
    
    
    13,967
    
    
    
    
    
    
    
    23,877Management fees
    
    
    1,250
    
    
    
    (5,564
    )
    
    
    5,564
    
    
    
    
    
    
    
    1,250Equity in earnings of
affiliates
    
    
    (36,212
    )
    
    
    
    
    
    
    
    
    
    
    36,212
    
    
    
    Total costs and expenses
    
    
    (18,230
    )
    
    
    175,031
    
    
    
    418,540
    
    
    
    23,792
    
    
    
    599,133Earnings (loss) from
continuing operations before
gain on disposal of assets and
income taxes
    
    
    18,230
    
    
    
    (3,730
    )
    
    
    41,792
    
    
    
    (26,468
    )
    
    
    29,824Gain on disposal of assets, net
    
    
    
    
    
    
    76
    
    
    
    28
    
    
    
    
    
    
    
    104Earnings (loss) from
continuing operations before
income taxes
    
    
    18,230
    
    
    
    (3,654
    )
    
    
    41,820
    
    
    
    (26,468
    )
    
    
    29,928Income tax expense
    
    
    10,591
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,591Net earnings (loss) from
continuing operations
    
    
    7,639
    
    
    
    (3,654
    )
    
    
    41,820
    
    
    
    (26,468
    )
    
    
    19,337Earnings (loss) from
discontinued operations, net
of income taxes
    
    
    (28
    )
    
    
    75
    
    
    
    (1
    )
    
    
    
    
    
    
    46Net earnings (loss)
    
    
    7,611
    
    
    
    (3,579
    )
    
    
    41,819
    
    
    
    (26,468
    )
    
    
    19,383Net earnings attributable to
non-controlling interests
    
    
    
    
    
    
    (2,028
    )
    
    
    
    
    
    
    
    
    
    
    (2,028
    )Net earnings (loss)
attributable to IASIS
Healthcare LLC
    
    $
    7,611
    
    
    $
    (5,607
    )
    
    $
    41,819
    
    
    $
    (26,468
    )
    
    $
    17,355
  18




---



##### 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)
    
    $
    1,356
    
    
    $
    (11,117
    )
    
    $
    39,677
    
    
    $
    (16,399
    )
    
    $
    13,517Adjustments to reconcile net earnings
(loss) to net cash provided by (used in)
operating activities:Loss (earnings) from discontinued
operations
    
    
    (1,883
    )
    
    
    5,031
    
    
    
    60
    
    
    
    
    
    
    
    3,208Depreciation and amortization
    
    
    
    
    
    
    9,996
    
    
    
    14,050
    
    
    
    
    
    
    
    24,046Amortization of loan costs
    
    
    810
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    810Deferred income taxes
    
    
    2,539
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,539Income tax benefit from parent company
interest
    
    
    2,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,240Loss (gain) on disposal of assets, net
    
    
    
    
    
    
    (364
    )
    
    
    19
    
    
    
    
    
    
    
    (345
    )Stock compensation
    
    
    496
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    496Equity in earnings of affiliates
    
    
    (26,789
    )
    
    
    
    
    
    
    
    
    
    
    26,789
    
    
    
    Changes in operating assets and
liabilities, net of the effect of acquisitions and
dispositions:Accounts receivable, net
    
    
    
    
    
    
    (4,451
    )
    
    
    (3,883
    )
    
    
    
    
    
    
    (8,334
    )Inventories, prepaid expenses and
other current assets
    
    
    
    
    
    
    (12,280
    )
    
    
    6,324
    
    
    
    
    
    
    
    (5,956
    )Accounts payable, other accrued
expenses and other accrued
liabilities
    
    
    (10,428
    )
    
    
    (2,105
    )
    
    
    (12,966
    )
    
    
    
    
    
    
    (25,499
    )Net cash provided by (used in)
operating activities  continuing
operations
    
    
    (31,659
    )
    
    
    (15,290
    )
    
    
    43,281
    
    
    
    10,390
    
    
    
    6,722Net cash provided by (used in)
operating activities  discontinued
operations
    
    
    (1,883
    )
    
