##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 0-51251
 
  Delaware
(State or other jurisdiction
of incorporation or organization)
    
    20-1538254
(I.R.S. Employer Identification No.)103 Powell Court, Suite 200
Brentwood, Tennessee
(Address of principal executive offices)
    
    37027
(Zip Code)
 
 
  þ o
  þ o




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TABLE OF CONTENTS  PART IFINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.Item 3. Quantitative and Qualitative Disclosures about Market Risk.PART IIOTHER INFORMATIONItem 2. Unregistered Sales of Equity Securities and Use of Proceeds.Item 4. Submission of Matters to a Vote of Security Holders.Item 6. Exhibits.EX-10.4 NONQUALIFIED STOCK OPTION AGREEMENTEX-10.5 RESTRICTED STOCK AWARD AGREEMENTEx-31.1 Section 302 Certifications of the CEOEx-31.2 Section 302 Certifications of the CFOEx-32.1 Section 906 Certifications of the CEOEx-32.2 Section 906 Certifications of the CFO    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
    
    Six Months EndedJune 30,
    
    June 30,2004
    
    2005
    
    2004
    
    2005Revenues
    
    $
    238.2
    
    
    $
    467.6
    
    
    $
    485.7
    
    
    $
    743.5Salaries and benefits
    
    
    97.7
    
    
    
    182.0
    
    
    
    194.6
    
    
    
    290.6Supplies
    
    
    31.1
    
    
    
    60.5
    
    
    
    63.2
    
    
    
    96.7Other operating expenses
    
    
    38.8
    
    
    
    79.6
    
    
    
    79.8
    
    
    
    125.4Provision for doubtful accounts
    
    
    18.9
    
    
    
    41.3
    
    
    
    39.6
    
    
    
    64.3Depreciation and amortization
    
    
    11.4
    
    
    
    26.8
    
    
    
    22.4
    
    
    
    40.0Interest expense, net
    
    
    3.2
    
    
    
    15.4
    
    
    
    6.6
    
    
    
    17.9Debt retirement costs
    
    
    1.5
    
    
    
    10.0
    
    
    
    1.5
    
    
    
    10.0Transaction costs
    
    
    
    
    
    
    44.6
    
    
    
    
    
    
    
    44.6ESOP expense
    
    
    2.5
    
    
    
    3.8
    
    
    
    4.8
    
    
    
    6.5205.1
    
    
    
    464.0
    
    
    
    412.5
    
    
    
    696.0Income from continuing operations before minority interests
and income taxes
    
    
    33.1
    
    
    
    3.6
    
    
    
    73.2
    
    
    
    47.5Minority interests in earnings of consolidated entities
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.6
    
    
    
    0.5Income from continuing operations before income taxes
    
    
    32.8
    
    
    
    3.4
    
    
    
    72.6
    
    
    
    47.0Provision for income taxes
    
    
    13.3
    
    
    
    6.2
    
    
    
    28.9
    
    
    
    23.8Income (loss) from continuing operations
    
    
    19.5
    
    
    
    (2.8
    )
    
    
    43.7
    
    
    
    23.2Discontinued operations, net of income taxes:Income (loss) from discontinued operations
    
    
    (0.8
    )
    
    
    0.3
    
    
    
    (1.1
    )
    
    
    0.9Impairment of assets of hospital held for sale
    
    
    
    
    
    
    (4.7
    )
    
    
    
    
    
    
    (4.7
    )Gain (loss) on sale of hospital
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    (0.7
    )Loss from discontinued operations
    
    
    (0.8
    )
    
    
    (4.3
    )
    
    
    (1.1
    )
    
    
    (4.5
    )Net income (loss)
    
    $
    18.7
    
    
    $
    (7.1
    )
    
    $
    42.6
    
    
    $
    18.7Basic earnings (loss) per share:Continuing operations
    
    $
    0.53
    
    
    $
    (0.05
    )
    
    $
    1.19
    
    
    $
    0.52Discontinued operations
    
    
    (0.02
    )
    
    
    (0.08
    )
    
    
    (0.03
    )
    
    
    (0.10
    )Net income (loss)
    
    $
    0.51
    
    
    $
    (0.13
    )
    
    $
    1.16
    
    
    $
    0.42Diluted earnings (loss) per share:Continuing operations
    
    $
    0.50
    
    
    $
    (0.05
    )
    
    $
    1.11
    
    
    $
    0.51Discontinued operations
    
    
    (0.02
    )
    
    
    (0.08
    )
    
    
    (0.03
    )
    
    
    (0.10
    )Net income (loss)
    
    $
    0.48
    
    
    $
    (0.13
    )
    
    $
    1.08
    
    
    $
    0.41Weighted average shares and dilutive securities outstanding:Basic
    
    
    36.9
    
    
    
    51.8
    
    
    
    36.8
    
    
    
    44.8Diluted
    
    
    43.1
    
    
    
    51.8
    
    
    
    42.9
    
    
    
    45.7
  2




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LIFEPOINT
HOSPITALS, INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except per share amounts)
 December 31,
    
    June 30,2004
    
    2005(1)
    
    (unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    18.6
    
    
    $
    53.0Accounts receivable, less allowances for doubtful accounts of $103.6 at December
31, 2004 and $216.8 at June 30, 2005
    
    
    112.0
    
    
    
    215.7Inventories
    
    
    25.3
    
    
    
    48.7Assets held for sale
    
    
    33.0
    
    
    
    19.2Income taxes receivable
    
    
    7.5
    
    
    
    34.6Prepaid expenses
    
    
    7.1
    
    
    
    13.9Deferred income taxes and other current assets
    
    
    24.3
    
    
    
    42.0227.8
    
    
    
    427.1Property and equipment:Land
    
    
    20.5
    
    
    
    66.6Buildings and improvements
    
    
    385.4
    

    
    
    941.2Equipment
    
    
    342.0
    
    
    
    462.5Construction in progress (estimated cost to complete and equip after June 30,
2005 is $143.0)
    
    
    48.6
    
    
    
    111.5796.5
    
    
    
    1,581.8Accumulated depreciation
    
    
    (295.4
    )
    
    
    (330.5
    )501.1
    
    
    
    1,251.3Deferred loan costs, net
    
    
    4.9
    
    
    
    30.9Intangible assets, net
    
    
    3.3
    
    
    
    3.9Other
    
    
    5.8
    
    
    
    234.9Goodwill
    
    
    144.4
    
    
    
    1,217.5$
    887.3
    
    
    $
    3,165.6LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    29.5
    
    
    $
    60.6Accrued salaries
    
    
    31.2
    
    
    
    52.5Other current liabilities
    
    
    18.5
    
    
    
    48.8Current maturities of long-term debt
    
    
    
    
    
    
    4.279.2
    
    
    
    166.1Long-term debt
    
    
    221.0
    
    
    
    1,585.0Deferred income taxes
    
    
    47.9
    
    
    
    132.2Professional and general liability claims and other liabilities
    
    
    28.4
    
    
    
    59.3Minority interests in equity of consolidated entities
    
    
    1.3
    
    
    
    3.3Stockholders 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; 40,123,768
shares and 56,980,458 shares issued at December 31, 2004
and June 30, 2005, respectively
    
    
    0.4
    
    
    
    0.6Capital in excess of par value
    
    
    332.6
    
    
    
    1,043.8Unearned ESOP compensation
    
    
    (12.9
    )
    
    
    (11.1
    )Unearned compensation on nonvested stock
    
    
    (4.5
    )
    
    
    (34.2
    )Retained earnings
    
    
    222.8
    
    
    
    220.6Common stock in treasury, at cost, 1,198,800 shares at December 31, 2004
    
    
    (28.9
    )
    
    
    509.5
    
    
    
    1,219.7$
    887.3
    
    
    $
    3,165.6
 
 (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 30,2004
    
    2005
    
    2004
    
    2005Cash flows from operating activities:Net income (loss)
    
    $
    18.7
    
    
    $
    (7.1
    )
    
    $
    42.6
    
    
    $
    18.7Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Loss from discontinued operations
    
    
    0.8
    
    
    
    4.3
    
    
    
    1.1
    
    
    
    4.5Depreciation and amortization
    
    
    11.4
    
    
    
    26.8
    
    
    
    22.4
    
    
    
    40.0Debt retirement costs
    
    
    1.5
    
    
    
    10.0
    
    
    
    1.5
    
    
    
    10.0Transaction costs
    
    
    
    
    
    
    44.6
    
    
    
    
    
    
    
    44.6ESOP expense
    
    
    2.5
    
    
    
    3.8
    
    
    
    4.8
    
    
    
    6.5Minority interests in earnings of consolidated entities
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.6
    
    
    
    0.5Deferred income taxes (benefit)
    
    
    (0.4
    )
    
    
    23.5
    
    
    
    (0.9
    )
    
    
    24.4Reserve for professional and general liability claims, net
    
    
    (2.2
    )
    
    
    1.6
    
    
    
    0.5
    
    
    
    2.0Tax benefit from employee stock plans
    
    
    3.8
    
    
    
    5.9
    
    
    
    4.3
    
    
    
    8.2Increase (decrease) in cash from operating assets and liabilities,
net of effects from acquisitions and divestitures:Accounts receivable
    
    
    3.2
    
    
    
    (0.2
    )
    
    
    (4.2
    )
    
    
    (8.3
    )Inventories and other current assets
    
    
    (3.2
    )
    
    
    0.4
    
    
    
    (3.2
    )
    
    
    3.3Accounts payable and accrued expenses
    
    
    1.5
    
    
    
    (5.0
    )
    
    
    6.3
    
    
    
    0.6Income taxes payable
    
    
    (19.7
    )
    
    
    (42.4
    )
    
    
    (5.1
    )
    
    
    (28.3
    )Other
    
    
    0.6
    
    
    
