##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    June 30, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to   Commission file number:
    000-51251
  
 (Exact name of registrant as
    specified in its charter)
  Delaware

20-1538254(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)103 Powell Court,
    Suite 200
    Brentwood, Tennessee(Address of principal
    executive offices)

37027(Zip Code)   (615) 372-8500
 (Registrants telephone
    number, including area code)
  Not Applicable
 (Former name, former address and
    former fiscal year,
 if changed since last
    report)
   þ o
  Rule 12b-2
 þ o o
  Rule 12b-2 o þ




---



##### 



TABLE
    OF CONTENTS
  PART I 
    FINANCIAL INFORMATIONItem 1.

Financial
    Statements


2Item 2.

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


30Item 3.

Quantitative and
    Qualitative Disclosures about Market Risk


67Item 4.

Controls and
    Procedures


67PART II 
    OTHER INFORMATIONItem 1.

Legal
    Proceedings


67Item 1A.

Risk
    factors


68Item 4.

Submission of
    Matters to a Vote of Security Holders


68Item 6.

Exhibits


69EX-10.5 STOCK PURCHASE AGREEMENT 07/14/05EX-10.6 AMENDMENT NO.1 TO THE STOCK PURCHASE AGREEMENT 06/02/06EX-10.7 REPURCHASE AGREEMENT 06/30/06EX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO   1




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements.  LIFEPOINT
    HOSPITALS, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    Unaudited
    (In millions, except per share amounts)
  Three Months Ended June 30,


Six Months Ended June 30,2005


2006


2005


2006Revenues

$
464.4


$
569.2


$
736.4


$
1,158.8Salaries and benefits


184.4



228.8



294.0



459.9Supplies


60.1



77.9



96.0



160.6Other operating expenses


78.8



101.8



123.6



197.5Provision for doubtful accounts


41.1



59.0



64.0



127.4Depreciation and amortization


26.6



16.0



39.8



47.9Interest expense, net


15.4



24.5



17.8



47.7Debt retirement costs


10.0







10.0



Transaction costs


44.6







44.6



461.0



508.0



689.8



1,041.0Income from continuing operations
    before minority interests and income taxes


3.4



61.2



46.6



117.8Minority interests in earnings of
    consolidated entities


0.2



0.4



0.5



0.7Income from continuing operations
    before income taxes


3.2



60.8



46.1



117.1Provision for income taxes


6.3



24.4



23.4



46.9Income (loss) from continuing
    operations


(3.1
)


36.4



22.7



70.2Discontinued operations, net of
    income taxes:Income (loss) from discontinued
    operations


0.6



(1.3
)


1.4



(1.5
)Impairment of assets


(4.7
)






(4.7
)


Gain (loss) on sale of hospitals


0.1



(0.3
)


(0.7
)


3.5Income (loss) from discontinued
    operations


(4.0
)


(1.6
)


(4.0
)


2.0Cumulative effect of change in
    accounting principle, net of income taxes














0.7Net income (loss)

$
(7.1
)

$
34.8


$
18.7


$
72.9Basic earnings (loss) per share:Continuing operations

$
(0.06
)

$
0.65


$
0.51


$
1.26Discontinued operations


(0.07
)


(0.02
)


(0.09
)


0.04Cumulative effect of change in
    accounting principle














0.01Net income (loss)

$
(0.13
)

$
0.63


$
0.42


$
1.31Diluted earnings (loss) per share:Continuing operations

$
(0.06
)

$
0.65


$
0.50


$
1.25Discontinued operations


(0.07
)


(0.03
)


(0.09
)


0.04Cumulative effect of change in
    accounting principle














0.01Net income (loss)

$
(0.13
)

$
0.62


$
0.41


$
1.30Weighted average shares and
    dilutive securities outstanding:Basic


51.8



55.6



44.8



55.5Diluted


51.8



56.2



45.8



56.1    2




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  CONDENSED
    CONSOLIDATED BALANCE SHEETS
 (Dollars
    in millions, except per share amounts)
  December 31,


June 30,2005(1)


2006(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
30.4


$
56.3Accounts receivable, less
    allowances for doubtful accounts of $252.9 at December 31,
    2005 and $287.3 at June 30, 2006


256.8



253.5Inventories


56.9



58.6Assets held for sale


22.0



Prepaid expenses


12.0



13.9Deferred tax assets


44.2



52.6Other current assets


11.0



12.8433.3



447.7Property and equipment:Land


64.4



73.7Buildings and improvements


986.9



1,020.6Equipment


540.3



533.8Construction in progress (estimated
    cost to complete and equip after June 30, 2006 is $98.1)


77.8



63.91,669.4



1,692.0Accumulated depreciation


(373.1
)


(417.2
)1,296.3



1,274.8Deferred loan costs, net


35.4



33.1Intangible assets, net


4.2



13.6Other


5.5



263.0Goodwill


1,449.9



1,470.9$
3,224.6


$
3,503.1LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
85.6


$
73.2Accrued salaries


58.7



59.5Other current liabilities


85.3



84.0Current maturities of long-term debt


0.5



0.7230.1



217.4Long-term debt


1,515.8



1,760.0Deferred income taxes


124.0



81.3Professional and general liability
    claims and other liabilities


60.3



65.1Minority interests in equity of
    consolidated entities


6.6



6.7Stockholders equity:Preferred stock, $0.01 par
    value; 10,000,000 shares authorized; no shares issued






Common stock, $0.01 par value;
    90,000,000 shares authorized; 57,102,882 shares and
    57,299,788 shares issued and outstanding at
    December 31, 2005 and June 30, 2006, respectively


0.6



0.6Capital in excess of par value


1,053.1



1,032.1Unearned ESOP compensation


(9.7
)


(8.0
)Unearned compensation on nonvested
    stock


(31.0
)


Accumulated other comprehensive
    income






0.2Retained earnings


274.8



347.71,287.8



1,372.6$
3,224.6


$
3,503.1     (1)
    
    Derived from audited financial statements.   3




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Unaudited
 (In millions)
  Three Months Ended


Six Months EndedJune 30,


June 30,2005


2006


2005


2006Cash flows from operating
    activities:Net income (loss)

$
(7.1
)

$
34.8


$
18.7


$
72.9Adjustments to reconcile net income
    (loss) to net cash provided by operating activities:Loss (income) from discontinued
    operations


4.0



1.6



4.0



(2.0
)Cumulative effect of change in
    accounting principle, net of income taxes














(0.7
)Stock-based compensation


1.7



2.6



2.2



5.8ESOP expense (non-cash portion)


3.9



2.6



6.5



5.0Depreciation and amortization


26.6



16.0



39.8



47.9Amortization of deferred loan costs


1.2



1.4



1.6



2.7Debt retirement costs


10.0







10.0



Transaction costs


44.6







44.6



Minority interests in earnings of
    consolidated entities


0.2



0.4



0.5



0.7Deferred income taxes (benefit)


23.5



2.9



24.4



(0.2
)Reserve for professional and
    general liability claims, net


1.6



2.3



2.0



4.1Excess tax benefits from employee
    stock plans


5.9







8.2



Increase (decrease) in cash from
    operating assets and liabilities, net of effects from
    acquisitions and divestitures:Accounts receivable


(1.1
)


5.5



(5.9
)


(3.9
)Inventories and other current assets


0.5



(2.6
)


3.4



(5.8
)Accounts payable and accrued
    expenses


(5.0
)


12.3



(2.5
)


(4.3
)Income taxes payable


(42.4
)


(21.7
)


(28.3
)


(9.0
)Other


0.1











0.5Net cash provided by operating
    activities  continuing operations


68.2



58.1



129.2



113.7Net cash provided by (used in)
    operating activities  discontinued operations


3.1



0.2



3.2



(0.2
)Net cash provided by operating
    activities


71.3



58.3



132.4



113.5Cash flows from investing
    activities:Purchase of property and equipment


(33.3
)


(44.9
)


(60.4
)


(95.0
)Acquisitions, net of cash acquired


(957.7
)


(257.1
)


(959.7
)


(260.6
)Other


(0.2
)


(0.3
)


(0.6
)


(0.6
)Net cash used in investing
    activities  continuing operations


(991.2
)


(302.3
)


(1,020.7
)


(356.2
)Net cash provided by investing
    activities  discontinued operations (Proceeds from
    sale of hospitals)






7.7



32.5



27.6Net cash used in investing
    activities


(991.2
)


(294.6
)


(988.2
)


(328.6
)Cash flows from financing
    activities:Proceeds from borrowings


1,592.0



250.0



1,592.0



260.0Payments of borrowings


(709.2
)


(10.0
)


(709.2
)


(20.0
)Proceeds from exercise of stock
    options


31.0







41.6



0.3Proceeds from employee stock
    purchase plans


0.3







1.1



1.7Payment of debt issue costs


(31.8
)






(31.8
)


(0.4
)Other


(3.6
)


(0.5
)


(3.5
)


(0.6
)Net cash provided by financing
    activities


878.7



239.5



890.2



241.0Change in cash and cash equivalents


(41.2
)


3.2



34.4



25.9Cash and cash equivalents at
    beginning of period


94.2



53.1



18.6



30.4Cash and cash equivalents at end of
    period

$
53.0


$
56.3


$
53.0


$
56.3Supplemental disclosure of cash
    flow information:Interest payments

$
23.0


$
19.9


$
23.5


$
45.0Capitalized interest

$
0.8


$
0.2


$
1.2


$
0.3Income taxes paid, net

$
19.4


$
43.5


$
20.0


$
56.2    4




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  CONDENSED
    CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 For the
    Six Months Ended June 30, 2006
 Unaudited
 (Amounts in millions)
  Unearned


AccumulatedCapital in


Unearned


Compensation


OtherCommon Stock


Excess of


ESOP


on Nonvested


Comprehensive


RetainedShares


Amount


Par Value


Compensation


Stock


Income


Earnings


TotalBalance at December 31, 2005


57.1


$
0.6


$
1,053.1


$
(9.7
)

$
(31.0
)

$



$
274.8


$
1,287.8Comprehensive income:Net income


























72.9



72.9Net change in fair value of
    interest rate swap, net of tax expense of $0.1






















0.2







0.2Total comprehensive income






























73.1Reclassification of unearned
    compensation on nonvested stock balance upon adoption of
    SFAS No. 123(R)










(31.0
)






31.0











Non-cash ESOP compensation earned










3.3



1.7















5.0Exercise of stock options,
    including tax benefits and other










0.2



















0.2Stock activity in connection with
    employee stock purchase plans










1.7



















1.7Stock-based
    compensation  nonvested stock










2.0



















2.0Stock-based
    compensation  stock options










2.8



















2.8Nonvested stock issued to key
    employees


0.2



























Balance at June 30, 2006


57.3


$
0.6


$
1,032.1


$
(8.0
)

$



$
0.2


$
347.7


$
1,372.6  5




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2006
 Unaudited
  Note 1.
    Basis of
    Presentation  and/or
    Form 10-Q Regulation S-X. Form 10-K
      Note 2.
    Acquisitions  2006
    Acquisitions
  200-bed 155-bed
 6




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##### Table of Contents





LIFEPOINT
    HOSPITALS, INC.




NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)








Business
    Combination with Province Healthcare Company








one-for-one




Rule 12g-3(c)










7



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##### Table of Contents





LIFEPOINT
    HOSPITALS, INC.




NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)








20-day








|                                                    |  |   |         | 
|--------------------------------------------------- |  | - | ------- | 
|Fair value of Company Common Stock
    issued       |  | $ | 596.0   | 
|Cash                                                |  |   | 586.3   | 
|Fair value of assumed Province
    debt obligations |  |   | 511.6   | 
|Severance and Province stock
    option costs       |  |   | 73.8    | 
|Direct transaction costs                            |  |   | 30.5    | 
|                                                    |  |   |         | 
|                                                    |  | $ | 1,798.2 | 
|                                                    |  |   |         | 





No. 99-12). No. 99-12,






8



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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Cash

$
2.7Accounts receivable, net


122.1Inventories


21.0Prepaid expenses


4.6Other current assets


15.6Property and equipment


575.6Other long-term assets


15.8Goodwill


1,175.9Total assets acquired


1,933.3Accounts payable


33.0Accrued salaries


28.1Other current liabilities


41.9Long-term debt


511.6Professional and general liability
    claims and other liabilities


30.1Minority interests in equity of
    consolidated entities


2.0Total liabilities assumed


646.7Net assets acquired

$
1,286.6       Other
    2005 Acquisitions
       9




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##### Table of Contents





LIFEPOINT
    HOSPITALS, INC.




NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)






Impact
    of Final Valuations of Fixed Assets








|        |                            
|------- | ---------------------------
|Note 3. | Discontinued
    Operations



Three
    Former Province Hospitals












Smith
    County Memorial Hospital








Bartow
    Memorial Hospital










10



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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Impact
    of Discontinued Operations
    Three Months Ended

Six Months EndedJune 30,

June 30,2005

2006

2005

2006Revenues

$
16.3


$
2.6


$
29.6


$
13.4Income (loss) before income taxes


0.7



(2.1
)


2.4



(2.4
)       Current


Property andAssets


Equipment


Goodwill


TotalBalance at December 31, 2005

$
1.6


$
14.7


$
5.7


$
22.0Sale of Smith County


(0.3
)


(6.0
)


(5.7
)


(12.0
)Sale of MCSI and Ashland


(1.3
)


(8.7
)






(10.0
)Balance at June 30, 2006

$



$



$



$
   Note 4.
    Goodwill
    and Intangible Assets      Balance at December 31, 2005

$
1,449.9Consideration adjustments and
    adjustments to purchase price allocations for acquisitions


21.0Balance at June 30, 2006

$
1,470.9  11




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     GrossCarrying


Accumulated


NetAmount


Amortization


TotalContract-based physician
    minimum revenue guarantees:Balance at December 31, 2005

$



$



$
Additions


9.2







9.2Amortization expense






(0.2
)


(0.2
)Balance at June 30, 2006

$
9.2


$
(0.2
)

$
9.0Certificates of need:Balance at December 31, 2005

$
1.4


$



$
1.4Additions


1.2







1.2Balance at June 30, 2006

$
2.6


$



$
2.6Non-competition
    agreements:Balance at December 31, 2005

$
5.9


$
(3.1
)

$
2.8Adjustments


(0.1
)






(0.1
)Amortization expense






(0.7
)


(0.7
)Balance at June 30, 2006

$
5.8


$
(3.8
)

$
2.0Total intangible
    assets:Balance at December 31, 2005

$
7.3


$
(3.1
)

$
4.2Additions/Adjustments


10.3







10.3Amortization expense






(0.9
)


(0.9
)Balance at June 30, 2006

$
17.6


$
(4.0
)

$
13.6   Contract-based
    Physician Minimum Revenue Guarantees
  No. 45-3, FIN 45-3), FIN 45-3, FIN 45-3 FIN 45-3
  FIN 45-3 FIN 45-3
 12




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  FIN 45-3,
  FIN 45-3
  Three Months


Six MonthsEnded


EndedJune 30, 2006


June 30, 2006Increase of income from continuing
    operations before income taxes (included in other operating
    expenses)

$
1.7


$
2.4Provision for income taxes


(0.7
)


(1.0
)Increase of income from continuing
    operations

$
1.0


$
1.4Increase of income per share from
    continuing operations:Basic

$
0.02


$
0.03Diluted

$
0.02


$
0.03   Certificates
    of Need and Non-Competition Agreements
      Amount2006 (July 1 
    December 31)

$
1.62007


2.82008


2.02009


2.02010


1.8$
10.2  13




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 5.
    Earnings
    (Loss) Per Share    Six MonthsThree Months Ended June 30,


Ended June 30,2005(a)


2006


2005(b)


2006Numerator:Numerator for basic and diluted
    earnings (loss) per share  income (loss) from
    continuing operations

$
(3.1
)

$
36.4


$
22.7


$
70.2Income (loss) from discontinued
    operations


(4.0
)


(1.6
)


(4.0
)


2.0Cumulative effect of change in
    accounting principle














0.7$
(7.1
)

$
34.8


$
18.7


$
72.9Denominator:Denominator for basic earnings
    (loss) per share  weighted average shares outstanding


51.8



55.6



44.8



55.5Effect of dilutive securities:Employee stock benefit plans






0.6



1.0



0.6Denominator for diluted earnings
    (loss) per share  weighted average shares


51.8



56.2



45.8



56.1Basic earnings (loss) per share:Continuing operations

$
(0.06
)

$
0.65


$
0.51


$
1.26Discontinued operations


(0.07
)


(0.02
)


(0.09
)


0.04Cumulative effect of change in
    accounting principle














0.01Net income (loss)

$
(0.13
)

$
0.63


$
0.42


$
1.31Diluted earnings (loss) per share:Continuing operations

$
(0.06
)

$
0.65


$
0.50


$
1.25Discontinued operations


(0.07
)


(0.03
)


(0.09
)


0.04Cumulative effect of change in
    accounting principle














0.01Net income (loss)

$
(0.13
)

$
0.62


$
0.41


$
1.30     (a)
    
    All the potentially dilutive securities were excluded from the
    calculation of diluted loss per share for the three months ended
    June 30, 2005, because the Company incurred a loss from
    continuing operations.(b)
    
    The impact of 4.4 million potential weighted average shares
    of common stock, if converted, and interest expense related to
    convertible notes was not included in the computation of diluted
    earnings per share for the six months ended June 30, 2005,
    because the effect would have been
    anti-dilutive.  Note 6.
    Recently
    Issued Accounting Pronouncements   14




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Note 7.
    Change in
    the Companys Chief Executive Officer and
    Chairman       15




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 8.
    Stock-Based
    Compensation     16




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Impact
    of the Adoption of SFAS No. 123(R)
    Three Months


Six MonthsEnded


EndedJune 30, 2006


June 30, 2006Reduction of income from
    continuing operations before income taxes (included in salaries
    and benefits)

$
1.5


$
2.8Income tax benefit


(0.6
)


(1.1
)Reduction of income from
    continuing operations

$
0.9


$
1.7Reduction of income per share from
    continuing operations:Basic

$
0.02


$
0.03Diluted

$
0.02


$
0.03      17




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         Description
    of Stock-Based Compensation Plans
  1998
    Long-Term Incentive Plan
        Outside
    Directors Stock and Incentive Compensation Plan
   18




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          ESPP
    MSPP
  cliff-vesting
 19




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    Options
  Change in
    Stock Option Valuation Model
  HW-II
  Valuation
      Six Months EndedJune 30,2005


2006Expected volatility


56.0
%


33.0%Risk free interest rate (range)


3.76
%


4.38 - 4.99%Expected dividends






Average expected term (years)


4.0



5.4   Population
    Stratification
   20




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Expected
    Volatility
    Risk-Free
    Interest Rate
    Expected
    Dividends
    Pre-Vesting
    Forfeitures
    Post-Vesting
    Cancellations
    Expected
    Term
   21




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Stock
    Option Activity
    WeightedWeighted


Weighted








AverageAverage


Average


Total





RemainingNumber


Exercise


Fair


Fair


Aggregate


ContractualStock Options

of Shares


Price


Value


Value


Intrinsic Value(b)


Term(In millions)


(In millions)


(In years)Outstanding at December 31,
    2005(a)


3,554,804


$
30.01


$
12.26


$
43.6


$
32.3



7.17Exercisable at December 31,
    2005(a)


2,784,822


$
26.61


$
10.27


$
28.6


$
32.3



N/AGranted


824,870



33.02



11.09



9.2



N/A



N/AForfeited (pre-vest cancellation)


242,254



37.91



15.92



3.9



N/A



N/AExercised


18,104



17.96



6.50



0.1



0.2



N/AExpired (post-vest cancellation)


5,428



28.61



10.70



0.1



N/A



N/AVested


220,405



42.60



19.82



4.4



N/A



N/AOutstanding at June 30, 2006


4,113,888


$
30.20


$
11.84


$
48.7


$
21.7



6.51Exercisable at June 30, 2006


2,981,695


$
27.84


$
11.00


$
32.8


$
21.7



5.43     (a)
    
    Certain prior period adjustments were made to the amounts at
    December 31, 2005.(b)
    
    The aggregate intrinsic value represents the difference between
    the underlying stocks market price and the stock
    options exercise price.      Nonvested
    Stock
   22




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Weighted


TotalNumber


Average


Fair


AggregateNonvested Shares

of Shares


Fair Value


Value


Intrinsic Value(In millions)


(In millions)Outstanding at December 31,
    2005(a)


865,034


$
42.76


$
37.0


$
32.4Granted


377,949



33.02



12.5



N/AVested














Forfeited (pre-vest cancellation)


231,876



40.41



9.4



N/AOutstanding at June 30, 2006


1,011,107


$
39.66


$
40.1


$
32.5     (a)
    
    Certain prior period adjustments were made to the outstanding
    amounts at December 31, 2005.      Comparable
    Disclosures
   23




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Six MonthsThree Months Ended


EndedJune 30,


June 30,2005(d)


2006


2005(d)


2006Net income (loss), as reported in
    prior period(a)

$
(7.1
)





$
18.7Add: Stock-based compensation
    expense included in reported net income (loss), net of income
    taxes


5.1







5.4Less: Stock-based compensation
    expense determined under fair value based method for all awards,
    net of income taxes(b)


(11.7
)






(13.5
)Net income (loss), including
    stock-based compensation(c)

$
(13.7
)

$
34.8


$
10.6


$
72.9Net income (loss) per share:Basic  as reported in
    prior period(a)

$
(0.13
)





$
0.42Basic  including
    stock-based compensation(c)

$
(0.27
)

$
0.63


$
0.24


$
1.31Diluted  as reported in
    prior period(a)

$
(0.13
)





$
0.41Diluted  including
    stock-based compensation(c)

$
(0.27
)

$
0.62


$
0.23


$
1.30     (a)
    
    Net income and net income per share as reported for periods
    prior to January 1, 2006 did not include
    stock-based
    compensation expense for stock options and the Companys
    ESPP because it did not adopt the recognition provisions of
    SFAS No. 123.(b)
    