    
    1,643
    
    
    
    
    
    
    
    
    
    
    
    (240
    )Net cash provided by (used in)
operating activities
    
    
    (33,542
    )
    
    
    (13,647
    )
    
    
    43,281
    
    
    
    10,390
    
    
    
    6,482Cash flows from investing activitiesPurchases of property and equipment, net
    
    
    
    
    
    
    (6,597
    )
    
    
    (8,763
    )
    
    
    
    
    
    
    (15,360
    )Payment for acquisitions
    
    
    
    
    
    
    (574
    )
    
    
    (1,306
    )
    
    
    
    
    
    
    (1,880
    )Change in other assets, net
    
    
    
    
    
    
    (3,826
    )
    
    
    4,341
    
    
    
    
    
    
    
    515Net cash
used in investing activities
    
    
    
    
    
    
    (10,997
    )
    
    
    (5,728
    )
    
    
    
    
    
    
    (16,725
    )Cash flows from financing activitiesPayment of debt and capital lease
obligations
    
    
    (1,474
    )
    
    
    
    
    
    
    (459
    )
    
    
    
    
    
    
    (1,933
    )Distributions to non-controlling interests
    
    
    
    
    
    
    (33
    )
    
    
    (3,056
    )
    
    
    
    
    
    
    (3,089
    )Change in intercompany balances with
affiliates, net
    
    
    35,016
    
    
    
    4,089
    
    
    
    (28,715
    )
    
    
    (10,390
    )
    
    
    Net cash provided by (used in)
financing activities
    
    
    33,542
    
    
    
    4,056
    
    
    
    (32,230
    )
    
    
    (10,390
    )
    
    
    (5,022
    )Change in cash and cash equivalents
    
    
    
    
    
    
    (20,588
    )
    
    
    5,323
    
    
    
    
    
    
    
    (15,265
    )Cash and cash equivalents at beginning of
period
    
    
    
    
    
    
    143,599
    
    
    
    912
    
    
    
    
    
    
    
    144,511Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    123,011
    
    
    $
    6,235
    
    
    $
    
    
    
    $
    129,246
  19




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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
    
    
    ConsolidatedCash flows from operating activitiesNet earnings (loss)
    
    $
    7,611
    
    
    $
    (3,579
    )
    
    $
    41,819
    
    
    $
    (26,468
    )
    
    $
    19,383Adjustments to reconcile net earnings
(loss) to net cash provided by (used in)
operating activities:Loss (earnings) from discontinued
operations
    
    
    28
    
    
    
    (75
    )
    
    
    1
    
    
    
    
    
    
    
    (46
    )Depreciation and amortization
    
    
    
    
    
    
    9,910
    
    
    
    13,967
    
    
    
    
    
    
    
    23,877Amortization of loan costs
    
    
    775
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    775Deferred income taxes
    
    
    2,652
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,652Income tax benefit from parent company
interest
    
    
    2,224
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,224Gain on disposal of assets, net
    
    
    
    
    
    
    (76
    )
    
    
    (28
    )
    
    
    
    
    
    
    (104
    )Stock compensation
    
    
    121
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    121Equity in earnings of affiliates
    
    
    (36,212
    )
    
    
    
    
    
    
    
    
    
    
    36,212
    
    
    
    Changes in operating assets and
liabilities, net of the effect of
dispositions:Accounts receivable, net
    
    
    
    
    
    
    (659
    )
    
    
    (3,673
    )
    
    
    
    
    
    
    (4,332
    )Inventories, prepaid expenses and
other current assets
    
    
    
    
    
    
    (3,409
    )
    
    
    7,895
    
    
    
    
    
    
    
    4,486Accounts payable, other accrued
expenses and other accrued
liabilities
    
    
    (10,406
    )
    
    
    (13,783
    )
    
    
    (15,184
    )
    
    
    
    
    
    
    (39,373
    )Net cash provided by (used in)
operating activities  continuing
operations
    
    
    (33,207
    )
    
    
    (11,671
    )
    
    
    44,797
    
    
    
    9,744
    
    
    