    3.0
    
    
    
    1.2
    
    
    
    3.8Net cash
provided by operating activities  continuing operations
    
    
    18.8
    
    
    
    69.4
    
    
    
    71.9
    
    
    
    130.5Net cash provided by operating activities  discontinued
operations
    
    
    0.9
    
    
    
    1.9
    
    
    
    
    
    
    
    1.9Net cash provided by operating activities
    
    
    19.7
    
    
    
    71.3
    
    
    
    71.9
    
    
    
    132.4Cash flows from investing activities:Purchase of property and equipment
    
    
    (20.3
    )
    
    
    (33.3
    )
    
    
    (35.4
    )
    
    
    (60.4
    )Acquisitions,
net of cash acquired
    
    
    (24.8
    )
    
    
    (957.7
    )
    
    
    (26.5
    )
    
    
    (959.7
    )Proceeds from sale of hospital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32.5Other
    
    
    (0.3
    )
    
    
    (0.2
    )
    
    
    (0.6
    )
    
    
    (0.6
    )Net cash used in investing activities
    
    
    (45.4
    )
    
    
    (991.2
    )
    
    
    (62.5
    )
    
    
    (988.2
    )Cash flows from financing activities:Proceeds from long-term debt
    
    
    30.0
    
    
    
    1,592.0
    
    
    
    30.0
    
    
    
    1,592.0Payments of borrowings
    
    
    (29.9
    )
    
    

    (709.2
    )
    
    
    (49.9
    )
    
    
    (709.2
    )Payment of debt issue costs
    
    
    
    
    
    
    (31.8
    )
    
    
    
    
    
    
    (31.8
    )Proceeds from exercise of stock options
    
    
    5.9
    
    
    
    31.0
    
    
    
    7.5
    
    
    
    41.6Other
    
    
    
    
    
    
    (3.3
    )
    
    
    0.8
    
    
    
    (2.4
    )Net cash provided by (used in) financing activities
    
    
    6.0
    
    
    
    878.7
    
    
    
    (11.6
    )
    
    
    890.2Change in cash and cash equivalents
    
    
    (19.7
    )
    
    
    (41.2
    )
    
    
    (2.2
    )
    
    
    34.4Cash and cash equivalents at beginning of period
    
    
    38.1
    
    
    
    94.2
    
    
    
    20.6
    
    
    
    18.6Cash and cash equivalents at end of period
    
    $
    18.4
    
    
    $
    53.0
    
    
    $
    18.4
    
    
    $
    53.0Supplemental disclosure of cash flow information:Interest payments
    
    $
    6.1
    
    
    $
    23.0
    
    
    $
    6.7
    
    
    $
    23.5Capitalized interest
    
    $
    0.2
    
    
    $
    0.8
    
    
    $
    0.4
    
    
    $
    1.2Income taxes paid, net
    
    $
    29.1
    
    
    $
    19.4
    
    
    $
    30.0
    
    
    $
    20.0
  4




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LIFEPOINT HOSPITALS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2005
UNAUDITED
 NOTE 1  BASIS OF PRESENTATION
     NOTE 2
 ACQUISITIONS
 Combination with Province Healthcare Company
  5




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Six Months EndedJune 30,2004
    
    
    2005Revenues
    
    $
    955.2
    
    
    $
    1,023.4Income from continuing operations
    
    
    64.8
    
    
    
    47.6Net income
    
    
    62.8
    
    
    
    42.1Earnings per share:Basic:Income from continuing operations
    
    $
    1.25
    
    
    $
    0.89Net income
    
    $
    1.21
    
    
    $
    0.79Diluted:Income from continuing operations
    
    $
    1.19
    
    
    $
    0.87Net income
    
    $
    1.16
    
    
    $
    0.78
   Fair value of LifePoint Common Stock issued
    
    $
    596.0Cash
    
    
    586.3Fair value of assumed Province debt obligations
    
    
    511.6Estimated severance and Province stock option costs
    
    
    73.8Estimated direct transaction costs
    
    
    28.4$
    1,796.1
    Net working capital
    
    $
    81.9Property and equipment
    
    
    709.5Goodwill
    
    
    1,074.6Other long-term assets
    
    
    5.2Total assets acquired
    
    
    1,871.2
 7




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Debt
    
    
    511.6Other longterm liabilities
    
    
    25.6Deferred income taxes
    
    
    47.5Minority interests in equity of consolidated entities
    
    
    2.0Total liabilities assumed
    
    
    586.7Net assets acquired
    
    $
    1,284.5
  Adjustment to Province acquired accounts receivable
    
    $
    26.4Adjustment to Province assumed liabilities,
primarily related to professional and general
liability claims
    
    
    8.7Retention bonuses paid to former Province employees
    
    
    4.2Compensation expense, primarily restricted stock vesting
from change in control
    
    
    5.3$
    44.6
   Other Acquisitions
    8




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##### Table of Contents



Facility
    
    Number of BedsClinch
Valley Medical Center, Richlands, VA
St. Josephs Hospital, Parkersburg, WV
Saint Francis Hospital, Charleston, WV
Raleigh General Hospital, Beckley, WV
Putnam General Hospital, Hurricane, WV
    
    200 beds
325 beds
155 beds
369 beds
68 beds
 NOTE 3  LONG -TERM DEBT
  December 31,
    
    
    June 30,2004
    
    
    2005Senior BorrowingsCredit Agreement:Term B Loans
    
    $
    
    
    
    $
    1,237.5Revolving Credit Loans
    
    
    
    
    
    
    150.0Senior Credit Borrowings
    
    
    
    
    
    
    1,387.5Subordinated BorrowingsSenior Subordinated Credit Agreement
    
    
    
    
    
    
    192.0Province 7 1/2 % Senior Subordinated Notes
    
    
    
    
    
    
    6.14 1/2% Convertible Notes
    
    
    221.0
    
    
    
    0.1221.0
    
    
    
    198.2Capital leases
    
    
    
    
    
    
    3.5Total long-term debt
    
    
    
    
    
    
    1,589.2Less current portion
    
    
    
    
    
    
    4.2$
    221.0
    
    
    $
    1,585.0
  2005 (July 1 through December 31)
    
    $
    0.62006
    
    
    9.92007
    
    
    12.52008
    
    
    12.52009
    
    
    12.5Thereafter
    
    
    1,541.2$
    1,589.2
 New Senior Secured Credit Facilities
  9




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Level atRequirement
    
    
    June 30, 2005Minimum Interest Coverage Ratio
    
    
    3 3.00:1.00
    
    
    
    6.77Maximum Total Leverage Coverage Ratio
    
    
    £ 4.75:1.00
    
    
    
    3.53
   10




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Senior Subordinated Credit Agreement
 1 2
  Previous Credit Facilities
  Province 7 1/2% Senior Subordinated Notes
 1 2 1 2
 1 2 1 2 1 2
 1 2 1 2 1 2 1 2
 Province 4 1/4% Convertible Subordinated Notes
 1 4 1 4
 Province 4 1/2% Convertible Subordinated Notes
 1 2
 11




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Historic LifePoint 4 1/2% Convertible Subordinated Notes Due June 1, 2009
 1 2 1 2
 1 2 1 2
 Deferred Loan Costs
  1 2
 NOTE 4  EARNINGS (LOSS) PER SHARE
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2004
    
    
    2005 (a)
    
    
    2004
    
    
    2005 (b)Numerator:Numerator for basic earnings (loss) per share  income (loss)
from continuing operations
    
    $
    19.5
    
    
    $
    (2.8
    )
    
    $
    43.7
    
    
    $
    23.2Interest on convertible notes, net of taxes
    
    
    1.8
    
    
    
    
    
    
    
    3.8
    
    
    
    Numerator for diluted earnings (loss) per share  income
(loss) from continuing operations
    
    
    21.3
    
    
    
    (2.8
    )
    
    
    47.5
    
    
    
    23.2Loss from discontinued operations, net of income taxes
    
    
    (0.8
    )
    
    
    (4.3
    )
    
    
    (1.1
    )
    
    
    (4.5
    )$
    20.5
    
    
    $
    (7.1
    )
    
    $
    46.4
    
    
    $
    18.7Denominator:Denominator for basic earnings (loss) per share  weighted
average shares outstanding
    
    
    36.9
    
    
    
    51.8
    
    
    
    36.8
    
    
    
    44.8Effect of dilutive securities:Employee stock benefit plans
    
    
    1.0
    
    
    
    
    
    
    
    0.9
    
    
    
    0.9Convertible notes
    
    
    5.2
    
    
    
    
    
    
    
    5.2
    
    
    
    Denominator for diluted earnings (loss) per share  adjusted
weighted average shares
    
    
    43.1
    
    
    
    51.8
    
    
    
    42.9
    
    
    
    45.7
 12




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2004
    
    
    2005 (a)
    
    
    2004
    
    
    2005 (b)Basic earnings (loss) per share:Continuing operations
    
    $
    0.53
    
    
    $
    (0.05
    )
    
    $
    1.19
    
    
    $
    0.52Discontinued operations:Income (loss) from discontinued operations, net of
income taxes
    
    
    (0.02
    )
    
    
    0.01
    
    
    
    (0.03
    )
    
    
    0.02Impairment of assets of hospital held for sale, net of
income taxes
    
    
    
    
    
    
    (0.09
    )
    
    
    
    
    
    
    (0.10
    )Loss on sale of hospital, net of income taxes
    
    
    
    
    
    

    
    
    
    
    
    
    
    
    (0.02
    )Loss on discontinued operations
    
    
    (0.02
    )
    
    
    (0.08
    )
    
    
    (0.03
    )
    
    
    (0.10
    )Net income (loss)
    
    $
    0.51
    
    
    $
    (0.13
    )
    