    Stock-based compensation expense for periods prior to
    January 1, 2006 is calculated based on the pro forma
    application of SFAS No. 123.(c)
    
    Net income and net income per share including stock-based
    compensation for periods prior to January 1, 2006 are based
    on the pro forma application of SFAS No. 123.(d)
    
    All outstanding stock options as of April 15, 2005, except
    for 28,500 stock options granted in December 2004, and all
    outstanding nonvested stock awards became fully vested on
    April 15, 2005, as a result of the Province Business
    Combination and the change of control provisions in the
    Companys stock-based compensation plans. The estimated pro
    forma after-tax charge the Company would have incurred during
    the three and six months ended June 30, 2005 as a result of
    the accelerated vesting of stock options was $4.9 million.
    In addition, as a result of the accelerated vesting of nonvested
    stock awards, the Company recognized an after-tax charge of
    $2.5 million for the three and six months ended
    June 30, 2005. 24




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 9.
    Long-Term
    Debt    December 31,


June 30,2005


2006Senior Borrowings:Credit Agreement:Term B Loans

$
1,281.9


$
1,321.9Revolving Credit Loans






200.01,281.9



1,521.9Subordinated Borrowings:Province
    71/2% Senior
    Subordinated Notes


6.1



6.1Province
    41/4% Convertible
    Subordinated Notes, due 2008


0.1



0.131/4% Convertible
    Senior Subordinated Debentures, due 2025


225.0



225.0231.2



231.2Capital leases


3.2



7.6Total long-term debt


1,516.3



1,760.7Less: current portion


0.5



0.7$
1,515.8


$
1,760.0   Amendment
    to Senior Secured Credit Facilities
    Revolving
    Credit Loans
    Note 10.
    Interest
    Rate Swap   25




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Notional
    Schedule
  Date Range

Notional AmountNovember 15, 2006 to
    November 15, 2007

$
900.0 millionNovember 15, 2007 to
    November 15, 2008

$
750.0 millionNovember 15, 2008 to
    November 15, 2009

$
600.0 millionNovember 15, 2009 to
    November 15, 2010

$
450.0 millionNovember 15, 2010 to
    May 15, 2011

$
300.0 million       Note 11.
    Contingencies  Americans
    with Disabilities Act Claim
  facility-by-facility
   26




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Corporate
    Integrity Agreement
    Legal
    Proceedings and General Liability Claims
    Shareholder
    Lawsuit
      Physician
    Commitments
   27




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  FIN 45-3
  Capital
    Expenditure Commitments
        40-year
    Tax
    Matters
     28




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Acquisitions
   29




---



##### Table of Contents



|        |                                                                                               
|------- | ----------------------------------------------------------------------------------------------
|Item 2. | Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.



Form 10-K.




Overview








|                                                                 |  |                |       |   |                |   |       |      |  |   |       |  |  |   |         | 
|---------------------------------------------------------------- |  | -------------- | ----- | - | -------------- | - | ----- | ---- |  | - | ----- |  |  | - | ------- | 
|                                                                 |  | Three Months   |       |   | Six Months     |  
|                                                                 |  | Ended June 30, |       |   | Ended June 30, |  
|                                                                 |  | 2005           |       |   | 2006           |   |       | 2005 |  |   | 2006  | 
|                                                                
|Revenues                                                         |  | $              | 464.4 |   |                | $ | 569.2 |      |  | $ | 736.4 |  |  | $ | 1,158.8 | 
|Income (loss) from continuing
    operations                     |  | $              | (3.1  | ) |                | $ | 36.4  |      |  | $ | 22.7  |  |  | $ | 70.2    | 
|Diluted earnings (loss) per share
    from continuing operations |  | $              | (0.06 | ) |                | $ | 0.65  |      |  | $ | 0.50  |  |  | $ | 1.25    | 





Change
    in the Companys Chief Executive Officer and
    Chairman
















Hospital
    Acquisitions






30



---



##### Table of Contents



Business, Form 10-K Form 10-K




Business
    Combination with Province Healthcare Company








Impact
    of Final Valuations of Fixed Assets








Discontinued
    Operations






31



---



##### Table of Contents







|                                                                   |  |                |       |   |                |   |       |      |  |   |       |   |  |   |      |  
|------------------------------------------------------------------ |  | -------------- | ----- | - | -------------- | - | ----- | ---- |  | - | ----- | - |  | - | ---- | -
|                                                                   |  | Three Months   |       |   | Six Months     |  
|                                                                   |  | Ended June 30, |       |   | Ended June 30, |  
|                                                                   |  | 2005           |       |   | 2006           |   |       | 2005 |  |   | 2006  |  
|                                                                  
|Revenues                                                           |  | $              | 16.3  |   |                | $ | 2.6   |      |  | $ | 29.6  |   |  | $ | 13.4 |  
|                                                                   |  |                |       |   |                |   |       |      |  |   |       |   |  |   |      |  
|Income (loss) from discontinued
    operations                     |  | $              | 0.6   |   |                | $ | (1.3  | )    |  | $ | 1.4   |   |  | $ | (1.5 | )
|Impairment of assets                                               |  |                | (4.7  | ) |                |   |      |      |  |   | (4.7  | ) |  |   |     |  
|Gain (loss) on sale of hospitals                                   |  |                | 0.1   |   |                |   | (0.3  | )    |  |   | (0.7  | ) |  |   | 3.5  |  
|                                                                   |  |                |       |   |                |   |       |      |  |   |       |   |  |   |      |  
|Income (loss) from discontinued
    operations                     |  | $              | (4.0  | ) |                | $ | (1.6  | )    |  | $ | (4.0  | ) |  | $ | 2.0  |  
|                                                                   |  |                |       |   |                |   |       |      |  |   |       |   |  |   |      |  
|Diluted earnings (loss) per share
    from discontinued operations |  | $              | (0.07 | ) |                | $ | (0.03 | )    |  | $ | (0.09 | ) |  | $ | 0.04 |  
|                                                                   |  |                |       |   |                |   |       |      |  |   |       |   |  |   |      |  





Key
    Challenges




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Integration of Recently Acquired Hospitals.  We
    recently acquired numerous hospitals in separate transactions.
    The process of integrating the operations of these hospitals
    could cause an interruption of, or loss of momentum in, the
    activities of our business. However, we are dedicated to
    devoting significant management attention and resources to
    integrating the business practices and operations of our
    recently acquired hospitals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Medicare Changes.  We are experiencing changes
    with respect to governmental reimbursement that are affecting
    our growth. Effective October 1, 2005, CMS expanded the
    post-acute transfer policy from 30 diagnosis related groups
    (DRGs) to 182 DRGs. We estimate the expansion in the
    post-acute transfer policy results in a quarterly reduction of
    approximately $1.5 million to $2.0 million in our
    Medicare inpatient Prospective Payment System payments. On
    February 8, 2006, President Bush signed the Deficit
    Reduction Act of 2005 (DRA) into law. This law
    includes measures related to specialty hospitals, quality
    reporting and
    pay-for-performance,
    the inpatient rehabilitation facility 75% rule and Medicaid
    cuts. Part I, Item 1. Business, Sources
    of Revenuein our 2005 Annual Report on
    Form 10-K
    contains a detailed discussion of provisions that affect our
    Medicare reimbursement.
|
| |  | States Implementing Medicaid Cost Containment
    Measures.  A number of states have incurred budget
    deficits within recent years. To address these budget deficits,
    certain states have reduced spending and increased taxes. State
    cost containment activity continues to focus on reducing
    provider payments and limiting eligible enrollees under the
    state Medicaid programs. The following is a summary of four
    states where there have been significant developments in 2006:                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



| |            |                                                                                                                                                                                                                                                                                                                        
| | ---------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Tennessee: | We estimate that the reduction in the TennCare Medicaid program
    negatively impacted us by approximately $4.0 million for
    the first half of 2006. However, we have received some relief
    with the States Essential Access Payments of approximately
    $0.6 million during the quarter ended June 30, 2006.
|
| | Alabama:   | The state of Alabama has implemented rate changes and reduced
    disproportionate share hospital-type payments. These changes
    negatively impacted our pre-tax earnings by approximately
    $1.0 million for the first half of 2006.                                                                              



| |            |                                                                                                                                                                                                                                                                                    
| | ---------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Louisiana: | Effective January 1, 2006, the state of Louisiana
    implemented Medicaid reductions of approximately 12% to 17%.
    However, the DRA provided approximately $2.0 billion in
    Hurricane Katrina-related Medicaid relief, which offset the
    previously announced reductions.



| |           |                                                                                                                                                                                                                                                                                 
| | --------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Kentucky: | Kentucky Medicaid implemented increased co-payments effective
    July 1, 2005. During the second quarter of 2006, Kentucky
    Medicaid increased Medicaid DRG rates by approximately 17%
    retroactive to July 1, 2005. We estimate that these rate
    increases positively

32



---



##### Table of Contents



| |  |                                                                                                                     
| |  | --------------------------------------------------------------------------------------------------------------------
| |  | impacted our pre-tax earnings by approximately $2.4 million
    during the three and six months ended June 30, 2006.



Business, Form 10-K




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Increases in Provision for Doubtful
    Accounts.  We have experienced an increase in our
    provision for doubtful accounts during recent years. These
    increases were the result of an increased number of uninsured
    patients and an increase in co-payments and deductibles from
    healthcare plan design changes. These changes increase
    collection costs and reduce overall cash collections.







|               |  |                                 |       |  |      |   |       | 
|-------------- |  | ------------------------------- | ----- |  | ---- | - | ----- | 
|               |  | Provision for Doubtful Accounts |      
|               |  | 2005                            |       |  | 2006 |  
|              
|First Quarter  |  | $                               | 22.9  |  |      | $ | 68.4  | 
|Second Quarter |  |                                 | 41.1  |  |      |   | 59.0  | 
|Third Quarter  |  |                                 | 63.9  |  |      |   | N/A   | 
|Fourth Quarter |  |                                 | 62.1  |  |      |   | N/A   | 
|               |  |                                 |       |  |      |   |       | 
|               |  | $                               | 190.0 |  |      | $ | 127.4 | 
|               |  |                                 |       |  |      |   |       | 













|               |  |                                      |      |  |      |   |      | 
|-------------- |  | ------------------------------------ | ---- |  | ---- | - | ---- | 
|               |  | Charity and Indigent Care Write-Offs |     
|               |  | 2005                                 |      |  | 2006 |  
|              
|First Quarter  |  | $                                    | 1.8  |  |      | $ | 6.1  | 
|Second Quarter |  |                                      | 5.6  |  |      |   | 12.1 | 
|Third Quarter  |  |                                      | 7.6  |  |      |   | N/A  | 
|Fourth Quarter |  |                                      | 9.0  |  |      |   | N/A  | 
|               |  |                                      |      |  |      |   |      | 
|               |  | $                                    | 24.0 |  |      | $ | 18.2 | 
|               |  |                                      |      |  |      |   |      | 









|               |  |                   |       |  |      |   |       | 
|-------------- |  | ----------------- | ----- |  | ---- | - | ----- | 
|               |  | Self-Pay Revenues |      
|               |  | 2005              |       |  | 2006 |  
|              
|First Quarter  |  | $                 | 24.2  |  |      | $ | 73.6  | 
|Second Quarter |  |                   | 47.6  |  |      |   | 73.3  | 
|Third Quarter  |  |                   | 71.5  |  |      |   | N/A   | 
|Fourth Quarter |  |                   | 66.7  |  |      |   | N/A   | 
|               |  |                   |       |  |      |   |       | 
|               |  | $                 | 210.0 |  |      | $ | 146.9 | 
|               |  |                   |       |  |      |   |       | 