    9,663Net cash used in
operating activities  discontinued
operations
    
    
    (28
    )
    
    
    (97
    )
    
    
    
    
    
    
    
    
    
    
    (125
    )Net cash provided by (used in)
operating activities
    
    
    (33,235
    )
    
    
    (11,768
    )
    
    
    44,797
    
    
    
    9,744
    
    
    
    9,538Cash flows from investing activitiesPurchases of property and equipment, net
    
    
    
    
    
    
    (5,620
    )
    
    
    (6,662
    )
    
    
    
    
    
    
    (12,282
    )Proceeds from sale of assets
    
    
    
    
    
    
    3
    
    
    
    28
    
    
    
    
    
    
    
    31Change in other assets, net
    
    
    
    
    
    
    414
    
    
    
    245
    
    
    
    
    
    
    
    659Net cash used in investing activities
    
    
    
    
    
    
    (5,203
    )
    
    
    (6,389
    )
    
    
    
    
    
    
    (11,592
    )Cash flows from financing activitiesPayment of debt and capital lease
obligations
    
    
    (3,016
    )
    
    
    (34
    )
    
    
    (402
    )
    
    
    
    
    
    
    (3,452
    )Distributions to non-controlling interests
    
    
    
    
    
    
    (66
    )
    
    
    (3,868
    )
    
    
    
    
    
    
    (3,934
    )Costs paid
for the repurchase of partnership interests, net
    
    
    
    
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    (13
    )Change in intercompany balances with
affiliates, net
    
    
    36,251
    
    
    
    7,631
    
    
    
    (34,138
    )
    
    
    (9,744
    )
    
    
    Net cash provided by (used in)
financing activities
    
    
    33,235
    
    
    
    7,518
    
    
    
    (38,408
    )
    
    
    (9,744
    )
    
    
    (7,399
    )Change in cash and cash equivalents
    
    
    
    
    
    
    (9,453
    )
    
    
    
    
    
    
    
    
    
    
    (9,453
    )Cash and cash equivalents at beginning of
period
    
    
    
    
    
    
    206,331
    
    
    
    197
    
    
    
    
    
    
    
    206,528Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    196,878
    
    
    $
    197
    
    
    $
    
    
    
    $
    197,075
  20




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  FORWARD LOOKING STATEMENTS
 qui tam
  21




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##### Table of Contents



EXECUTIVE OVERVIEW
  
    
    Salt Lake City, Utah;
    
    Phoenix, Arizona;
    
    Tampa-St. Petersburg, Florida;
    
    four cities in Texas, including San Antonio;
    
    Las Vegas, Nevada;
    
    West Monroe, Louisiana; and
    
    Woodland Park, Colorado.
   Significant Industry Trends
  The Impact of Health Reform
   22




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Payor Mix Shift
  Value-Based Reimbursement
       23




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##### Table of Contents



Physician Alignment and Integration
    Uncompensated Care
     24




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##### Table of Contents



December 31,
    
    
    September 30,2010
    
    
    2010Insured receivables
    
    
    61.4
    %
    
    
    61.8
    %Uninsured receivables
    
    
    38.6
    %
    
    
    38.2
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
   December 31,
    
    
    September 30,2010
    
    

20100 to 90 days
    
    
    69.3
    %
    
    
    69.4
    %91 to 180 days
    
    
    16.7
    %
    
    
    18.1
    %Over 180 days
    
    
    14.0
    %
    
    
    12.5
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
 Revenue and Volume Trends
  Acute Care Revenue
    25




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##### Table of Contents



QuarterEnded December 31,2010
    
    
    2009Medicare
    
    
    30.9
    %
    
    
    30.4
    %Managed Medicare
    
    
    12.1
    %
    
    
    11.2
    %Medicaid
    
    
    9.1
    %
    
    
    8.9
    %Managed Medicaid
    
    
    11.1
    %
    
    
    11.9
    %Managed care and other
    
    
    31.2
    %
    
    
    32.8
    %Self-pay
    
    
    5.6
    %
    
    
    4.8
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
     26




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##### Table of Contents



Premium Revenue
     CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   27




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##### Table of Contents



SELECTED OPERATING DATA
  QuarterEnded December 31,2010
    
    
    2009Acute Care:Number of acute care hospital facilities at end of period
    
    
    17
    
    
    