    $
    1.16
    
    
    $
    0.42Diluted earnings (loss) per share:Continuing operations
    
    $
    0.50
    
    
    $
    (0.05
    )
    
    $
    1.11
    
    
    $
    0.51Discontinued operations:Income (loss) from discontinued operations, net of income
taxes
    
    
    (0.02
    )
    
    
    0.01
    
    
    
    (0.03
    )
    
    
    0.02Impairment of assets of hospital held for sale, net of
income taxes
    
    
    
    
    
    
    (0.09
    )
    
    
    
    
    
    
    (0.10
    )Loss on sale of hospital, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.02
    )Loss on discontinued operations
    
    
    (0.02
    )
    
    
    (0.08
    )
    
    
    (0.03
    )
    
    
    (0.10
    )Net income (loss)
    
    $
    0.48
    
    
    $
    (0.13
    )
    
    $
    1.08
    
    
    $
    0.41
 
 (a)
    
    All of 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 because the effect would have been anti-dilutive. NOTE 5
 DISCONTINUED OPERATIONS
     13




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2004
    
    
    2005
    
    
    2004
    
    
    2005Revenues
    
    $
    8.2
    
    
    $
    13.1
    
    
    $
    17.3
    
    
    $
    22.5Income (loss) before income taxes
    
    $
    (1.2
    )
    
    $
    0.6
    
    
    $
    (1.7
    )
    
    $
    1.6
 NOTE 6  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
     14




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##### Table of Contents



NOTE 7
 STOCK BENEFIT PLANS
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2004
    
    
    2005
    
    
    2004
    
    
    2005Net income (loss), as reported
    
    $
    18.7
    
    
    $
    (7.1
    )
    
    $
    42.6
    
    
    $
    18.7Add: Stock-based compensation expense
included in
reported net income (loss), net of related
tax effects
    
    
    0.3
    
    
    
    5.1
    
    
    
    0.5
    
    
    
    5.4Less: Stock-based compensation expense
determined under fair value based method
for all
awards, net of related tax effects
    
    
    (2.4
    )
    
    
    (11.7
    )
    
    
    (4.7
    )
    
    
    (13.5
    )Pro forma net income (loss)
    
    
    16.6
    
    
    
    (13.7
    )
    
    
    38.4
    
    
    
    10.6Interest on Convertible Notes, net of taxes
    
    
    1.8
    
    
    
    
    
    
    
    3.8
    
    
    
    Diluted pro forma net income (loss)
    
    $
    18.4
    
    
    $
    ( 13.7
    )
    
    $
    42.2
    
    
    $
    10.6Denominator for basic earnings (loss) per
share  weighted average shares
    
    
    36.9
    
    
    
    51.8
    
    
    
    36.8
    
    
    
    44.8Effect of dilutive securities:Employee stock benefit plans
    
    
    1.0
    
    
    
    
    
    
    
    0.9
    
    
    
    0.9Convertible Notes
    
    
    5.2
    
    
    
    
    
    
    
    5.2
    
    
    
    Denominator for diluted earnings (loss) per
share  adjusted
weighted average shares
    
    
    43.1
    
    
    
    51.8
    
    
    
    42.9
    
    
    
    45.7Earnings (loss) per share:Basic  as reported
    
    $
    0.51
    
    
    $
    (0.13
    )
    
    $
    1.16
    
    
    $
    0.42Basic  pro forma
    
    $
    0.45
    
    
    $
    (0.27
    )
    
    $
    1.05
    
    
    $
    0.24Diluted  as reported
    
    $
    0.48
    
    
    $
    (0.13
    )
    
    $
    1.08
    
    
    $
    0.41Diluted  pro forma
    
    $
    0.43
    
    
    $
    (0.27
    )
    
    $
    0.98
    
    
    $
    0.23
  15




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##### Table of Contents



Three Months
    
    
    Six Months EndedEnded June 30,
    
    
    June 30,2004

    
    2005
    
    2004

    
    2005Risk free interest rate
    
    
    3.17
    %
    
    
    3.76
    %
    
    
    2.19
    %
    
    
    3.76
    %Expected life, in years
    
    
    3.0
    
    
    
    4.0
    
    
    
    3.0
    
    
    
    4.0Expected volatility
    
    
    53
    %
    
    
    56
    %
    
    
    53
    %
    
    
    56
    %
   DeferredStock Options
    
    
    Nonvested Stock
    
    
    Stock UnitsOutstanding
    
    
    Outstanding
    
    

    
    OutstandingWeighted
    
    
    
    
    
    
    WeightedShares
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageAvailable
    
    
    Number
    
    
    Exercise
    
    
    Number of
    
    
    Grant Date
    
    
    Number offor Grant
    
    
    of Shares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    SharesDecember 31, 2003
    
    
    2,640,452
    
    
    
    4,393,442
    
    
    $
    23.91
    
    
    
    
    
    
    $
    
    
    
    
    9,478Increase in shares available
(approved by stockholders)
    
    
    2,200,000
    
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    
    
    
    
    
    Stock option grants
    
    
    (906,300
    )
    
    
    906,300
    
    
    
    33.49
    
    
    
    
    
    
    
    
    
    
    
    Deferred stock unit grants
    
    
    (2,376
    )
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    
    
    
    
    
    2,376Deferred stock units vested
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    
    
    
    
    
    (1,544
    )Nonvested stock grants
    
    
    (196,000
    )
    
    
    
    
    
    
    N/A
    
    
    
    196,000
    
    
    
    33.67
    
    
    
    Stock option exercises
    
    
    
    
    
    
    (774,635
    )
    
    
    13.23
    
    
    
    
    
    
    
    
    
    
    
    Stock option cancellations
    
    
    165,526
    
    
    
    (165,526
    )
    
    
    33.64
    
    
    
    
    
    
    
    
    
    
    
    Nonvested stock cancellations
    
    
    10,000
    
    
    
    
    
    
    
    N/A
    
    
    
    (10,000
    )
    
    
    33.17
    
    
    
    December 31, 2004
    
    
    3,911,302
    
    
    
    4,359,581
    
    
    
    27.43
    
    
    
    186,000
    
    
    
    33.70
    
    
    
    10,310Increase in shares available
(approved by
stockholders)
    
    
    2,000,000
    
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    
    
    
    
    
    Stock option grants
    
    
    (739,738
    )
    
    
    739,738
    
    
    
    42.60
    
    
    
    
    
    
    
    
    
    
    
    Deferred stock units vested
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    
    
    
    
    
    (1,230
    )Nonvested stock grants
    
    
    (848,568
    )
    
    
    
    
    
    
    N/A
    
    
    
    848,568
    
    
    
    42.60
    
    
    
    Nonvested stock vested
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    (186,000
    )
    
    
    33.70
    
    
    
    Stock option exercises
    
    
    
    
    
    
    (1,448,240
    )
    
    
    28.71
    
    
    
    
    
    
    
    
    
    
    
    Stock option cancellations
    
    
    12,494
    
    
    
    (12,494
    )
    
    
    30.19
    
    
    
    
    
    
    
    
    
    
    
    June 30, 2005
    
    
    4,335,490
    
    
    
    3,638,585
    
    
    $
    29.99
    
    
    
    848,568
    
    
    $
    42.60
    
    
    
    9,080
  16




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##### Table of Contents



NOTE 8  CONTINGENCIES
 Americans with Disabilities Act Claims
   Corporate Integrity Agreement
  Legal Proceedings and General Liability Claims
  17




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##### Table of Contents



Physician Commitments
  Capital Expenditure Commitments
       18




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##### Table of Contents



Tax Matters
    Acquisitions
  19




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Executive Overview
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2004
    
    2005
    
    2004
    
    2005Number of hospitals at end of period in
continuing operations
    
    
    28
    
    
    
    48
    
    
    
    28
    
    
    
    48Revenues from continuing operations (in millions)
    
    $
    238.2
    
    
    $
    467.6
    
    
    $
    485.7
    
    
    $
    743.5Income (loss) from continuing operations (in
millions)
    
    $
    19.5
    
    
    $
    (2.8
    )
    
    $
    43.7
    
    
    $
    23.2Diluted earnings (loss) per share from
continuing operations
    
    $
    0.50
    
    
    $
    (0.05
    )
    
    $

    1.11
    
    
    $
    0.51
 Combination with Province Healthcare Company
   Discontinued Operations
  20




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##### Table of Contents



Hospital Acquisitions
 Business
 Revenue Sources
 Business
   Revenue/Volume Trends
  
    
    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.
Continuing to add specialists should help our hospitals increase
volumes by offering new services. We signed 92 admitting
physicians during the six months ended June 30, 2005. Of these 92
physicians signed, 21 started in the first six months of 2005, and
71 are scheduled to start in the remainder of 2005.
 21




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##### Table of Contents




    
    Capital Expenditures. Increases in capital expenditures in our
hospitals should increase our local market share and help persuade
patients to obtain healthcare services within their communities.
The following table reflects our capital expenditures (in
millions):
 Three Months Ended June 30,
    
    Six Months Ended June 30,2004
    
    2005
    
    2004
    
    2005Capital Projects
    
    $
    13.3
    
    
    $
    19.2
    
    
    $
    22.6
    
    
    $
    37.0Routine
    
    
    4.6
    
    
    
    8.1
    
    
    
    9.8
    
    
    
    12.8Building Purchase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.2Information Systems
    
    
    2.4
    
    
    
    6.0
    
    
    
    3.0
    
    
    
    7.4$
    20.3
    
    
    $
    33.3
    
    
    $
    35.4
    
    
    $
    60.4
 We exercised our option to purchase Bluegrass Community Hospital for $3.2 million in January
2005, as reflected in the above table under Building Purchase. We leased this hospital from
January 2001 through December 2004. This purchase had no impact on our results of operations.
 