33



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##### Table of Contents







|             |  |                                                 |      |  |      |  |      | 
|------------ |  | ----------------------------------------------- | ---- |  | ---- |  | ---- | 
|             |  | Revenue Days Outstanding in Accounts Receivable |     
|             |  | 2005                                            |      |  | 2006 | 
|            
|March 31     |  |                                                 | 37.2 |  |      |  | 40.3 | 
|June 30      |  |                                                 | 37.6 |  |      |  | 40.5 | 
|September 30 |  |                                                 | 42.0 |  |      |  | N/A  | 
|December 31  |  |                                                 | 42.3 |  |      |  | N/A  | 









|                                                                 |  |              |       |   |           |  |       |          |  |  |       |  
|---------------------------------------------------------------- |  | ------------ | ----- | - | --------- |  | ----- | -------- |  |  | ----- | -
|                                                                 |  | December 31, |       |   | March 31, |  |       | June 30, | 
|                                                                 |  | 2005         |       |   | 2006      |  |       | 2006     | 
|                                                                
|Insured receivables                                              |  |              | 40.6  | % |           |  | 40.1  | %        |  |  | 36.1  | %
|Uninsured receivables (including
    copayments and deductibles) |  |              | 59.4  |   |           |  | 59.9  |          |  |  | 63.9  |  
|                                                                 |  |              |       |   |           |  |       |          |  |  |       |  
|                                                                 |  |              | 100.0 | % |           |  | 100.0 | %        |  |  | 100.0 | %
|                                                                 |  |              |       |   |           |  |       |          |  |  |       |  









|               |  |              |       |   |           |  |       |          |  |  |       |  
|-------------- |  | ------------ | ----- | - | --------- |  | ----- | -------- |  |  | ----- | -
|               |  | December 31, |       |   | March 31, |  |       | June 30, | 
|               |  | 2005         |       |   | 2006      |  |       | 2006     | 
|              
|0 to 60 days   |  |              | 51.4  | % |           |  | 51.5  | %        |  |  | 48.0  | %
|61 to 150 days |  |              | 20.9  |   |           |  | 20.7  |          |  |  | 21.5  |  
|Over 150 days  |  |              | 27.7  |   |           |  | 27.8  |          |  |  | 30.5  |  
|               |  |              |       |   |           |  |       |          |  |  |       |  
|               |  |              | 100.0 | % |           |  | 100.0 | %        |  |  | 100.0 | %
|               |  |              |       |   |           |  |       |          |  |  |       |  









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Substantial Indebtedness.  We have substantial
    indebtedness. Our consolidated debt was $1,760.7 million as
    of June 30, 2006, and we incurred $47.7 million of net
    interest expense during the six months ended June 30, 2006.
    We anticipate that we will incur a higher amount of interest
    expense for the remainder of 2006 because of increasing interest
    rates. Our substantial indebtedness increases our cost of
    capital, decreases our net income and reduces the amount of
    funds available for operations, capital expenditures and future
    acquisitions. We are in compliance with our financial debt
    covenants as of June 30, 2006 and believe we will be in
    compliance with them for the second half of 2006.
|
| |  | Start-up
    Costs at Our Two De Novo Hospitals.  Each of our
    two newly-constructed hospitals, Valley View Medical Center in
    Fort Mohave, Arizona and Coastal Carolina Medical Center in
    Hardeeville, South Carolina, has incurred significant
    start-up
    costs and will attempt to build market share over time. In
    addition, we did not receive Medicare certification at Valley
    View Medical Center until April 28, 2006. We could not bill
    Medicare and Medicaid for most services provided at this
    facility for periods prior to the Medicare certification.                                                                                                                                                               
|
| |  | Physician Recruitment and
    Retention.  Recruiting and retaining both primary
    care physicians and specialists for our non-urban communities is
    a key to increasing revenues and patient volumes. The medical
    staffs at our hospitals are typically small and our revenues may
    be negatively affected by the loss of one or more of our
    physicians. Our management believes that continuing to add
    specialists should help our hospitals increase volumes by
    offering new services. We plan to recruit approximately 182 new
    admitting physicians during 2006. For the six months ended
    June 30, 2006, we recruited 125                                                                                                      

34



---



##### Table of Contents



| |  |                                                                                                                                           
| |  | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | new admitting physicians, including physicians who have not yet
    started, and spent $11.3 million in cash on physician
    recruitment.







|                      |  |            |       |  
|--------------------- |  | ---------- | ----- | -
|                      |  | Admitting  |      
|                      |  | Physicians |      
|                     
|December 31, 2005     |  |            | 1,832 |  
|Recruited and started |  |            | 53    |  
|Departed              |  |            | (24   | )
|                      |  |            |       |  
|June 30, 2006         |  |            | 1,861 |  
|                      |  |            |       |  





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Shortage of Clinical Personnel and Increased Contract Labor
    Usage.  In recent years, many hospitals, including
    some of the hospitals we own, have encountered difficulty in
    recruiting and retaining nursing and other clinical personnel.
    When we are unable to staff our nursing and clinical positions,
    we are required to use contract labor to ensure adequate patient
    care. Contract labor generally costs more per hour than employed
    labor. We have adopted a number of human resources strategies in
    an attempt to improve our ability to recruit and retain nursing
    and other clinical personnel. However, we expect that staffing
    issues related to nurses and other clinical personnel will
    continue in the future.
|
| |  | Increases in Supply Costs.  During the past few
    years, we have experienced an increase in supply costs as a
    percentage of revenues, especially in the areas of
    pharmaceutical, orthopedic, oncology and cardiac supplies. We
    participate in a group purchasing organization in an attempt to
    achieve lower supply costs from our vendors. Because of the
    fixed reimbursement nature of most governmental and commercial
    payor arrangements, we may not be able to recover supply cost
    increases through increased revenues.                                                                                                                                                                                                                
|
| |  | Challenges in Professional and General Liability
    Costs.  In recent years, we have incurred
    favorable loss experience, as reflected in our external
    actuarial reports. We have implemented enhanced risk management
    processes for monitoring professional and general liability
    claims and managing in high-risk areas. Professional and general
    liability costs remain a challenge to us, and we expect this
    pressure to continue in the future.                                                                                                                                                                                                                                                                                               
|
| |  | Increases in Information Technology Costs and Costs of
    Integration.  Our acquisition activity requires
    transitions from, and the integration of, various information
    systems that are used by hospitals we acquire. We rely heavily
    on HCA-IT for information systems integration pursuant to our
    contractual arrangement for information technology services.
    Recently, the number of hospitals we operated increased
    significantly. This resulted in significant increases in
    information technology costs and we expect that such costs will
    continue to increase significantly as we integrate our recent
    acquisitions onto the HCA-IT systems.                                                                                



Outlook










35



---



##### Table of Contents



Revenue
    Sources
  Business Form 10-K
        Critical
    Accounting Estimates
    
    it requires assumptions to be made that were uncertain at the
    time the estimate was made; and
    changes in the estimate or different estimates that could have
    been made could have a material impact on our consolidated
    results of operations or financial condition.  Form 10-K
  
    Allowance for doubtful accounts and provision for doubtful
    accounts;
    Revenue recognition and allowance for contractual discounts;
    Goodwill and accounting for business combinations;
    Professional and general liability claims; and
    Accounting for income taxes.  New
    Critical Accounting Estimate
  Accounting
    for Stock-based Compensation
   36




---



##### Table of Contents



Impact of
    the Adoption of SFAS No. 123(R)
    Three Months


Six MonthsEnded


EndedJune 30, 2006


June 30, 2006Reduction of income from
    continuing operations before income taxes (included in salaries
    and benefits)

$
1.5


$
2.8Income tax benefit


(0.6
)


(1.1
)Reduction of income from
    continuing operations

$
0.9


$
1.7Reduction of income per share from
    continuing operations:Basic

$
0.02


$
0.03Diluted

$
0.02


$
0.03    37




---



##### Table of Contents



Change in
    Stock Option Valuation Model
     38




---



##### Table of Contents



Valuation
      Six Months EndedJune 30,2005

2006Expected volatility

56.0%

33.0%Risk free interest rate (range)

3.76%

4.38% - 4.99%Expected dividends



Average expected term (years)

4.0

5.4   Population
    Stratification
    Expected
    Volatility
    Risk-Free
    Interest Rate
  grant-date
  Expected
    Dividends
   39




---



##### Table of Contents



Pre-Vesting
    Forfeitures








Post-Vesting
    Cancellations








Expected
    Term








Nonvested
    Stock
















Comparable
    Disclosures






40



---



##### Table of Contents







|                                                                                                                               |  |                    |       |   |            |   |      |         |  |   |       |   |  |   |      | 
|------------------------------------------------------------------------------------------------------------------------------ |  | ------------------ | ----- | - | ---------- | - | ---- | ------- |  | - | ----- | - |  | - | ---- | 
|                                                                                                                               |  |                    |       |   | Six Months |  
|                                                                                                                               |  | Three Months Ended |       |   | Ended      |  
|                                                                                                                               |  | June 30,           |       |   | June 30,   |  
|                                                                                                                               |  | 2005(d)            |       |   | 2006       |   |      | 2005(d) |  |   | 2006  |  
|                                                                                                                              
|Net income (loss), as reported in
    prior period(a)                                                                          |  | $                  | (7.1  | ) |            |   |      |         |  | $ | 18.7  |   |  |   |      | 
|Add: Stock-based compensation
    expense included in reported net income (loss), net of income
    taxes                      |  |                    | 5.1   |   |            |   |      |         |  |   | 5.4   |   |  |   |      | 
|Less: Stock-based compensation
    expense determined under fair value based method for all awards,
    net of income taxes(b) |  |                    | (11.7 | ) |            |   |      |         |  |   | (13.5 | ) |  |   |      | 
|                                                                                                                               |  |                    |       |   |            |   |      |         |  |   |       |   |  |   |      | 
|Net income (loss), including
    stock-based compensation(c)                                                                   |  | $                  | (13.7 | ) |            | $ | 34.8 |         |  | $ | 10.6  |   |  | $ | 72.9 | 
|                                                                                                                               |  |                    |       |   |            |   |      |         |  |   |       |   |  |   |      | 
|Net income (loss) per share:                                                                                                   |  |                    |       |   |            |   |      |         |  |   |       |   |  |   |      | 
|Basic  as reported in
    prior period(a)                                                                                     |  | $                  | (0.13 | ) |            |   |      |         |  | $ | 0.42  |   |  |   |      | 
|                                                                                                                               |  |                    |       |   |            |   |      |         |  |   |       |   |  |   |      | 
|Basic  including
    stock-based compensation(c)                                                                              |  | $                  | (0.27 | ) |            | $ | 0.63 |         |  | $ | 0.24  |   |  | $ | 1.31 | 
|                                                                                                                               |  |                    |       |   |            |   |      |         |  |   |       |   |  |   |      | 
|Diluted  as reported in
    prior period(a)                                                                                   |  | $                  | (0.13 | ) |            |   |      |         |  | $ | 0.41  |   |  |   |      | 
|                                                                                                                               |  |                    |       |   |            |   |      |         |  |   |       |   |  |   |      | 
|Diluted  including
    stock-based compensation(c)                                                                            |  | $                  | (0.27 | ) |            | $ | 0.62 |         |  | $ | 0.23  |   |  | $ | 1.30 | 
|                                                                                                                               |  |                    |       |   |            |   |      |         |  |   |       |   |  |   |      | 