    15Licensed beds at end of period (1)
    
    
    3,570
    
    
    
    3,185Average length of stay (days) (2)
    
    
    4.9
    
    
    
    4.8Occupancy rates (average beds in service)
    
    
    45.3
    %
    
    
    45.4
    %Admissions (3)
    
    
    26,202
    
    
    
    25,253Adjusted admissions (4)
    
    
    45,312
    
    
    
    42,067Patient days (5)
    
    
    127,807
    
    
    
    120,551Adjusted patient days (4)
    
    
    211,696
    
    
    
    193,223Net patient revenue per adjusted admission
    
    $
    10,325
    
    
    $
    10,026Same-Facility
Acute Care (6):Number of acute care hospital facilities at end of period
    
    
    15
    
    
    
    15Licensed beds at end of period (1)
    
    
    3,185
    
    
    
    3,185Average length of stay (days) (2)
    
    
    4.9
    
    
    
    4.8Occupancy rates (average beds in service)
    
    
    44.8
    %
    
    
    45.4
    %Admissions (3)
    
    
    24,137
    
    
    
    25,253Adjusted admissions (4)
    
    
    41,436
    
    
    
    42,067Patient days (5)
    
    
    119,284
    
    
    
    120,551Adjusted patient days (4)
    
    
    196,045
    
    
    
    193,223Net patient revenue per adjusted admission
    
    $
    10,497
    
    
    $
    10,026Health Choice:Medicaid covered lives
    
    
    193,126
    
    
    
    194,195Dual-eligible lives (7)
    
    
    4,332
    
    
    
    3,997Medical loss ratio (8)
    
    
    86.1
    %
    
    
    88.7
    %
 (1)
    
    Includes St. Lukes Behavioral Hospital.(2)
    
    Represents the average number of days that a patient stayed in our hospitals.(3)
    
    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.(4)
    
    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.(5)
    
    Represents the number of days our beds were occupied by inpatients over the period.(6)
    
    Excludes the impact of the Brim acquisition, which was effective October 1, 2010.(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.  28




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##### Table of Contents



RESULTS OF OPERATIONS SUMMARY
 Consolidated
  Quarter Ended
    
    
    Quarter EndedDecember 31, 2010
    
    
    December 31, 2009($ in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageNet revenue:Acute care revenue
    
    $
    471,139
    
    
    
    70.0
    %
    
    $
    424,660
    
    
    
    67.5
    %Premium revenue
    
    
    202,192
    
    
    
    30.0
    %
    
    
    204,297
    
    
    
    32.5
    %Total net revenue
    
    
    673,331
    
    
    
    100.0
    %
    
    
    628,957
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    189,913
    
    
    
    28.2
    %
    
    
    170,482
    
    
    
    27.1
    %Supplies
    
    
    76,436
    
    
    
    11.4
    %
    
    
    65,409
    
    
    
    10.4
    %Medical claims
    
    
    171,334
    
    
    
    25.4
    %
    
    
    178,567
    
    
    
    28.4
    %Other operating expenses
    
    
    97,126
    
    
    
    14.4
    %
    
    
    84,592
    
    
    
    13.4
    %Provision for bad debts
    
    
    59,614
    
    
    
    8.9
    %
    
    
    47,949
    
    
    
    7.6
    %Rentals and leases
    
    
    11,166
    
    
    
    1.7
    %
    
    
    10,275
    
    
    
    1.7
    %Interest expense, net
    
    
    16,877
    
    
    
    2.5
    %
    
    
    16,732
    
    
    
    2.7
    %Depreciation and amortization
    
    
    24,046
    
    
    
    3.5
    %
    
    
    23,877
    
    
    
    3.8
    %Management fees
    
    
    1,250
    
    
    
    0.2
    %
    
    
    1,250
    
    
    
    0.2
    %Total costs and expenses
    
    
    647,762
    
    
    