    
    Medicare Rate Increases.MMA provides a prescription drug benefit for Medicare
beneficiaries and also contains numerous provisions that provide incremental funding to
hospitals. The initial increases in reimbursement under MMA were effective in 2004.
 Hospitals qualify for Medicare disproportionate share hospital (DSH) payments when their
percentage of low-income patients exceeds 15%. A majority of our hospitals qualify to receive
DSH payments. Effective April 1, 2004, MMA raised the cap on the DSH payment adjustment
percentage from 5.25% to 12.0% for rural and small urban hospitals and specified that payments
to all hospitals are based on the same conversion factor, regardless of geographic location. A
majority of our hospitals are benefiting from these provisions. The following table lists our
DSH payments from Medicare (in millions):
 Medicare DSH Payments2004
    
    2005First Quarter
    
    $
    3.1
    
    
    $
    7.5Second Quarter
    
    
    5.4
    
    
    
    11.9Third Quarter
    
    
    5.9
    
    
    
    N/AFourth Quarter
    
    
    6.8
    
    
    
    N/A$
    21.2
    
    
    $
    19.4
 Please refer to the Sources of Revenue section in Part I, Item 1. Businessof our 2004 Annual
Report on Form 10-K for a discussion of other MMA provisions that affect our reimbursement.Although we anticipate that our patient volumes will increase, the resulting revenues will
likely be partially offset by the following factors:
    
    Inpatient Rehabilitation and the 75% Rule. Historically, freestanding rehabilitation
hospitals and rehabilitation units within acute care hospitals
(collectively, IRFs) received
cost-based reimbursement from Medicare under an exemption from the acute care prospective
payment system (PPS). The Balanced Budget Act of 1997 and its implementing regulations
replaced the traditional IRF cost-based methodology, however, with a PPS system that
recognizes 21 Rehabilitation Impairment Categories. This new IRF-PPS became effective on
January 1, 2002.To qualify as an IRF under Medicare, a facility must show that 75% of the facilitys patient
population requires intensive rehabilitation services that fall into a specified list of 13
conditions (the 75% Rule). In anticipation of the considerable difficulty many IRFs will have
satisfying the revised 75% Rule, CMS established a phase-in period for compliance, as follows:
 22




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##### Table of Contents



Minimum Qualifying
    
    Co-morbiditiesCost Reporting Period
    
    Patient Mix
    
    Apply (Y/N)(1)
    
    Patient Mix AffectedJuly 1, 2004June 30, 2005
    
    
    50
    %
    
    Y
    
    Medicare and TotalJuly 1, 2005June 30, 2006
    
    
    60
    %
    
    Y
    
    Medicare and TotalJuly 1, 2006June 30, 2007
    
    
    65
    %
    
    Y
    
    Medicare and TotalJuly 1, 2007 and Thereafter
    
    
    75
    %
    
    N
    
    Total
 
 (1)
    
    Patients with certain co-morbidities (additional health conditions) may count towards the
minimum patient mix established by the revised 75% Rule during the phase-in period.
 Any IRF that fails to meet the requirements of the 75% Rule is subject to prospective
reclassification as an acute care hospital. The effect of such reclassification would be to
revert Medicare prospective IRF payment rates to lower acute care payment rates. Such rates
are approximately 64% lower than these IRF payment rates. We have experienced reduced
admissions in an attempt to achieve compliance with the current phase-in schedule for the
revised 75% Rule.In January 2005, the Centers for Medicare and Medicaid Services (CMS) suspended enforcement of
the revised 75% Rule in response to a provision of the Consolidated Appropriations Act of 2005,
enacted as Public Law 108-447, that directed CMS not to change the status of certain IRFs for
their failure to comply with the revised 75% Rule until the Secretary of Health and Human
Services (HHS) made a determination of clinically appropriate IRF classification criteria
based on the recently issued report by the Government Accountability Office (the GAO). On June
21, 2005, CMS issued a notice announcing that it will proceed with implementing the revised 75%
Rule as set forth in its previously issued final rule. The notice states that CMS has determined
it has already been taking the steps that the GAO recommended to improve how facilities are
classified as an IRF and that the revised classification criteria for IRFs contained in the
revised 75% Rule are not inconsistent with the recommendations in the GAO report. Accordingly,
the June 21 notice lifts the suspension of enforcement of the revised 75% Rule.On May 25, 2005, CMS published a proposed rule that updates the IRF-PPS for federal fiscal year
2006. The proposed rule:(1) increases the market basket payments by 3.1% utilizing a new
methodology,(2) incorporates downward adjustments for reimbursement (resulting in an overall
decrease of approximately 1.9%) in response to coding changes,(3) increases the payment rate
adjustment for IRFs in rural areas to 24.1% from the current 19.1%,(4) reduces the outlier
payment threshold for cases with unusually high costs,(5) implements refinements to the
Case-Mix Groups, comorbidity tiers, and relative weights,(6) implements new and revised payment
adjustments that will be implemented on a budget neutral basis,(7) adopts the new geographic
labor market area definitions based on the definitions created by the Office of Management and
Budget known as Core-Based Statistical Areas, and(8) incorporates several other modifications
to Medicare reimbursement for IRFs.After a notice and comment period, CMS is expected to
publish a final rule in the next several months. CMS predicted in its announcement of the
proposed rule that overall payments to IRFs nationwide would increase by 2.9% if the proposed
rule were implemented. However, the final rule could result in a reduction in our reimbursement
from Medicare for care provided in our IRFs.We operate 18 IRFs for which services are reimbursed under the IRF-PPS. The following table lists our IRF Reimbursement from Medicare (in millions):
 IRF Reimbursement2004
    
    2005First Quarter
    
    $
    5.0
    
    
    $
    4.3Second Quarter
    
    
    5.6
    
    
    
    9.7Third Quarter
    
    
    5.2
    
    
    
    N/AFourth Quarter
    
    
    5.1
    
    
    
    N/ATotal
    
    $
    20.9
    
    
    $
    14.0
 Growth in Outpatient Services
 23




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##### Table of Contents




    
    Efforts to Reduce Payments. Revenues from HMOs, PPOs and other
private insurance programs are subject to contracts and other
arrangements that require us to discount the amounts we
customarily charge for healthcare services. These discounted
arrangements often limit our ability to increase charges in
response to increasing costs during the term of the contracts.
 
    
    States Implementing Medicaid Cost Containment Measures. A number
of states have incurred budget deficits within recent years. To
close these budget gaps, 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.
 Other Trends
 
    
    Increases in Provision for Doubtful Accounts. We experienced an
increase in our provision for doubtful accounts during the past
few years. The increase was the result of a combination of broad
economic factors, including an increased number of uninsured
patients, and health care plan design changes that resulted in
increased co-payments and deductibles. Our provision for doubtful
accounts for each quarter in 2004 and for the first and second
quarters in 2005 was as follows (in millions):
 Provision for Doubtful Accounts2004
    
    2005First Quarter
    
    $
    20.7
    
    
    $
    23.0Second Quarter
    
    
    18.9
    
    
    
    41.3Third Quarter
    
    
    24.4
    
    
    
    N/AFourth Quarter
    
    
    22.2
    
    
    
    N/ATotal
    
    $
    86.2
    
    
    $
    64.3
 Our revenues are reduced when we write-off patient accounts identified as charity and
indigent care. Our hospitals write-off a portion of a patients account upon the
determination that the patient qualifies under a hospitals charity/indigent care policy.
The following table reflects our charity and indigent care write-offs (in millions):
 Charity and Indigent CareWrite-Offs2004
    
    2005First Quarter
    
    $
    1.9
    
    
    $
    1.8Second Quarter
    
    
    2.4
    
    
    
    5.6Third Quarter
    
    
    1.7
    
    
    
    N/AFourth Quarter
    
    
    1.8
    
    
    
    N/ATotal
    
    $
    7.8
    
    
    $
    7.4
 The following table shows our revenue days in our consolidated accounts receivable:
 Revenue Days inAccounts Receivable2004
    
    2005March 31
    
    
    39.1
    
    
    
    37.2June 30
    
    
    38.8
    
    
    
    37.6September 30
    
    
    40.6
    
    
    
    N/ADecember 31
    
    
    38.8
    
    
    
    N/A
 The approximate percentages of billed hospital receivables (which is a component of total
accounts receivable) are summarized as follows:
 24




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##### Table of Contents



December 31, 2004
    
    March 31, 2005
    
    June 30, 2005Insured receivables
    
    
    40.9
    %
    
    
    40.9
    %
    
    
    41.6
    %Uninsured receivables
(including co-payments
and deductibles)
    
    
    59.1
    
    
    
    59.1
    
    
    
    58.4Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  December 31, 2004
    
    March 31, 2005
    
    June 30, 20050 to 60 days
    
    
    52.5
    %
    
    
    54.4
    %
    
    
    52.4
    %61 to 150 days
    
    
    20.8
    
    
    
    18.5
    
    
    
    20.5Over 150 days
    
    
    26.7
    
    
    
    27.1
    
    
    
    27.1Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 We have implemented a number of operating strategies that improved our cash collections of
self-pay revenues. However, if the trend of increasing self-pay revenues continues, then this
trend could have a material adverse effect on our results of operations and financial position in
the future.
 
    
    Increased Purchase Prices for Acquisitions. As previously
discussed, we attempt to make acquisitions in a highly competitive
environment. Compared to historic trends, we have seen an increase
in prices being paid for hospital acquisitions in the past few
years. In some cases, the cost of an acquisition could result in
a dilutive effect on our results of operations for up to two years
depending on various factors, including the acquired hospitals
results of operations, allocations of tangible and intangible
assets, effects of subsequent legislation changes and limitations
on rate increases. In addition, 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 Information Technology and Services, Inc. (HCA-IT) for
information systems integration as part of our contractual
arrangement for information technology services.
 