|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Net income and net income per share as reported for periods
    prior to January 1, 2006 did not include stock-based
    compensation expense for stock options and our ESPP because we
    did not adopt the recognition provisions of
    SFAS No. 123.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(b) |  | Stock-based compensation expense for periods prior to
    January 1, 2006 is calculated based on the pro forma
    application of SFAS No. 123.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(c) |  | Net income and net income per share including stock-based
    compensation for periods prior to January 1, 2006 are
    based on the pro forma application of SFAS No. 123.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(d) |  | All outstanding stock options as of April 15, 2005, except
    for 28,500 stock options granted in December 2004, and all
    outstanding nonvested stock awards became fully vested on
    April 15, 2005, as a result of the Province business
    combination and the change of control provisions in the
    Companys stock-based compensation plans. The estimated pro
    forma after-tax charge the Company would have incurred during
    the three and six months ended June 30, 2005 as a result of
    the accelerated vesting of stock options was $4.9 million.
    In addition, as a result of the accelerated vesting of nonvested
    stock awards, the Company recognized an after-tax charge of
    $2.5 million for the three and six months ended
    June 30, 2005.



Results
    of Operations








Admissions.




bps.




Continuing operations.




Emergency room visits.




Equivalent admissions.


41



---



##### Table of Contents



ESOP.
  Medicare case mix index.
  N/A. .
  N/M.
  Outpatient surgeries.
  Same-hospital.
  Operating
    Results Summary
    Three Months Ended June 30,


Six Months Ended June 30,2005


2006


2005


2006% of





% of





% of





% ofAmount


Revenues


Amount


Revenues


Amount


Revenues


Amount


RevenuesRevenues

$
464.4



100.0
%

$
569.2



100.0
%

$
736.4



100.0
%

$
1,158.8



100.0
%Salaries and benefits


184.4



39.7



228.8



40.3



294.0



39.9



459.9



39.7Supplies


60.1



13.0



77.9



13.7



96.0



13.0



160.6



13.9Other operating expenses


78.8



17.0



101.8



17.7



123.6



16.8



197.5



17.0Provision for doubtful accounts


41.1



8.8



59.0



10.4



64.0



8.7



127.4



11.0Depreciation and amortization


26.6



5.7



16.0



2.9



39.8



5.4



47.9



4.1Interest expense, net


15.4



3.3



24.5



4.3



17.8



2.4



47.7



4.1Debt retirement costs


10.0



2.1











10.0



1.4







Transaction costs


44.6



9.6











44.6



6.1







461.0



99.2



508.0



89.3



689.8



93.7



1,041.0



89.8Income from continuing operations
    before minority interests and income taxes


3.4



0.8



61.2



10.7



46.6



6.3



117.8



10.2Minority interests in earnings of
    consolidated entities


0.2



0.1



0.4







0.5







0.7



0.1Income from continuing operations
    before income taxes


3.2



0.7



60.8



10.7



46.1



6.3



117.1



10.1Provision for income taxes


6.3



1.4



24.4



4.3



23.4



3.2



46.9



4.0Income (loss) from continuing
    operations

$
(3.1
)


(0.7
)%

$
36.4



6.4
%

$
22.7



3.1
%

$
70.2



6.1
%  42




---



##### Table of Contents



For
    the Quarters Ended June 30, 2005 and 2006
  Revenues
      Three Months Ended





%June 30,


Increase


Increase2005


2006


(Decrease)


(Decrease)Revenues:Same-hospital

$
263.2


$
277.5


$
14.3



5.4
%Former Province hospitals


197.6



242.3



44.7



22.72005 Acquisitions


3.6



49.4



45.8



1,275.7$
464.4


$
569.2


$
104.8



22.6Admissions:Same-hospital


23,080



22,168



(912
)


(4.0
)Continuing operations


38,902



44,184



5,282



13.6Equivalent admissions:Same-hospital


45,964



45,171



(793
)


(1.7
)Continuing operations


76,430



87,572



11,142



14.6Revenues per equivalent admission:Same-hospital

$
5,726


$
6,143


$
417



7.3Continuing operations

$
6,076


$
6,500


$
424



7.0Medicare case mix index:Same-hospital


1.19



1.20



0.01



0.8Continuing operations


1.21



1.22



0.01



0.8Average length of stay (days):Same-hospital


4.1



4.2



0.1



2.4Continuing operations


4.1



4.2



0.1



2.4Inpatient surgeries:Same-hospital


6,749



6,522



(227
)


(3.4
)Continuing operations


11,510



13,478



1,968



17.1Outpatient surgeries:Same-hospital


19,395



18,558



(837
)


(4.3
)Continuing operations


30,488



34,818



4,330



14.2Emergency room visits:Same-hospital


107,177



108,931



1,754



1.6Continuing operations


178,126



207,119



28,993



16.3Outpatient factor:Same-hospital


1.99



2.04



0.05



2.5Continuing operations


1.96



1.98



0.02



1.0Outpatient revenues as a
    percentage of total revenues:Same-hospital


49.3
%


50.6
%


130bps



N/MContinuing operations


51.4
%


48.9
%


(250)bps



N/M  43




---



##### Table of Contents



Inpatient
    Revenues
    Outpatient
    Revenues
    Other
      Continuing Operations


Same-Hospital2005


2006


2005


2006Medicare


37.1
%


35.3
%


36.6
%


35.4
%Medicaid


10.0



11.0



10.9



10.8HMOs, PPOs and other private
    insurers


35.5



36.7



39.2



39.2Self-Pay


12.4



12.9



9.3



10.4Other


5.0



4.1



4.0



4.2100.0
%


100.0
%


100.0
%


100.0
%  44




---



##### Table of Contents



Expenses
  Salaries
    and Benefits
    Three Months Ended June 30,% of





% of


Increase


% Increase2005


Revenues


2006


Revenues


(Decrease)


(Decrease)Salaries and benefits:Salaries and wages

$
141.3



30.4
%

$
177.6



31.2
%

$
36.3



25.8
%Stock-based compensation


1.6



0.4



2.5



0.5



0.9



59.1Employee benefits


31.6



6.8



33.1



5.8



1.5



4.8Contract labor


6.0



1.3



11.2



2.0



5.2



89.7ESOP expense


3.9



0.8



4.4



0.8



0.5



17.4$
184.4



39.7
%

$
228.8



40.3
%

$
44.4



24.3Continuing operations:Man-hours
    per equivalent admission


87.3



N/A



91.4



N/A



4.1



4.7Salaries and benefits per
    equivalent admission

$
2,223



N/A


$
2,481



N/A


$
258



11.6Corporate office salaries and
    benefits

$
8.5



1.8
%

$
12.9



2.3
%

$
4.4



51.0Same-hospital:Salaries and wages

$
78.7



29.9
%

$
80.6



29.0
%

$
1.9



2.3Stock-based compensation


0.3



0.1



0.6



0.2



0.3



112.8Employee benefits


19.1



7.2



17.2



6.2



(1.9
)


(9.9
)Contract labor


2.6



1.0



2.7



1.0



0.1



0.3ESOP expense


2.2



0.9



2.1



0.7



(0.1
)


(7.7
)$
102.9



39.1
%

$
103.2



37.1
%

$
0.3



0.1Same-hospital:Man-hours
    per equivalent admission


84.1



N/A



84.4



N/A



0.3



0.4Salaries and benefits per
    equivalent admission

$
2,191



N/A


$
2,269



N/A


$
78



3.6      45




---



##### Table of Contents



Managements Discussion and Analysis of Financial
    Condition and Results of Operations
  Supplies
    Three Months





%Ended June 30,


Increase


Increase2005


2006


(Decrease)


(Decrease)Continuing operations:Supplies

$
60.1


$
77.9


$
17.8



29.5
%Supplies as a percentage of
    revenues


13.0
%


13.7
%


70bps



N/MSupplies per equivalent admission

$
794


$
885


$
91



11.4
%Same-hospital:Supplies

$
34.4


$
35.7


$
1.3



3.8
%Supplies as a percentage of
    revenues


13.1
%


12.9
%


(20)bps



N/MSupplies per equivalent admission

$
762


$
787


$
25



3.2
%    46




---



##### Table of Contents



Other
    Operating Expenses
    Three Months Ended June 30,% of





% of


Increase


% Increase2005


Revenues


2006


Revenues


(Decrease)


(Decrease)Other operating expenses:Professional fees

$
7.0



1.5
%

$
10.5



1.8
%

$
3.5



49.3
%Utilities


8.0



1.7



10.9



1.9



2.9



37.4Repairs and maintenance


8.3



1.8



12.1



2.1



3.8



45.6Rents and leases


4.6



1.0



5.3



0.9



0.7



14.7Insurance


6.3



1.4



7.8



1.4



1.5



22.0HCA-IT expense


5.3



1.1



7.3



1.3



2.0



36.0Physician recruiting


4.9



1.0



4.0



0.7



(0.9
)


(18.4
)Contract services


16.2



3.5



21.7



3.8



5.5



33.7Non-income taxes


7.5



1.6



8.2



1.4



0.7



9.4Other


10.7



2.4



14.0



2.4



3.3



30.7$
78.8



17.0
%

$
101.8



17.7
%

$
23.0



28.9Corporate office other operating
    expenses

$
6.1



1.3
%

$
8.2



1.4
%

$
2.1



34.8Same-hospital other operating
    expenses:Professional fees

$
3.4



1.3
%

$
4.2



1.5
%

$
0.8



25.7
%Utilities


4.4



1.7



4.8



1.7



0.4



8.6Repairs and maintenance


5.4



2.0



6.1



2.2



0.7



13.6Rents and leases


2.3



0.9



2.6



0.9



0.3



12.2Insurance


2.0



0.7



2.4



0.9



0.4



23.0HCA-IT expense


3.7



1.4



4.2



1.5



0.5



13.9Physician recruiting


3.0



1.1



2.4



0.9



(0.6
)


(19.9
)Contract services


9.1



3.5



9.7



3.5



0.6



6.3Non-income taxes


4.7



1.8



4.7



1.7







1.1Other


3.7



1.4



3.9



1.5



0.2



4.4$
41.7



15.8
%

$
45.0



16.3
%

$
3.3



8.3     FIN 45-3
 47




---



##### Table of Contents



Provision
    for Doubtful Accounts
    Three MonthsEnded June 30,


Increase


% Increase2005


2006


(Decrease)