    96.2
    %
    
    
    599,133
    
    
    
    95.3
    %Earnings from continuing
operations before gain on
disposal of assets and income
taxes
    
    
    25,569
    
    
    
    3.8
    %
    
    
    29,824
    
    
    
    4.7
    %Gain on disposal of assets, net
    
    
    345
    
    
    
    0.1
    %
    
    
    104
    
    
    
    0.1
    %Earnings from continuing
operations before income taxes
    
    
    25,914
    
    
    
    3.9
    %
    
    
    29,928
    
    
    
    4.8
    %Income tax expense
    
    
    9,189
    
    
    
    1.4
    %
    
    
    10,591
    
    
    
    1.7
    %Net earnings from continuing
operations
    
    
    16,725
    
    
    
    2.5
    %
    
    
    19,337
    
    
    
    3.1
    %Earnings (loss) from
discontinued operations, net of
income taxes
    
    
    (3,208
    )
    
    
    (0.5
    )%
    
    
    46
    
    
    
    0.0
    %Net earnings
    
    
    13,517
    
    
    
    2.0
    %
    
    
    19,383
    
    
    
    3.1
    %Net earnings attributable to
non-controlling interests
    
    
    (1,771
    )
    
    
    (0.3
    )
    
    
    (2,028
    )
    
    
    (0.3
    )Net earnings attributable to
IASIS Healthcare LLC
    
    $
    11,746
    
    
    
    1.7
    %
    
    $
    17,355
    
    
    
    2.8
    %
  29




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##### Table of Contents



Acute Care
  Quarter Ended
    
    
    Quarter EndedDecember 31, 2010
    
    
    December 31, 2009($ in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageNet revenue:Acute care revenue
    
    $
    471,139
    
    
    
    99.4
    %
    
    $
    424,660
    
    
    
    99.4
    %Revenue between segments (1)
    
    
    2,660
    
    
    
    0.6
    %
    
    
    2,676
    
    
    
    0.6
    %Total acute care revenue
    
    
    473,799
    
    
    
    100.0
    %
    
    
    427,336
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    184,890
    
    
    
    39.0
    %
    
    
    165,890
    
    
    
    38.8
    %Supplies
    
    
    76,392
    
    
    
    16.1
    %
    
    
    65,362
    
    
    
    15.3
    %Other operating expenses
    
    
    90,830
    
    
    
    19.2
    %
    
    
    78,325
    
    
    
    18.3
    %Provision for bad debts
    
    
    59,614
    
    
    
    12.6
    %
    
    
    47,949
    
    
    
    11.2
    %Rentals and leases
    
    
    10,722
    
    
    
    2.3
    %
    
    
    9,904
    
    
    
    2.4
    %Interest expense, net
    
    
    16,877
    
    
    
    3.5
    %
    
    
    16,732
    
    
    
    3.9
    %Depreciation and amortization
    
    
    23,151
    
    
    
    4.9
    %
    
    
    22,988
    
    
    
    5.4
    %Management fees
    
    
    1,250
    
    
    
    0.3
    %
    
    
    1,250
    
    
    
    0.3
    %Total costs and expenses
    
    
    463,726
    
    
    
    97.9
    %
    
    
    408,400
    
    
    
    95.6
    %Earnings from continuing
operations before gain on
disposal of assets and income
taxes
    
    
    10,073
    
    
    
    2.1
    %
    
    
    18,936
    
    
    
    4.4
    %Gain on disposal of assets, net
    
    
    345
    
    
    
    0.1
    %
    
    
    104
    
    
    
    0.1
    %Earnings from continuing
operations before income taxes
    
    $
    10,418
    
    
    
    2.2
    %
    
    $
    19,040
    
    
    
    4.5
    %
 (1)
    
    Revenue between segments is eliminated in our consolidated results. Acute care revenue 
  Salaries and benefits 
 Supplies 
  30




---



##### Table of Contents



Other operating expenses
 Provision for bad debts 
 Health Choice
  Quarter Ended
    
    
    Quarter EndedDecember 31, 2010
    
    
    December 31, 2009($ in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentagePremium revenue:Premium revenue
    