    
    Shortage of Clinical Personnel and Increased Contract Labor Usage.
In recent years, many hospitals, including 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. These
strategies appear to be working as our contract labor costs as a
percentage of revenue decreased by 20 basis points from 1.4% of
net revenue to 1.2% of net revenue for the first six months of
2004 compared to the first six months of 2005. However, we expect
that the staffing difficulties related to nurses and other
clinical personnel will continue in the near term.
 
    
    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, orthopaedic,
and cardiac supplies. We participate in a group purchasing
organization in an attempt to achieve optimum 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 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 near term.
 25




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##### Table of Contents



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.
  
    
    Allowance for doubtful accounts and provision for doubtful accounts;
 
    
    Revenue recognition and allowance for contractual discounts;
 
    
    Professional and general liability claims; and
 
    
    Accounting for income taxes.
 Changes in Critical Accounting Estimates
  Allowance for Doubtful Accounts and Provision for Doubtful Accounts
  Allowance for Contractual Discounts
  Professional and General Liability Claims
  26




---



##### Table of Contents



Business Combinations
   27




---



##### Table of Contents



Results of Operations
 Operating Results Summary
  Three Months EndedJune 30,2004
    
    2005
    
    Change
    
    % ChangeRevenues
    
    $
    238.2
    
    
    $
    467.6
    
    
    $
    229.4
    
    
    
    96.3
    %Salaries and benefits (a)
    
    
    97.7
    
    
    
    182.0
    
    
    
    84.3
    
    
    
    86.5Supplies (b)
    
    
    31.1
    
    
    
    60.5
    
    
    
    29.4
    
    
    
    94.5Other operating expenses (c)
    
    
    38.8
    
    
    
    79.6
    
    
    
    40.8
    
    
    
    104.8Provision for doubtful accounts
    
    
    18.9
    
    
    
    41.3
    
    
    
    22.4
    
    
    
    117.5Depreciation and amortization
    
    
    11.4
    
    
    
    26.8
    
    
    
    15.4
    
    
    
    135.1Interest expense, net
    
    
    3.2
    
    
    
    15.4
    
    
    
    12.2
    
    
    
    379.4Debt retirement costs
    
    
    1.5
    
    
    
    10.0
    
    
    
    8.5
    
    
    
    570.2Transaction costs
    
    
    
    
    
    
    44.6
    
    
    
    44.6
    
    
    
    100.0ESOP expense
    
    
    2.5
    
    
    
    3.8
    
    
    
    1.3
    
    
    
    52.7205.1
    
    
    
    464.0
    
    
    
    258.9
    
    
    
    126.2Income from continuing operations before
minority interests and income taxes
    
    
    33.1
    
    
    
    3.6
    
    
    
    (29.5
    )
    
    
    (89.2
    )Minority interests in earnings of
consolidated
entities
    
    
    0.3
    
    
    
    0.2
    
    
    
    (0.1
    )
    
    
    (26.0
    )Income from continuing operations before
income taxes
    
    
    32.8
    
    
    
    3.4
    
    
    
    (29.4
    )
    
    
    (89.7
    )Provision for income taxes
    
    
    13.3
    
    
    
    6.2
    
    
    
    (7.1
    )
    
    
    (53.7
    )Income (loss) from continuing operations
    
    $
    19.5
    
    
    $
    (2.8
    )
    
    $
    (22.3
    )
    
    
    114.2
    %
 Three Months EndedJune 30,2004
    
    2005% of
    
    % ofRevenues
    
    RevenuesRevenues
    
    
    100.0
    %
    
    
    100.0
    %Salaries and benefits (a)
    
    
    41.0
    
    
    
    38.9Supplies (b)
    
    
    13.1
    
    
    
    12.9Other operating expenses (c)
    
    
    16.2
    
    
    
    17.1Provision for doubtful accounts
    
    
    8.0
    
    
    
    8.8Depreciation and amortization
    
    
    4.8
    
    
    
    5.7Interest expense, net
    
    
    1.3
    
    
    
    3.3Debt retirement costs
    
    
    0.6
    
    
    
    2.1Transaction costs
    
    
    0.0
    
    
    
    9.6ESOP expense
    
    
    1.1
    
    
    
    0.886.1
    
    
    
    99.2Income from continuing operations before
minority interests and income taxes
    
    
    13.9
    
    
    
    0.8Minority interests in earnings of
consolidated
entities
    
    
    0.1
    
    
    
    0.1Income from continuing operations before
income taxes
    
    
    13.8
    
    
    
    0.7Provision for income taxes
    
    
    5.6
    
    
    
    1.3Income (loss) from continuing operations
    
    
    8.2
    %
    
    
    (0.6
    )%
 28




---



##### Table of Contents



Three Months Ended June 30,2004
    
    2005% Change
    
    
    
    
    % ChangeAmount
    
    from Prior Year
    
    Amount
    from Prior YearContinuing Operations (j)Number of hospitals at end of period
    
    
    28
    
    
    
    
    %
    
    
    48
    
    
    
    71.4
    %Admissions (d)
    
    
    21,997
    
    
    
    2.1
    
    
    
    39,226
    
    
    
    78.3Equivalent admissions (e)
    
    
    44,509
    
    
    
    (0.3
    )
    
    
    77,215
    
    
    
    73.5Revenues per equivalent admission
    
    $
    5,351
    
    
    
    7.8
    
    
    $
    6,055
    
    
    
    13.2Outpatient factor (e)
    
    
    2.02
    
    
    
    1.0
    
    
    
    1.97
    
    
    
    (2.5
    )Emergency room visits (f)
    
    
    102,957
    
    
    
    2.8
    
    
    
    179,410
    
    
    
    74.3Inpatient surgeries
    
    
    6,658
    
    
    
    8.4
    
    
    
    11,542
    
    
    
    73.4Outpatient surgeries (g)
    
    
    18,404
    
    
    
    2.9
    
    
    
    30,650
    
    
    
    66.5Total surgeries
    
    
    25,062
    
    
    
    4.3
    
    
    
    42,192
    
    
    
    68.4Medicare case mix index (i)
    
    
    1.17
    
    
    
    (0.8
    )
    
    
    1.21
    
    
    
    3.4Same-hospital (h):Revenues
    
    $
    238.2
    
    
    
    N/M
    
    
    $
    255.4
    
    
    
    7.2Number of hospitals at end of period
    
    
    28
    
    
    
    N/M
    
    
    
    28
    
    
    
    Admissions (d)
    
    
    21,997
    
    
    
    N/M
    
    
    
    22,697
    
    
    
    3.2Equivalent admissions (e)
    
    
    44,509
    
    
    
    N/M
    
    
    
    45,004
    
    
    
    1.1Revenues per equivalent admission
    
    $
    5,351
    
    
    
    N/M
    
    
    $
    5,676
    
    
    
    6.1Outpatient factor (e)
    
    
    2.02
    
    
    
    N/M
    
    
    
    1.98
    
    
    
    (2.0
    )Emergency room visits (f)
    
    
    102,957
    
    
    
    N/M
    
    
    
    103,591
    
    
    
    0.6Inpatient surgeries
    
    
    6,658
    
    
    
    N/M
    
    
    
    6,502
    
    
    
    (2.3
    )Outpatient surgeries (g)
    
    
    18,404
    
    
    
    N/M
    
    
    
    18,793
    
    
    
    2.1Total surgeries
    
    
    25,062
    
    
    
    N/M
    
    
    
    25,295
    
    
    
    0.9Medicare case mix index (i)
    
    
    1.17
    
    
    
    N/M
    
    
    
    1.18
    
    
    
    0.9
 Six Months EndedJune 30,2004
    
    2005
    
    Change
    
    % ChangeRevenues
    
    $
    485.7
    
    
    $
    743.5
    
    
    $
    257.8
    
    
    
    53.1
    %Salaries and benefits (a)
    
    
    194.6
    
    
    
    290.6
    
    
    
    96.0
    
    
    
    49.4Supplies (b)
    
    
    63.2
    
    
    
    96.7
    
    
    
    33.5
    
    
    
    53.1Other operating expenses (c)
    
    
    79.8
    
    
    
    125.4
    
    
    
    45.6
    
    
    
    57.1Provision for doubtful accounts
    
    
    39.6
    
    
    
    64.3
    
    
    
    24.7
    
    
    
    62.2Depreciation and amortization
    
    
    22.4
    
    
    
    40.0
    
    
    
    17.6
    
    
    
    78.7Interest expense, net
    
    
    6.6
    
    
    
    17.9
    
    
    
    11.3
    
    
    
    170.7Debt retirement costs
    
    
    1.5
    
    
    
    10.0
    
    
    
    8.5
    
    
    
    570.2Transaction costs
    
    
    
    
    
    
    44.6
    
    
    
    44.6
    
    
    
    100.0ESOP expense
    
    
    4.8
    
    
    
    6.5
    
    
    
    1.7
    
    
    
    36.0412.5
    
    
    
    696.0
    
    
    
    283.5
    
    
    
    68.7Income from continuing operations before
minority interests and income taxes
    
    
    73.2
    
    
    
    47.5
    
    
    
    (25.7
    )
    
    
    (35.1
    )Minority interests in earnings of
consolidated
entities
    
    
    0.6
    
    
    
    0.5
    
    
    
    (0.1
    )
    
    
    (14.2
    )Income from continuing operations before
income taxes
    
    
    72.6
    
    
    
    47.0
    
    
    
    (25.6
    )
    
    
    (35.2
    )Provision for income taxes
    
    
    28.9
    
    
    
    23.8
    
    
    
    (5.1
    )
    
    
    (17.7
    )Income from continuing operations
    
    $
    43.7
    
    
    $
    23.2
    
    
    $
    (20.5
    )
    