(Decrease)Continuing operations:Provision for doubtful accounts

$
41.1


$
59.0


$
17.9



43.8
%Percentage of revenue


8.8
%


10.4
%


160bps



N/MCharity care write-offs

$
5.6


$
12.1


$
6.5



116.0
%Same-hospital:Provision for doubtful accounts

$
20.4


$
26.2


$
5.8



28.0
%Percentage of revenues


7.8
%


9.4
%


160bps



N/MCharity care write-offs

$
2.2


$
4.9


$
2.7



122.5
%   . Managements Discussion and
    Analysis of Financial Condition and Results of Operations Form 10-K.
  Depreciation
    and Amortization
      Three MonthsEnded June 30,


Increase


% Increase2005


2006


(Decrease)


(Decrease)Same-hospital

$
15.5


$
13.8


$
(1.7
)


(10.9
)%Former Province hospitals


10.8



13.0



2.2



20.62005 Acquisitions


0.1



2.2



2.1



1,092.5Purchase price allocation
    adjustment






(13.5
)


(13.5
)


N/ACorporate office


0.2



0.5



0.3



218.7$
26.6


$
16.0


$
(10.6
)


(39.7
)  48




---



##### Table of Contents



Interest
    Expense
    Three MonthsEnded June 30,


Increase2005


2006


(Decrease)Interest expense:Senior credit facility, including
    commitment fees

$
12.6


$
21.6


$
9.0Senior subordinated credit
    agreement


0.6







(0.6
)41/2% convertible
    notes


2.0







(2.0
)Province
    41/4% convertible
    notes


0.3







(0.3
)Province
    71/2% senior
    subordinated notes


0.1



0.1



31/4% convertible
    notes






1.8



1.8Other


0.2



0.6



0.415.8



24.1



8.3Amortization of deferred loan costs


1.2



1.3



0.1Less:Interest income


(0.8
)


(0.7
)


0.1Capitalized interest


(0.8
)


(0.2
)


0.6$
15.4


$
24.5


$
9.1     Provision
    for Income Taxes
    Three MonthsEnded June 30,

Increase2005

2006

(Decrease)Provision for income taxes

$
6.3


$
24.4


$
18.1Effective income tax rate


193.8
%


40.1
%


(15,370)bps   non-deductible
 49




---



##### Table of Contents



For
    the Six Months Ended June 30, 2005 and 2006
  Revenues
      Six Months Ended





%June 30,


Increase


Increase2005


2006


(Decrease)


(Decrease)Revenues:Same-hospital

$
534.8


$
559.7


$
24.9



4.6
%Former Province hospitals


197.5



493.0



295.5



149.52005 Acquisitions


3.6



106.1



102.5



2,853.4Other


0.5







(0.5)



(100.0
)$
736.4


$
1,158.8


$
422.4



57.4Admissions:Same-hospital


48,524



46,523



(2,001)



(4.1
)%Continuing operations


64,346



92,026



27,680



43.0
%Equivalent admissions:Same-hospital


94,816



92,395



(2,421)



(2.6
)%Continuing operations


125,282



178,807



53,525



42.7
%Revenues per equivalent admission:Same-hospital

$
5,640


$
6,057


$
417



7.4
%Continuing operations

$
5,878


$
6,481


$
603



10.3
%Medicare case mix index:Same-hospital


1.19



1.21



0.02



1.7
%Continuing operations


1.20



1.23



0.03



2.5
%Average length of stay (days):Same-hospital


4.1



4.2



0.1



2.4
%Continuing operations


4.1



4.3



0.2



4.9
%Inpatient surgeries:Same-hospital


13,345



13,203



(142)



(1.1
)%Continuing operations


18,106



27,012



8,906



49.2
%Outpatient surgeries:Same-hospital


38,592



36,868



(1,724)



(4.5
)%Continuing operations


49,685



68,836



19,151



38.5
%Emergency room visits:Same-hospital


217,291



215,899



(1,392)



(0.6
)%Continuing operations


288,240



412,032



123,792



42.9
%Outpatient factor:Same-hospital


1.95



1.99



0.04



2.1
%Continuing operations


1.95



1.94



(0.01)



(0.5
)Outpatient revenues as a
    percentage of total revenues:Same-hospital


49.4
%


50.3
%


90bps



N/MContinuing operations


50.7
%


48.7
%


(200)bps



N/M  50




---



##### Table of Contents



Inpatient
    Revenues
    Outpatient
    Revenues
    Other
      Continuing Operations


Same-Hospital2005


2006


2005


2006Medicare


37.5
%


35.8
%


37.4
%


36.2
%Medicaid


10.3



10.1



10.8



10.3HMOs, PPOs and other private
    insurers


36.3



37.3



38.4



39.0Self-Pay


11.1



12.7



9.1



10.3Other


4.8



4.1



4.3



4.2100.0
%


100.0
%


100.0
%


100.0
%   Expenses
  Salaries
    and Benefits
    Six Months Ended June 30,% of





% of


Increase


% Increase2005


Revenues


2006


Revenues


(Decrease)


(Decrease)Salaries and benefits:Salaries and wages

$
224.5



30.5
%

$
351.7



30.4
%

$
127.2



56.7
%Stock-based compensation


2.1



0.3



5.7



0.5



3.6



169.4Employee benefits


52.2



7.1



71.7



6.2



19.5



37.4Contract labor


8.7



1.2



22.1



1.9



13.4



155.5ESOP expense


6.5



0.8



8.7



0.7



2.2



34.4$
294.0



39.9
%

$
459.9



39.7
%

$
165.9



56.5 51




---



##### Table of Contents



Six Months Ended June 30,% of





% of


Increase


% Increase2005


Revenues


2006


Revenues


(Decrease)


(Decrease)Continuing operations:Man-hours
    per equivalent admission


84.1



N/M



89.8



N/M



5.7



6.8Salaries and benefits per
    equivalent admission

$
2,150



N/M


$
2,434



N/M


$
284



13.2Corporate office salaries and
    benefits

$
15.4



2.1


$
23.2



2.0
%

$
7.8



50.2Same-hospital:Salaries and wages

$
156.7



29.3
%

$
160.7



28.7
%

$
4.0



2.5Stock-based compensation


0.3



0.1



1.1



0.2



0.8



287.6Employee benefits


38.7



7.2



37.6



6.7



(1.1
)


(2.9
)Contract labor


5.3



1.0



5.5



1.0



0.2



2.6ESOP expense


4.8



0.9



4.1



0.7



(0.7
)


(15.8
)$
205.8



38.5
%

$
209.0



37.3
%

$
3.2



1.5Same-hospital:Man-hours
    per equivalent admission


81.5



N/M



82.9



N/M



1.4



1.6Salaries and benefits per
    equivalent admission

$
2,112



N/M


$
2,243



N/M


$
131



6.2       Managements Discussion and Analysis of Financial
    Condition and Results of Operations
 52




---



##### Table of Contents



Supplies
    Six Months Ended





%June 30,


Increase


Increase2005


2006


(Decrease)


(Decrease)Continuing operations:Supplies

$
96.0


$
160.6


$
64.6



67.2
%Supplies as a percentage of
    revenues


13.0
%


13.9
%


90bps



N/MSupplies per equivalent admission

$
768


$
894


$
126



16.3
%Same-hospital:Supplies

$
70.2


$
72.4


$
2.2



3.1
%Supplies as a percentage of
    revenues


13.1
%


13.0
%


(10)bps



N/MSupplies per equivalent admission

$
745


$
782


$
37



4.9
%     Other
    Operating Expenses
    Six Months Ended June 30,% of





% of


Increase


% Increase2005


Revenues


2006


Revenues


(Decrease)


(Decrease)Other operating expenses:Professional fees

$
10.5



1.4
%

$
20.1



1.7
%

$
9.6



91.8
%Utilities


12.4



1.7



23.0



2.0



10.6



85.4Repairs and maintenance


13.7



1.9



23.3



2.0



9.6



69.6Rents and leases


7.0



1.0



11.1



1.0



4.1



57.7Insurance


8.9



1.2



14.3



1.2



5.4



60.0HCA-IT expense


9.8



1.3



14.1



1.2



4.3



42.3Physician recruiting


8.3



1.1



8.9



0.8



0.6



8.7Contract services


25.1



3.4



42.1



3.6



17.0



68.1Non-income taxes


12.0



1.6



15.9



1.4



3.9



32.2Other


15.9



2.2



24.7



2.1



8.8



54.4$
123.6



16.8
%

$
197.5



17.0
%

$
73.9



59.6Corporate office other operating
    expenses

$
9.0



1.2
%

$
13.8



1.2
%

$
4.8



53.6 53




---



##### Table of Contents



Six Months Ended June 30,% of





% of


Increase


% Increase2005


Revenues


2006


Revenues


(Decrease)


(Decrease)Same-hospital other operating
    expenses:Professional fees

$
6.8



1.3
%

$
8.0



1.4
%

$
1.2



18.1
%Utilities


8.9



1.7



10.2



1.8



1.3



15.1Repairs and maintenance


10.8



2.0



11.8



2.1



1.0



9.7Rents and leases


4.5



0.8



5.2



0.9



0.7



14.4Insurance


4.2



0.8



4.4



0.8



0.2



4.6HCA-IT expense


8.1



1.5



8.7



1.6



0.6



8.2Physician recruiting


6.4



1.2



5.5



1.0



(0.9
)


(14.5
)Contract services


17.5



3.3



18.5



3.3



1.0



5.6Non-income taxes


9.1



1.7



8.9



1.6



(0.2
)


(2.0
)Other


7.3



1.3



7.2



1.3



(0.1
)


(1.1
)$
83.6



15.6
%

$
88.4



15.8
%

$
4.8



5.9     FIN 45-3
  Provision
    for Doubtful Accounts
    Six Months EndedJune 30,


Increase


% Increase2005


2006


(Decrease)


(Decrease)Continuing operations:Provision for doubtful accounts

$
64.0


$
127.4


$
63.4



99.5
%Percentage of revenue


8.7
%


11.0
%


230bps



N/MCharity care write-offs

$
7.4


$
18.2


$
10.8



144.8
%Same-hospital:Provision for doubtful accounts

$
43.3


$
55.6


$
12.3



28.4
%Percentage of revenues


8.1
%


9.9
%


180bps



N/MCharity care write-offs

$
4.0


$
7.3


$
3.3



82.3
%  54




---



##### Table of Contents



. Managements Discussion and
    Analysis of Financial Condition and Results of Operations, Form 10-K.
  Depreciation
    and Amortization
      Six Months EndedJune 30,


Increase


% Increase2005


2006


(Decrease)


(Decrease)Same-hospital

$
28.4


$
27.6


$
(0.8
)


(2.5
)%Former Province hospitals


10.8



27.2



16.4



152.02005 Acquisitions


0.2



5.5



5.3



2,908.7Purchase price allocation
    adjustment






(13.5
)


(13.5
)