    $
    202,192
    
    
    
    100.0
    %
    
    $
    204,297
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    5,023
    
    
    
    2.5
    %
    
    
    4,592
    
    
    
    2.2
    %Supplies
    
    
    44
    
    
    
    0.0
    %
    
    
    47
    
    
    
    0.0
    %Medical claims (1)
    
    
    173,994
    
    
    
    86.1
    %
    
    
    181,243
    
    
    
    88.7
    %Other operating expenses
    
    
    6,296
    
    
    
    3.1
    %
    
    
    6,267
    
    
    
    3.1
    %Rentals and leases
    
    
    444
    
    
    
    0.2
    %
    
    
    371
    
    
    
    0.2
    %Depreciation and amortization
    
    
    895
    
    
    
    0.4
    %
    
    
    889
    
    
    
    0.5
    %Total costs and expenses
    
    
    186,696
    
    
    
    92.3
    %
    
    
    193,409
    
    
    
    94.7
    %Earnings before income taxes
    
    $
    15,496
    
    
    
    7.7
    %
    
    $
    10,888
    
    
    
    5.3
    %
 (1)
    
    Medical claims paid to our hospitals of $2.7 million for both of the quarters ended December
31, 2010 and 2009, are eliminated in our consolidated results. Premium revenue 
 Medical claims 
  31




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Overview of Cash Flow Activities for the Quarters Ended December 31, 2010 and 2009
  QuarterEnded December 31,2010
    
    
    2009Cash flows from operating activities
    
    $
    6,482
    
    
    $
    9,538Cash flows from investing activities
    
    
    (16,725
    )
    
    
    (11,592
    )Cash flows from financing activities
    
    
    (5,022
    )
    
    
    (7,399
    )
 Operating Activities
   Investing Activities
  Financing Activities
  Capital Resources
  
    
    $854.0 million in senior secured credit facilities; and
    
    $475.0 million in 8 3/4% senior subordinated notes due 2014.
 $854.0 Million Senior Secured Credit Facilities
    32




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$475.0 Million 8 3 / 4 Senior
Subordinated Notes Due 2014
 3 4 3 4 3 4 3 4 3 4 3 4 3 4
 Holdings Senior PIK Loans
   33




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##### Table of Contents



Other
   Capital Expenditures
  
    
    $50.0 million to $55.0 million for growth and new business projects;
    
    $40.0 million to $45.0 million in replacement or maintenance related projects at our
hospitals;
    
    $12.0 million related to our newly acquired facilities; and
    
    $18.0 million in hardware and software costs related to information systems projects,
including healthcare IT stimulus initiatives.
 Liquidity
   Available cash and cash equivalents
    
    $
    129.2Available capacity under our senior secured revolving credit facility
    
    
    183.3Net available liquidity at December 31, 2010
    
    $
    312.5
   34




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##### Table of Contents



3 4
 3 4
 SEASONALITY
  RECENT ACCOUNTING PRONOUNCEMENTS
 Health Care
Entities Measuring Charity Care for Disclosure
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   35




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##### Table of Contents



8 3/4% 3 4
   36




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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
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
 qui tam qui tam qui tam qui tam qui tam qui tam qui tam qui
tam
  37




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##### Table of Contents



Item 1A. Risk Factors
  
 Item 6. Exhibits
  10.1
    
    

Agreement,
dated December 20, 2010 and effective October 31, 2010, by and
between IASIS Healthcare Corporation and David R. White, incorporated
by reference to the Companys Current Report on Form 8-K filed on
December 23, 2010.31.1
    
    
    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.
  38




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##### Table of Contents



SIGNATURES
  IASIS HEALTHCARE LLCDate: February 14, 2011
    By:
    /s/ John M. DoyleJohn M. DoyleChief Financial Officer  39




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description10.1
    
    

Agreement,
dated December 20, 2010 and effective October 31, 2010, by and
between IASIS Healthcare Corporation and David R. White, incorporated
by reference to the Company's Current Report on Form 8-K filed on
December 23, 2010.31.1
    
    
    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.
  40