    
    (46.9
    )%
 29




---



##### Table of Contents



Six Months EndedJune 30,2004
    
    2005% of Revenues
    
    % of RevenuesRevenues
    
    
    100.0
    %
    
    
    100.0
    %Salaries and benefits (a)
    
    
    40.1
    
    
    
    39.1Supplies (b)
    
    
    13.0
    
    
    
    13.0Other operating expenses (c)
    
    
    16.4
    
    
    
    16.9Provision for doubtful accounts
    
    
    8.2
    
    
    
    8.6Depreciation and amortization
    
    
    4.5
    
    
    
    5.4Interest expense, net
    
    
    1.4
    
    
    
    2.4Debt retirement costs
    
    
    0.3
    
    
    
    1.3Transaction costs
    
    
    0.0
    
    
    
    6.0ESOP expense
    
    
    1.0
    
    
    
    0.984.9
    
    
    
    93.6Income from continuing operations before
minority interests and income taxes
    
    
    15.1
    
    
    
    6.4Minority interests in earnings of
consolidated
entities
    
    
    0.1
    
    
    
    0.1Income from continuing operations before
income taxes
    
    
    15.0
    
    
    
    6.3Provision for income taxes
    
    
    6.0
    
    
    
    3.2Income from continuing operations
    
    
    9.0
    %
    
    
    3.1
    %
 Six Months Ended June 30,2004
    
    2005% Change
    
    
    
    
    
    % ChangeAmount
    
    from Prior Year
    
    Amount
    
    from Prior YearContinuing Operations (j)Number of hospitals at end of period
    
    
    28
    
    
    
    
    %
    
    
    48
    
    
    
    71.4
    %Admissions (d)
    
    
    46,523
    
    
    
    5.4
    
    
    
    65,089
    
    
    
    39.9Equivalent admissions (e)
    
    
    91,697
    
    
    
    2.4
    
    
    
    126,924
    
    
    
    38.4Revenues per equivalent admission
    
    $
    5,297
    
    
    
    7.2
    
    
    $
    5,858
    
    
    
    10.6Outpatient factor (e)
    
    
    1.97
    
    
    
    0.5
    
    
    
    1.95
    
    
    
    (1.0
    )Emergency room visits (f)
    
    
    201,839
    
    
    
    4.4
    
    
    
    290,730
    
    
    
    44.0Inpatient surgeries
    
    
    13,308
    
    
    
    10.6
    
    
    
    18,152
    
    
    
    36.4Outpatient surgeries (g)
    
    
    37,008
    
    
    
    5.3
    
    
    
    49,994
    
    
    
    35.1Total surgeries
    
    
    50,316
    
    
    
    6.7
    
    
    
    68,146
    
    
    
    35.4Medicare case mix index (i)
    
    
    1.17
    
    
    
    (1.7
    )
    
    
    1.20
    
    
    
    2.6Same-hospital (h):Revenues
    
    $
    485.7
    
    
    
    N/M
    
    
    $
    520.9
    
    
    
    7.2Number of hospitals at end of period
    
    
    28
    
    
    
    N/M
    
    
    
    28
    
    
    
    Admissions (d)
    
    
    46,523
    
    
    
    N/M
    
    
    
    47,873
    
    
    
    2.9Equivalent admissions (e)
    
    
    91,697
    
    
    
    N/M
    
    
    
    93,065
    
    
    
    1.5Revenues per equivalent admission
    
    $
    5,297
    
    
    
    N/M
    
    
    $
    5,597
    
    
    
    5.7Outpatient factor (e)
    
    
    1.97
    
    
    
    N/M
    
    
    
    1.94
    
    
    
    (1.5
    )Emergency room visits (f)
    
    
    201,839
    
    
    
    N/M
    
    
    
    210,054
    
    
    
    4.1Inpatient surgeries
    
    
    13,308
    
    
    
    N/M
    
    
    
    12,870
    
    
    
    (3.3
    )Outpatient surgeries (g)
    
    
    37,008
    
    
    
    N/M
    
    
    
    37,347
    
    
    
    0.9Total surgeries
    
    
    50,316
    
    
    
    N/M
    
    
    
    50,217
    
    
    
    (0.2
    )Medicare case mix index (i)
    
    
    1.17
    
    
    
    N/M
    
    
    
    1.18
    
    
    
    0.9
 
 (a)
    
    Represents our cost of salaries and benefits, including employee health benefits and workers
compensation
 30




---



##### Table of Contents



insurance, for all hospital and corporate employees and contract labor.(b)
    
    Includes our hospitals costs for pharmaceuticals, blood, surgical instruments and all
general supply items, including the cost of freight.(c)
    
    Consists primarily of contract services, physician recruitment, professional fees, repairs
and maintenance, rents and leases, utilities, insurance, information systems fees paid to
HCA-IT, marketing and non-income taxes.(d)
    
    Represents the total number of patients admitted (in the facility for a period in excess of
23 hours) to our hospitals and is used by management and investors as a general measure of
inpatient volume.(e)
    
    Management and investors use equivalent admissions as a general measure of combined inpatient
and outpatient volume. We compute equivalent admissions by multiplying admissions (inpatient
volume) by the outpatient factor (the sum of gross inpatient revenue and gross outpatient
revenue divided by gross inpatient revenue). The equivalent admissions computation equates
outpatient revenue to the volume measure (admissions) used to measure inpatient volume
resulting in a general measure of combined inpatient and outpatient volume.(f)
    
    Represents the total number of hospital-based emergency room visits.(g)
    
    Outpatient surgeries are those surgeries that do not require admission to our hospitals.(h)
    
    Same-hospital information includes 28 hospitals operated by us throughout both periods and
excludes the operations of hospitals that we acquired and sold after January 1, 2004.(i)
    
    Refers to acuity or severity of illness of an average Medicare patient at our hospitals.(j)
    
    Continuing operations information excludes the operations of hospitals which are classified
as discontinued operations.
 For the Quarters Ended June 30, 2004 and 2005
 Revenues
  
    
    $197.6 million from the facilities acquired in the Province Merger
    
    $17.2 million in same-hospital revenues; and
    
    $14.6 million from our 2004 acquisition of River Parishes Hospital and 2005
acquisition of Wythe County Community Hospital.
    31




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##### Table of Contents



Same-hospital2004
    
    2005Medicare
    
    
    38.8
    %
    
    
    36.9
    %Medicaid
    
    
    10.9
    
    
    
    11.3HMOs, PPOs and other private insurers
    
    
    37.0
    
    
    
    39.2Self Pay
    
    
    9.0
    
    
    
    8.9Other
    
    
    4.3
    
    
    
    3.7Total
    
    
    100.0
    %
    
    
    100.0
    %
 Expenses
    32




---



##### Table of Contents



Three Months EndedJune 30,2004
    
    2005Legal fees for retirement of assumed Province debt,
our convertible notes and previous credit facilities
    
    $
    
    
    
    $
    1.0Tender premium paid on 41/2% convertible notes
    
    
    0.9
    
    
    
    4.8Deferred loan costs expensed on tender of our
convertible notes and previous credit facility
    
    
    0.6
    
    
    
    3.7Creditor fees and other expenses
    
    
    
    
    
    
    0.5$
    1.5
    
    
    $
    10.0
  Adjustment to Province acquired accounts receivable
    
    $
    26.4Adjustment to Province assumed liabilities,
primarily related to professional and general liability claims
    
    
    8.7Retention bonuses paid to former Province employees
    
    
    4.2Compensation expense, primarily restricted stock vesting
from change in control
    
    
    5.3$
    44.6
  33




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##### Table of Contents



For the Six Months Ended June 30, 2004 and 2005
 Revenues
  
    
    $197.6 million from the newly acquired Province facilities;
    
    $35.2 million in same-hospital revenues; and
$25.0 million from our 2004 acquisition of River Parishes Hospital and 2005
acquisition of Wythe County Community Hospital.·
      Same-hospital2004
    
    2005Medicare
    
    
    37.6
    %
    
    
    37.9
    %Medicaid
    
    
    10.8
    
    
    
    11.1HMOs, PPOs and other private insurers
    
    
    38.7
    
    
    
    38.5Self Pay
    
    
    8.7
    
    
    
    8.6Other
    
    
    4.2
    
    
    
    3.9Total
    
    
    100.0
    %
    
    
    100.0
    %
 34




---



##### Table of Contents



Expenses
      35




---



##### Table of Contents



Six Months EndedJune 30,2004
    
    2005Legal fees for retirement of assumed Province debt,
our convertible notes and previous credit facility
    
    $
    
    
    
    $
    1.0Tender premium paid on convertible notes
    
    
    0.9
    
    
    
    4.8Deferred loan costs expensed on tender of our
convertible notes and previous credit facility
    
    
    0.6
    
    
    
    3.7Creditor fees and other expenses
    
    
    
    
    
    
    0.5$
    1.5
    
    
    $
    10.0
  Adjustment to Province acquired accounts receivable
    
    $
    26.4Adjustment to Province assumed liabilities,
primarily related to professional and general liability claims
    
    
    8.7Retention bonuses paid to former Province employees
    
    
    4.2Compensation expense, primarily restricted stock vesting
from change in control
    
    
    5.3$
    44.6
  36




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##### Table of Contents



Liquidity and Capital Resources
 Liquidity
   Source (use) of cash flows
    
    2004
    
    2005Operating activities
    
    $
    71.9
    
    
    $
    132.4Investing activities
    
    
    (62.5
    )
    
    
    (988.2
    )Financing activities
    
    
    (11.6
    )
    
    
    890.2Net increase (decrease) in cash and cash equivalents
    
    $
    (2.2
    )
    