N/ACorporate office


0.4



1.1



0.7



229.3$
39.8


$
47.9


$
8.1



20.9  55




---



##### Table of Contents



Interest
    Expense
    Six MonthsEnded June 30,


Increase2005


2006


(Decrease)Interest expense:Senior credit facility, including
    commitment fees

$
12.9


$
41.8


$
28.9Senior subordinated credit
    agreement


0.6







(0.6
)41/2% convertible
    notes


4.5







(4.5
)Province
    41/4% convertible
    notes


0.3







(0.3
)Province
    71/2% senior
    subordinated notes


0.1



0.2



0.131/4% convertible
    notes






3.7



3.7Other


0.2



0.8



0.618.6



46.5



27.9Amortization of deferred loan costs


1.5



2.6



1.1Less:Discontinued operations interest
    expense allocation


(0.1
)


(0.1
)


Interest income


(1.0
)


(1.0
)


Capitalized interest


(1.2
)


(0.3
)


0.9$
17.8


$
47.7


$
29.9     Provision
    for Income Taxes
    Six MonthsEnded June 30,

Increase2005

2006

(Decrease)Provision for income

$
23.4


$
46.9


$
23.5Effective income tax rate


50.8
%


40.0
%


(108)bps   non-deductible
 56




---



##### Table of Contents



Liquidity
    and Capital Resources
  Liquidity
      Three Months Ended


Six Months EndedJune 30,


June 30,2005


2006


2005


2006Net cash flows provided by
    continuing operating activities

$
68.2


$
58.1


$
129.2


$
113.7Less: Purchase of property and
    equipment


(33.3
)


(44.9
)


(60.4
)


(95.0
)Free operating cash flow


34.9



13.2



68.8



18.7Acquisitions


(957.7
)


(257.1
)


(959.7
)


(260.6
)Proceeds from sale of hospitals






7.7



32.5



27.6Proceeds from borrowings


1,592.0



250.0



1,592.0



260.0Payments on borrowings


(709.2
)


(10.0
)


(709.2
)


(20.0
)Payment of debt issue costs


(31.8
)






(31.8
)


(0.4
)Proceeds from exercise of stock
    options


31.0







41.6



0.3Other


(3.5
)


(0.8
)


(3.0
)


0.5Cash flows from operations
    provided by (used in) discontinued operations


3.1



0.2



3.2



(0.2
)Net (decrease) increase in cash
    and cash equivalents

$
(41.2
)

$
3.2


$
34.4


$
25.9      57




---



##### Table of Contents



Working
    Capital
    December 31,


June 30,2005


2006Total current assets

$
433.3


$
447.7Total current liabilities


230.1



217.4Net working capital

$
203.2


$
230.3Current ratio


1.88



2.06   Capital
    Expenditures
      Three Months Ended


Six Months EndedJune 30,


June 30,2005


2006


2005


2006Capital projects

$
21.4


$
25.5


$
39.2


$
55.1Routine


8.2



13.5



12.9



28.4Purchase of buildings










3.2



Information systems


3.7



5.9



5.1



11.5$
33.3


$
44.9


$
60.4


$
95.0Depreciation expense (excluding
    purchase price allocation adjustment)

$
26.4


$
29.2


$
39.3


$
60.7Ratio of capital expenditures to
    depreciation expense


126.1
%


153.8
%


153.7
%


156.5
%    58




---



##### Table of Contents



Debt








|                                                        |  |              |         |  |                 |   |       |             |  |   |       |   |  |          |     |  |  |   |         | 
|------------------------------------------------------- |  | ------------ | ------- |  | --------------- | - | ----- | ----------- |  | - | ----- | - |  | -------- | --- |  |  | - | ------- | 
|                                                        |  | December 31, |         |  | Proceeds from   |   |       | Payments of |  |   |       |   |  | June 30, |    
|                                                        |  | 2005         |         |  | Debt Borrowings |   |       | Borrowings  |  |   | Other |   |  | 2006     |    
|                                                       
|Senior Credit Facility:                                 |  |              |         |  |                 |   |       |             |  |   |       |   |  |          |     |  |  |   |         | 
|Term B Loans                                            |  | $            | 1,281.9 |  |                 | $ | 50.0  |             |  | $ | (10.0 | ) |  | $        |    |  |  | $ | 1,321.9 | 
|Revolving loan                                          |  |              |        |  |                 |   | 210.0 |             |  |   | (10.0 | ) |  |          |    |  |  |   | 200.0   | 
|Provinces
    71/2% Senior
    Subordinated Notes      |  |              | 6.1     |  |                 |   |      |             |  |   |      |   |  |          |    |  |  |   | 6.1     | 
|Provinces
    41/4% Convertible
    Subordinated Notes |  |              | 0.1     |  |                 |   |      |             |  |   |      |   |  |          |    |  |  |   | 0.1     | 
|31/4% Convertible
    Senior Subordinated Debentures    |  |              | 225.0   |  |                 |   |      |             |  |   |      |   |  |          |    |  |  |   | 225.0   | 
|Other, including capital leases                         |  |              | 3.2     |  |                 |   |      |             |  |   | (0.3  | ) |  |          | 4.7 |  |  |   | 7.6     | 
|                                                        |  |              |         |  |                 |   |       |             |  |   |       |   |  |          |     |  |  |   |         | 
|                                                        |  | $            | 1,516.3 |  |                 | $ | 260.0 |             |  | $ | (20.3 | ) |  | $        | 4.7 |  |  | $ | 1,760.7 | 
|                                                        |  |              |         |  |                 |   |       |             |  |   |       |   |  |          |     |  |  |   |         | 









|                                   |  |              |         |   |          |   |         |            |  |   |       |    
|---------------------------------- |  | ------------ | ------- | - | -------- | - | ------- | ---------- |  | - | ----- | ---
|                                   |  | December 31, |         |   | June 30, |   |         | Increase   | 
|                                   |  | 2005         |         |   | 2006     |   |         | (Decrease) | 
|                                  
|Current portion of long-term debt  |  | $            | 0.5     |   |          | $ | 0.7     |            |  | $ | 0.2   |    
|Long-term debt                     |  |              | 1,515.8 |   |          |   | 1,760.0 |            |  |   | 244.2 |    
|                                   |  |              |         |   |          |   |         |            |  |   |       |    
|Total debt                         |  |              | 1,516.3 |   |          |   | 1,760.7 |            |  |   | 244.4 |    
|Total stockholders equity         |  |              | 1,287.8 |   |          |   | 1,372.6 |            |  |   | 84.8  |    
|                                   |  |              |         |   |          |   |         |            |  |   |       |    
|Total capitalization               |  | $            | 2,804.1 |   |          | $ | 3,133.3 |            |  |   | 329.2 |    
|                                   |  |              |         |   |          |   |         |            |  |   |       |    
|Total debt to total capitalization |  |              | 54.1    | % |          |   | 56.2    | %          |  |   | 210   | bps
|                                   |  |              |         |   |          |   |         |            |  |   |       |    
|Percentage of:                     |  |              |         |   |          |   |         |            |  |   |       |    
|Fixed rate debt                    |  |              | 15.5    | % |          |   | 13.6    | %          |  |   |       |    
|Variable rate debt                 |  |              | 84.5    |   |          |   | 86.4    |            |  |   |       |    
|                                   |  |              |         |   |          |   |         |            |  |   |       |    
|                                   |  |              | 100.0   | % |          |   | 100.0   | %          |  |   |       |    
|                                   |  |              |         |   |          |   |         |            |  |   |       |    
|Percentage of:                     |  |              |         |   |          |   |         |            |  |   |       |    
|Senior debt                        |  |              | 84.8    | % |          |   | 86.9    | %          |  |   |       |    
|Subordinated debt                  |  |              | 15.2    |   |          |   | 13.1    |            |  |   |       |    
|                                   |  |              |         |   |          |   |         |            |  |   |       |    
|                                   |  |              | 100.0   | % |          |   | 100.0   | %          |  |   |       |    
|                                   |  |              |         |   |          |   |         |            |  |   |       |    





Capital
    Resources




Senior
    Secured Credit Facilities




co-syndication


59



---



##### Table of Contents











and/or




















|                                          |  |             |            |          |  |  |      | 
|----------------------------------------- |  | ----------- | ---------- | -------- |  |  | ---- | 
|                                          |  |             |            | Level at
|                                          |  |             |            | June 30,
|                                          |  | Requirement |            | 2006    
|                                         
|Minimum Interest Coverage Ratio           |  |             | 33.50:1.00 |          |  |  | 4.87 | 
|Maximum Total Leverage Coverage
    Ratio |  |             | £4.75:1.00 |          |  |  | 3.88 | 











60



---



##### Table of Contents















Interest
    Rate Swap








Notional
    Schedule




|                                           |  |                 |               | 
|------------------------------------------ |  | --------------- | ------------- | 
|Date Range                                 |  | Notional Amount |              
|                                          
|November 15, 2006 to
    November 15, 2007 |  | $               | 900.0 million | 
|November 15, 2007 to
    November 15, 2008 |  | $               | 750.0 million | 
|November 15, 2008 to
    November 15, 2009 |  | $               | 600.0 million | 
|November 15, 2009 to
    November 15, 2010 |  | $               | 450.0 million | 
|November 15, 2010 to
    May 15, 2011      |  | $               | 300.0 million | 









Debt
    Ratings








| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | Moodys Investors Service, Inc. (Moodys);                                                 
|
| |  | Standard & Poors Rating Services, a division of
    McGraw-Hill Companies, Inc. (S&P); and
|
| |  | Fitch Ratings.                                                                               





61



---



##### Table of Contents



MoodysSenior








S&P


Fitch RatingsUnsecured


Senior Implied





Issuer





IssuerDate

Issuer Rating


Issuer Rating


Outlook


Rating


Outlook


Rating


OutlookApril 1999














B+



Stable







October 1999






B1



Stable



B+



Stable







February 2001






B1



Positive



B+



Stable







May 2001






Ba3



Stable



B+



Stable







June 2001


B2



Ba3



Stable



BB−



Stable







June 2002


B2



Ba3



Stable



BB−



Stable







December 2003


B2



Ba3



Stable



BB



Stable







August 2004


B2



Ba3



Negative



BB



Negative







March 2005


B2



Ba3



Stable



BB



Stable







July 2005


B2



Ba3



Stable



BB



Negative







May 2006






















BB−



Stable     Note: Dates represent change in rating or outlook.  Province
    71/2% Senior
    Subordinated Notes
  1 2 1 2 1 2
  1 2 1 2 1 2
  1 2 1 2 1 2 1 2
  Province
    41/4% Convertible
    Subordinated Notes
  1 4 1 4
  31/4% Convertible
    Senior Subordinated Debentures due August 15,
    2025
  1 4 1 4
 62




---



##### Table of Contents



1 4 1 4
  1 4 1 4 1 4 1 4 1 4 1 4
  1 4 1 4 1 4
  1 4 1 4 1 4 1 4
  1 4 1 4
  Liquidity
    and Capital Resources Outlook
     63




---



##### Table of Contents



Contractual
    Obligations
  Form 10-K
  Off-Balance
    Sheet Arrangements
    Recently
    Issued Accounting Pronouncements
    Contingencies
    
    Claims made under the Americans with Disabilities Act;
    Our Corporate Integrity Agreement;
    Legal proceedings and general liability claims;
    Physician commitments;
    Capital expenditure commitments;
    Tax matters; and
    Acquisitions. 64




---



##### Table of Contents



Forward-Looking
    Statements
    
    projections of our revenues, net income, earnings per share,
    capital expenditures, cash flows, debt repayments, interest
    rates, certain operating statistics and data or other financial
    items;
    descriptions of plans or objectives of our management for future
    operations or services, including pending acquisitions and
    divestitures;
    interpretations of Medicare and Medicaid law; and
    descriptions of assumptions underlying or relating to any of the
    foregoing.    
    investment in and integration of our recent acquisitions;
    liabilities and other effects associated with our recent
    acquisitions;
    future financial performance and condition;
    future liquidity and capital resources;
    future cash flows;
    existing and future debt and equity structure;
    competition with other hospitals;
    our compliance with federal, state and local regulations;
    our stock compensation arrangements;
    executive compensation;
    our hedging arrangements;
    supply and information technology costs;
    changes in interest rates;
    our payment of dividends;
    future acquisitions and dispositions;
    de novo facilities;
    tax-related liabilities;
    reimbursement changes;
    patient volumes and related revenues;
    recruiting and retention of clinical personnel;
    future capital expenditures;
    expected changes in certain expenses;
    the completion of projects under construction;
    the impact of changes in our critical accounting estimates;
    claims and legal actions relating to professional liabilities
    and other matters; 65




---



##### Table of Contents




    non-GAAP measures;
    the impact and applicability of new accounting
    standards; and
    physician recruiting and retention.  Risk Factors Form 10-K Form 10-K and/or Form 10-K
    
    problems that may arise in integrating the Province hospitals
    and our other acquired hospitals;
    reduction in payments to healthcare providers by government and
    commercial third-party payors, as well as changes in the manner
    in which employers provide healthcare coverage to their
    employees;
    the possibility of adverse changes in, and requirements of,
    applicable laws, regulations, policies and procedures;
    our ability to manage healthcare risks, including malpractice
    litigation, and the lack of state and federal tort reform;
    the availability, cost and terms of insurance coverage;
    the highly competitive nature of the healthcare business,
    including the competition to recruit and retain physicians and
    other healthcare professionals;
    the ability to attract and retain qualified management and
    personnel;
    the geographic concentration of our operations;
    changes in our operating or expansion strategy;
    the ability to operate and integrate newly acquired facilities
    successfully;
    the availability and terms of capital to fund our business
    strategy;
    changes in our liquidity or the amount or terms of our
    indebtedness and in our debt credit ratings;
    the potential adverse impact of government investigations and
    litigation involving the business practices of healthcare
    providers, including whistleblowers investigations;
    changes in generally accepted accounting principles or practices;
    volatility in the market value of our common stock;
    changes in general economic conditions in the markets we serve;
    our reliance on information technology systems maintained by
    HCA-IT;
    the costs of complying with the Americans with Disabilities Act;
    possible adverse rulings, judgments, settlements and other
    outcomes of pending litigation; and 66




---



##### Table of Contents





| |   |                                                                                           
| | - | ------------------------------------------------------------------------------------------
| |  | those risks and uncertainties described from time to time in our
    filings with the SEC.



|        |                                                                
|------- | ---------------------------------------------------------------
|Item 3. | Quantitative
    and Qualitative Disclosures about Market Risk.



Interest
    Rates








1 4








|        |                             
|------- | ----------------------------
|Item 4. | Controls
    and Procedures.



Rule 13a-15(e) Rule 13a-15








PART II 
    OTHER INFORMATION




|        |                       
|------- | ----------------------
|Item 1. | Legal
    Proceedings.









67



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##### Table of Contents







|         |                  
|-------- | -----------------
|Item 1A. | Risk
    Factors.



Form 10-K.




|        |                                                         
|------- | --------------------------------------------------------
|Item 4. | Submission
    of Matters to a Vote of Security Holders.







|                                                                                                                                                           |  |          |            |  |           |  |           |         |  |  |         | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | ---------- |  | --------- |  | --------- | ------- |  |  | ------- | 
|                                                                                                                                                           |  | Votes    |            |  |           |  |           | Votes   | 
|                                                                                                                                                           |  | in Favor |            |  | Abstained |  |           | Against | 
|                                                                                                                                                          
|a) Election of Class I
    Directors:                                                                                                                      |  |          |            |  |           |  |           |         |  |  |         | 
|Ricki Tigert Helfer                                                                                                                                        |  |          | 36,400,752 |  |           |  | 7,991,737 |         |  |  |        | 
|John E. Maupin, Jr.                                                                                                                                        |  |          | 36,445,687 |  |           |  | 7,946,802 |         |  |  |        | 
|Owen G. Shell, Jr.                                                                                                                                         |  |          | 36,446,838 |  |           |  | 7,945,651 |         |  |  |        | 
|b) Ratification of the appointment
    of Ernst & Young LLP as our independent registered
    public accounting firm for the year ending December 31, 2006 |  |          | 43,871,101 |  |           |  | 97,416    |         |  |  | 423,972 | 







68



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##### Table of Contents



Item 6.
    Exhibits.  ExhibitNumber

Description3
.1

Amended and Restated Certificate
    of Incorporation of LifePoint Hospitals, Inc.(a)3
.2

Amended and Restated By-Laws of
    LifePoint Hospitals, Inc.(a)4
.1

Indenture, dated August 10,
    2005, between LifePoint Hospitals, Inc. as Issuer and Citibank,
    N.A., as Trustee(b)4
.2

Form of 3.25% Convertible
    Senior Subordinated Debenture due 2025 (included as part of
    Exhibit 4.1)(b)4
.3

Registration Rights Agreement,
    dated August 10, 2005, between LifePoint Hospitals, Inc.
    and Citigroup Global Markets Inc. as Representatives of the
    Initial Purchasers(b)10
.1

Certain non-employee director
    compensation information(c)10
.2

Form of LifePoint Hospitals, Inc.
    Deferred Restricted Stock Award(c)10
.3

Separation Agreement, dated
    June 25, 2006, between LifePoint CSGP, LLC and Kenneth C.
    Donahey(d)10
.4

Incremental Facility Amendment
    No. 3 to the Credit Agreement, dated June 30, 2006,
    among LifePoint Hospitals, Inc., as borrower, Citicorp North
    America, Inc., as administrative agent and the lenders party
    thereto(e)10
.5

Stock Purchase Agreement, dated
    July 14, 2005, between HCA Inc. and LifePoint Hospitals,
    Inc.10
.6

Amendment No. 1 to the Stock
    Purchase Agreement, dated June 2, 2006, between HCA Inc.
    and LifePoint Hospitals, Inc.10
.7

Repurchase Agreement by and among
    HCA Inc. and LifePoint Hospitals, Inc. dated as of June 30,
    2006.31
.1

Certification of the Chief
    Executive Officer of LifePoint Hospitals, Inc. Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification of the Chief
    Financial Officer of LifePoint Hospitals, Inc. Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certification of the Chief
    Executive Officer of LifePoint Hospitals, Inc. Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200232
.2

Certification of the Chief
    Financial Officer of LifePoint Hospitals, Inc. Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     (a)
    
    Incorporated by reference to exhibits to the Registration
    Statement on
    Form S-8
    filed by LifePoint Hospitals, Inc. (formerly Lakers Holding
    Corp.) dated April 15, 2005, File
    Number 333-124151.(b)
    
    Incorporated by reference to exhibits to the Current Report on
    Form 8-K
    dated August 10, 2005 of LifePoint Hospitals, Inc., File
    Number 0-51251.(c)
    
    Incorporated by reference to exhibits to the Current Report on
    Form 8-K
    dated May 12, 2006 of LifePoint Hospitals, Inc., File
    Number 0-51251.(d)
    
    Incorporated by reference to Exhibit 10.1 to the Current
    Report on
    Form 8-K
    dated June 26, 2006 of LifePoint Hospitals, Inc., File
    Number 0-51251.(e)
    
    Incorporated by reference to Exhibit 10.4 to the Current
    Report on
    Form 8-K
    dated June 30, 2006 of LifePoint Hospitals, Inc., File
    Number 0-51251. 69




---



##### Table of Contents



SIGNATURES
      By:
    /s/  Gary D. Willis         70




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description3
.1

Amended and Restated Certificate
    of Incorporation of LifePoint Hospitals, Inc.(a)3
.2

Amended and Restated By-Laws of
    LifePoint Hospitals, Inc.(a)4
.1

Indenture, dated August 10,
    2005, between LifePoint Hospitals, Inc. as Issuer and Citibank,
    N.A., as Trustee(b)4
.2

Form of 3.25% Convertible
    Senior Subordinated Debenture due 2025 (included as part of
    Exhibit 4.1)(b)4
.3

Registration Rights Agreement,
    dated August 10, 2005, between LifePoint Hospitals, Inc.
    and Citigroup Global Markets Inc. as Representatives of the
    Initial Purchasers(b)10
.1

Certain non-employee director
    compensation information(c)10
.2

Form of LifePoint Hospitals, Inc.
    Deferred Restricted Stock Award(c)10
.3

Separation Agreement, dated
    June 25, 2006, between LifePoint CSGP, LLC and Kenneth C.
    Donahey(d)10
.4

Incremental Facility Amendment
    No. 3 to the Credit Agreement, dated June 30, 2006,
    among LifePoint Hospitals, Inc., as borrower, Citicorp North
    America, Inc., as administrative agent and the lenders party
    thereto(e)10
.5

Stock Purchase Agreement, dated
    July 14, 2005, between HCA Inc. and LifePoint Hospitals,
    Inc.10
.6

Amendment No. 1 to the Stock
    Purchase Agreement, dated June 2, 2006, between HCA Inc.
    and LifePoint Hospitals, Inc.10
.7

Repurchase Agreement by and among
    HCA Inc. and LifePoint Hospitals, Inc. dated as of June 30,
    2006.31
.1

Certification of the Chief
    Executive Officer of LifePoint Hospitals, Inc. Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification of the Chief
    Financial Officer of LifePoint Hospitals, Inc. Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certification of the Chief
    Executive Officer of LifePoint Hospitals, Inc. Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of the Chief
    Financial Officer of LifePoint Hospitals, Inc. Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     (a)
    
    Incorporated by reference to exhibits to the Registration
    Statement on
    Form S-8
    filed by LifePoint Hospitals, Inc. (formerly Lakers Holding
    Corp.) dated April 15, 2005, File
    Number 333-124151.(b)
    
    Incorporated by reference to exhibits to the Current Report on
    Form 8-K
    dated August 10, 2005 of LifePoint Hospitals, Inc., File
    Number 0-51251(c)
    
    Incorporated by reference to exhibits to the Current Report on
    Form 8-K
    dated May 12, 2006 of LifePoint Hospitals, Inc., File
    Number 0-51251.(d)
    
    Incorporated by reference to Exhibit 10.1 to the Current
    Report on
    Form 8-K
    dated June 26, 2006 of LifePoint Hospitals, Inc., File
    Number 0-51251.(e)
    
    Incorporated by reference to Exhibit 10.4 to the Current
    Report on
    Form 8-K
    dated June 30, 2006 of LifePoint Hospitals, Inc., File
    Number 0-51251.