    $
    34.4Interest payments
    
    $
    6.7
    
    
    $
    23.5Income taxes paid
    
    $
    30.0
    
    
    $
    20.0Working capital as of June 30, excluding assets
held for sale
    
    $
    99.8
    
    
    $
    241.8
 Operating activities
  
    
    increased cash flows as a result of the addition of the Province hospitals in the six
months ended June 30, 2005 as compared to the same period in 2004;
    
    lower tax payments of $10.0 million in the six months ended June 30, 2005 as compared to
the same period in 2004.
 Investing activities
  Financing activities
  Capital Resources
 Credit Agreement
    37




---



##### Table of Contents



Level atRequirement
    
    June 30, 2005Minimum Interest Coverage Ratio
    
    3
    3.00:1.00
    
    
    
    6.77Maximum Total Leverage Coverage Ratio
    
    £
 4.75:1.00
    
    
    
    3.53
    Debt Ratings
  
    
    Moodys Investors Service, Inc. (Moodys) and
    
    Standard & Poors Rating Services, a division of McGraw-Hill Companies, Inc. (S&P)
 38




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##### Table of Contents



Moodys
    
    S&PSenior
    
    Senior ImpliedUnsecured
    
    Issuer
    
    
    
    IssuerDate
    
    Issuer Rating
    
    Rating
    
    Outlook
    
    Rating
    
    OutlookApril 1999
    
    
    
    
    
    
    
    B+
    
    STABLEOctober 1999
    
    
    
    B1
    
    STABLE
    
    B+
    
    STABLEFebruary 2001
    
    
    
    B1
    
    POSITIVE
    
    B+
    
    STABLEMay 2001
    
    
    
    Ba3
    
    STABLE
    
    B+
    
    STABLEJune 2001
    
    B2
    
    Ba3
    
    STABLE
    
    BB-
    
    STABLEJune 2002
    
    B2
    
    Ba3
    
    STABLE
    
    BB-
    
    STABLEDecember 2003
    
    B2
    
    Ba3
    
    STABLE
    
    BB
    
    STABLEAugust 2004
    
    B2
    
    Ba3
    
    NEGATIVE
    
    BB
    
    NEGATIVEMarch 2005
    
    B2
    
    Ba3
    
    STABLE
    
    BB
    
    STABLEJuly 2005
    
    B2
    
    Ba3
    
    STABLE
    
    BB
    
    NEGATIVE
  Senior Subordinated Credit Agreement
 1 2
  Previous Credit Facilities
  Province 7 1/2% Senior Subordinated Notes
 1 2 1 2
 39




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##### Table of Contents



1 2
 1 2 1 2 1 2
 1 2 1 2 1 2 1 2
 Province 4 1/4% Convertible Subordinated Notes
 1 4 1 4
 Province 4 1/2% Convertible Subordinated Notes
 1 2
 Historic LifePoints 4 1/2% Convertible Subordinated Notes
 1 2 1 2
 1 2 1 2
 Liquidity and Capital Resources Outlook
  40




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##### Table of Contents



Contractual Obligations
  Off-Balance Sheet Arrangements
  Impact of 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
 41




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##### Table of Contents




    
    Acquisitions.
 Forward-Looking Statements
  
    
    projections of our revenues, net income, earnings per share, capital expenditures or
other financial items;
    
    descriptions of plans or objectives of management for future operations or services,
including pending acquisitions;
    
    forecasts of our future economic performance; and
    
    descriptions of assumptions underlying or relating to any of the foregoing.
  
    
    future financial performance;
    
    future liquidity;
    
    industry trends;
    
    patient volumes and related revenues;
    
    recruiting and retention of physicians and clinical personnel;
    
    future capital expenditures;
    
    the impact of new accounting standards; and
    
    future acquisitions.
  
    
    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 cost-containment efforts of insurers and other payors;
    
    the possibility of adverse changes in, and requirements of, applicable laws,
regulations, policies and procedures, including those required by our corporate integrity
agreement;
    
    our ability to manage healthcare risks and the lack of state and federal tort reform;
 42




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##### Table of Contents




    
    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;
    
    our ability to acquire hospitals on favorable terms and to complete budgeted capital
improvements successfully;
    
    our 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 and changes in the manner
in which employers provide healthcare coverage to their employees;
    
    our reliance on information technology systems maintained by HCA-IT;
    
    the costs of complying with the Americans with Disabilities Act and the related litigation;
    
    our ability to comply with all aspects of the Sarbanes-Oxley Act and regulations
promulgated thereunder; and
    
    those risks and uncertainties described from time to time in our filings with the SEC.
 Update to Risk Factors
  We have substantial indebtedness and we may incur significant amounts of additional indebtedness in
the future which could affect our ability to finance operations, pursue desirable business
opportunities or successfully run our business in the future.
   
    
    under our senior credit agreement, we will be required to satisfy and maintain
specified financial ratios and tests. Failure to comply with these obligations may cause
an event of default which, if not cured or waived, could require us to repay substantial
indebtedness immediately. Moreover, if debt repayment is accelerated, we will be subject
to higher interest rates on our debt obligations as a result of these covenants, and our
credit ratings may be adversely impacted;
    
    we may be vulnerable in the event of downturns and adverse changes in our businesses,
in our industries, or in the economy generally, such as the implementation by the
government of further limitations on reimbursement under Medicare and Medicaid, because
of our need for increased cash flow;
    
    we may have difficulty obtaining additional financing at favorable interest rates to
meet our requirements for working capital, capital expenditures, acquisitions, general
corporate or other purposes;
 43




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##### Table of Contents




    
    we will be required to dedicate a substantial portion of our cash flow to the payment
of principal and interest on indebtedness, which will reduce the amount of funds
available for operations, capital expenditures and future acquisitions;
    
    any borrowings we complete at variable interest rates expose us to increases in
interest rates generally;
    
    a breach of any of the restrictions or covenants in our debt agreements could cause a
cross-default under other debt agreements. We may be required to pay our indebtedness
immediately if we default on any of the numerous financial or other restrictive covenants
contained in the debt agreements. It is not certain whether or not we will have, or will
be able to obtain, sufficient funds to make these accelerated payments. If any senior
debt is accelerated, our assets may not be sufficient to repay such indebtedness and our
other indebtedness; and
    
    in the event of default, we may be forced to pursue one or more
alternative strategies, such as restructuring or refinancing our indebtedness, selling
assets, reducing or delaying capital
expenditures or seeking additional equity capital. There can be no assurances that any of
these strategies could be effected on satisfactory terms, if at all, or that sufficient
funds could be obtained to make these accelerated payments.
 Substantially
all of the Companys indebtedness consists of floating rate
which exposes the Company to interest rate risk.
   44




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##### Table of Contents



We have incurred significant expenses in connection with the Province business combination and
related financing transactions.
  Our revenues are especially concentrated in a small number of states which will make us
particularly sensitive to regulatory and economic changes in those states.
   
    
    our Kentucky hospitals generated approximately 18.6% of revenues for the year ended
December 31, 2003 and approximately 18.7% of revenues for the year ended December 31,
2004;
    
    our Tennessee hospitals generated approximately 11.1% of revenues for the year ended
December 31, 2003 and approximately 10.3% of revenues for the year ended December 31,
2004;
    
    our Alabama hospitals generated approximately 10.3% of revenues for the year ended
December 31, 2003 and approximately 9.6% of revenues for the year ended December 31,
2004; and
    
    our Louisiana hospitals generated approximately 9.6% of revenues for the year ended
December 31, 2003 and approximately 9.5% of revenues for the year ended December 31,
2004.
  We may be required to make significant capital expenditures in order to bring our facilities into
compliance with the Americans with Disabilities Act.
  45




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##### Table of Contents



Certificate of need laws and regulations regarding licenses, ownership and operation may impair our
future expansion in some states.
  Different interpretations of accounting principles could have a material adverse effect on the
Companys results of operations or financial condition.
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk.
    46




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##### Table of Contents



Item 4. Controls and Procedures.
   47




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##### Table of Contents



PART IIOTHER INFORMATION
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  ISSUER PURCHASES OF EQUITY SECURITIES
 Total Number
    
    
    Approximateof Shares
    
    
    Dollar Value ofTotal
    
    
    
    
    
    
    Purchased as
    
    
    Shares That MayNumber of
    
    
    
    
    
    
    part of Publicly
    
    
    Yet BeShares
    
    
    Average
    
    
    Announced
    
    
    Purchased UnderPurchased
    
    
    Price Paid
    
    
    Plans or
    
    
    The Plans orPeriod
    
    (1)
    
    
    Per Share
    
    
    Programs
    
    
    ProgramsApril 1, 2005  April 30, 2005
    
    
    19,597
    
    
    $
    44.42
    
    
    
    
    
    
    
    May 1, 2005  May 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    June 1, 2005  June 30, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    19,597
    
    
    $
    44.42
    
    
    
    
    
    
    
    
 
 (1)
    
    These shares were redeemed from employees upon vesting of restricted stock for tax
withholding purposes under the LifePoint Hospitals, Inc. Management Stock Purchase Plan. 
 Item 4. Submission of Matters to a Vote of Security Holders.
  VOTESIN
    
    
    
    
    
    
    VOTESFAVOR
    
    
    ABSTAINED
    
    
    AGAINST(a)Election of Class III Directors:Kenneth C. Donahey
    
    
    49,570,731
    
    
    
    1,713,190
    
    
    
    Richard H. Evans
    
    
    48,533,395
    
    
    
    2,750,526
    
    
    
    Michael P. Haley
    
    
    47,123,960
    
    
    
    4,159,961
    
    
    
    (b) Approval of an amendment and
restatement to the LifePoint
Hospitals, Inc. 1998 Long-Term
Incentive Plan;
    
    
    34,854,512
    
    
    
    37,668
    
    
    
    11,265,225(c) Ratification of the appointment
of Ernst & Young LLP as the
independent registered public
accounting firm of our company
for the year ending December
31, 2005.
    
    
    50,067,049
    
    
    
    40,338
    
    
    
    1,176,534
  48




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##### Table of Contents



Item 6. Exhibits.
 Exhibit Number
    
    Description2.1
    
    Agreement and Plan of Merger, dated as of August 15, 2004, by and among LifePoint
Hospitals, Inc., Lakers Holding Corp., Lakers Acquisition Corp., Pacers
Acquisition Corp. and Province Healthcare Company (a)2.2
    
    Amendment No. 1 to Agreement and Plan of Merger, dated as of January 25, 2005, by
and among LifePoint Hospitals, Inc., Lakers Holding Corp., Lakers Acquisition
Corp., Pacers Acquisition Corp. and Province Healthcare Company (a)2.3
    
    Amendment No. 2 to Agreement and Plan of Merger, dated as of March 15, 2005, by
and among LifePoint Hospitals, Inc., Lakers Holding Corp., Lakers Acquisition
Corp., Pacers Acquisition Corp. and Province Healthcare Company (b)3.1
    
    Amended and Restated Certificate of Incorporation of LifePoint Hospitals, Inc. (c)3.2
    
    Amended and Restated By-Laws of LifePoint Hospitals, Inc. (c)4.1
    
    Form of Specimen Stock Certificate (a)4.2
    
    Rights Agreement, dated as of April 15, 2005, by and between LifePoint Hospitals,
Inc. (formerly Lakers Holding Corp.) and National City Bank, as Rights Agent (c)4.3
    
    First Supplemental Indenture, dated as of April 15, 2005, by and among Historic
LifePoint Hospitals, Inc., LifePoint Hospitals, Inc. and U.S. Bank National
Association (as successor in interest to National City Bank), as trustee, to the
Indenture dated as of May 22, 2002 relating to Historic LifePoint Hospitals,
Inc.s 4 1/2% Convertible Subordinated Notes due 2009 (d)4.4
    
    First Supplemental Indenture, dated as of April 15, 2005, by and among Province
Healthcare Company, LifePoint Hospitals, Inc. and U.S. Bank National Association
(as successor in interest to National City Bank), as trustee, to the Indenture
dated as of November 20, 2000 relating to Province Healthcare Companys 4 1/2 %
Convertible Subordinated Notes due 2005 (d)4.5
    
    First Supplemental Indenture, dated as of April 15, 2005, by and among Province
Healthcare Company, LifePoint Hospitals, Inc. and U.S. Bank National Association
(as successor in interest to National City Bank), as trustee, to the Indenture
dated as of October 10, 2001 relating to Province Healthcare Companys 4 1/4 %
Convertible Subordinated Notes due 2008 (d)10.1
    
    Credit Agreement, dated as of April 15, 2005, among Lakers Holding Corp. (to be
renamed LifePoint Hospitals, Inc.), as borrower, the lenders referred to therein,
Citicorp North America, Inc., as administrative agent, Bank of America, N.A.,
CIBC World Markets Corp., SunTrust Bank, UBS Securities LLC, as co-syndication
agents and Citigroup Global Markets Inc., as sole lead arranger and sole
bookrunner (d)10.2
    
    Form of Senior Subordinated Credit Agreement, dated as of June 15, 2005, among
LifePoint Hospitals, Inc., as borrower, the lenders referred to therein and
Citigroup Global Markets Inc. as sole lead arranger, sole bookrunner and sole
syndication agent (e)10.3
    
    Amended and Restated LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan,
dated as of June 30, 2005 (f)10.4
    
    Form of LifePoint Hospitals, Inc.
Nonqualified Stock Option Agreement10.5
    
    Form of LifePoint Hospitals, Inc.
Restricted Stock Award Agreement31.1
    
    Certification of the Chief Executive Officer of LifePoint Hospitals, Inc.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of the Chief Financial Officer of LifePoint Hospitals, Inc.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 49




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##### Table of Contents



Exhibit Number
    
    Description32.1
    
    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 Appendix A to the Registration Statement on Form S-4, as
amended, filed by LifePoint Hospitals, Inc. (formerly Lakers Holding Corp.) on February 18,
2005, File Number 333-119929.(b)
    
    Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Historic
LifePoint Hospitals, Inc. on March 16, 2005, File Number 0-29818.(c)
    
    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.(d)
    
    Incorporated by reference to the exhibits to the Current Report on Form 8-K filed by
LifePoint Hospitals, Inc. (formerly Lakers Holding Corp.), dated April 15, 2005, File Number
0-51251.(e)
    
    Incorporated by reference to the exhibits to the Current Report on Form 8-K filed by
LifePoint Hospitals, Inc., dated June 15, 2005, File Number 0-51251(f)
    
    Incorporated by reference to the exhibits to the Current Report on Form 8-K filed by
LifePoint Hospitals, Inc., dated July 7, 2005, File Number 0-51251 50




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##### Table of Contents



SIGNATURES
  Date: July 27, 2005

    LifePoint Hospitals, Inc.By:

    /s/ Michael J. CulottaMichael J. CulottaChief Financial Officer(Principal Financial and Accounting Officer)
 51




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##### Table of Contents



Exhibit Number
    

Description2.1
    
    Agreement and Plan of Merger, dated as of August 15, 2004, by and among LifePoint
Hospitals, Inc., Lakers Holding Corp., Lakers Acquisition Corp., Pacers
Acquisition Corp. and Province Healthcare Company (a)2.2
    
    Amendment No. 1 to Agreement and Plan of Merger, dated as of January 25, 2005, by
and among LifePoint Hospitals, Inc., Lakers Holding Corp., Lakers Acquisition
Corp., Pacers Acquisition Corp. and Province Healthcare Company (a)2.3
    
    Amendment No. 2 to Agreement and Plan of Merger, dated as of March 15, 2005, by
and among LifePoint Hospitals, Inc., Lakers Holding Corp., Lakers Acquisition
Corp., Pacers Acquisition Corp. and Province Healthcare Company (b)3.1
    
    Amended and Restated Certificate of Incorporation of LifePoint Hospitals, Inc. (c)3.2
    
    Amended and Restated By-Laws of LifePoint Hospitals, Inc. (c)4.1
    
    Form of Specimen Stock Certificate (a)4.2
    
    Rights Agreement, dated as of April 15, 2005, by and between LifePoint Hospitals,
Inc. (formerly Lakers Holding Corp.) and National City Bank, as Rights Agent (c)4.3
    
    First Supplemental Indenture, dated as of April 15, 2005, by and among Historic
LifePoint Hospitals, Inc., LifePoint Hospitals, Inc. and U.S. Bank National
Association (as successor in interest to National City Bank), as trustee, to the
Indenture dated as of May 22, 2002 relating to Historic LifePoint Hospitals,
Inc.s 4 1/2% Convertible Subordinated Notes due 2009 (d)4.4
    
    First Supplemental Indenture, dated as of April 15, 2005, by and among Province
Healthcare Company, LifePoint Hospitals, Inc. and U.S. Bank National Association
(as successor in interest to National City Bank), as trustee, to the Indenture
dated as of November 20, 2000 relating to Province Healthcare Companys 4 1/2 %
Convertible Subordinated Notes due 2005 (d)4.5
    
    First Supplemental Indenture, dated as of April 15, 2005, by and among Province
Healthcare Company, LifePoint Hospitals, Inc. and U.S. Bank National Association
(as successor in interest to National City Bank), as trustee, to the Indenture
dated as of October 10, 2001 relating to Province Healthcare Companys 4 1/4 %
Convertible Subordinated Notes due 2008 (d)10.1
    
    Credit Agreement, dated as of April 15, 2005, among Lakers Holding Corp. (to be
renamed LifePoint Hospitals, Inc.), as borrower, the lenders referred to therein,
Citicorp North America, Inc., as administrative agent, Bank of America, N.A.,
CIBC World Markets Corp., SunTrust Bank, UBS Securities LLC, as co-syndication
agents and Citigroup Global Markets Inc., as sole lead arranger and sole
bookrunner (d)10.2
    
    Form of Senior Subordinated Credit Agreement, dated as of June 15, 2005, among
LifePoint Hospitals, Inc., as borrower, the lenders referred to therein and
Citigroup Global Markets Inc. as sole lead arranger, sole bookrunner and sole
syndication agent (e)10.3
    
    Amended and Restated LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan,
dated as of June 30, 2005 (f)10.4
    
    Form of LifePoint Hospitals, Inc.
Nonqualified Stock Option Agreement10.5
    
    Form of LifePoint Hospitals, Inc.
Restricted Stock Award Agreement31.1
    
    Certification of the Chief Executive Officer of LifePoint Hospitals, Inc.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of the Chief Financial Officer of LifePoint Hospitals, Inc.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of the Chief Executive Officer of LifePoint Hospitals, Inc.
Pursuant to Section 906




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##### Table of Contents



Exhibit Number
    

Descriptionof 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 Appendix A to the Registration Statement on Form S-4, as
amended, filed by LifePoint Hospitals, Inc. (formerly Lakers Holding Corp.) on February 18,
2005, File Number 333-119929.(b)
    
    Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Historic
LifePoint Hospitals, Inc. on March 16, 2005, File Number 0-29818.(c)
    
    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.(d)
    
    Incorporated by reference to the exhibits to the Current Report on Form 8-K filed by
LifePoint Hospitals, Inc. (formerly Lakers Holding Corp.), dated April 15, 2005, File Number
0-51251.(e)
    
    Incorporated by reference to the exhibits to the Current Report on Form 8-K filed by
LifePoint Hospitals, Inc., dated June 15, 2005, File Number 0-51251(f)
    
    Incorporated by reference to the exhibits to the Current Report on Form 8-K filed by
LifePoint Hospitals, Inc., dated July 7, 2005, File Number 0-51251