##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



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FORM 10-Q

|           |  |                                                                                         
|---------- |  | ----------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                         
|          
|[X]        |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|          
|           |  | For the quarterly period ended March 31, 2002 or                                        
|          
|[   ]      |  | 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 0-23639

PROVINCE HEALTHCARE COMPANY(Exact Name of Registrant as Specified in Its Charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or Other Jurisdiction of
Incorporation or Organization) |  | 62-1710772
(I.R.S. Employer
Identification No.)

|                                                                                           |  |                 
|------------------------------------------------------------------------------------------ |  | ----------------
|105 Westwood Place
Suite 400
Brentwood, Tennessee
(Address of Principal Executive Offices) |  | 37027
(Zip Code)

(615) 370-1377
(Registrants Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]       No [  ]


Indicate the number of shares outstanding of each of the issuers
classes of common stock, as of the latest practicable date.

|                             |  |                           
|---------------------------- |  | --------------------------
|Class                        |  | Outstanding at May 3, 2002
|                            
|                            
|                            
|                            
|Common Stock, $.01 par value |  | 47,686,187                





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TABLE OF CONTENTS



|                                                |                                                                                               |  |  |  |  |  |  | 
|----------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                                | CONDENSED CONSOLIDATED BALANCE SHEETS                                                        
|                                                | CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)                                      
|                                                | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                                  
|                                                | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                         
|                                                | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|AMENDMENT NO. 1 TO CERTAIN OPERATIVE AGREEMENTS



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##### Table of Contents



PART I
FINANCIAL INFORMATION

|        |  |                                                                                            |  |   
|------- |  | ------------------------------------------------------------------------------------------ |  | --
|Item 1. |  | Financial Statements (Unaudited)                                                           |  |   
|       
|        |  | Condensed Consolidated Balance Sheets
March 31, 2002 and December 31, 2001                 |  | 1 
|       
|        |  | Condensed Consolidated Statements of Income
Three Months Ended March 31, 2002 and 2001     |  | 2 
|       
|        |  | Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2002 and 2001 |  | 3 
|       
|        |  | Notes to Condensed Consolidated Financial Statements                                       |  | 4 
|       
|Item 2. |  | Managements Discussion and Analysis of Financial Condition
And Results of Operations      |  | 10
|       
|Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk                                 |  | 17





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##### Table of Contents



PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES




CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


|                                                                      |                                                                                                                                                                                           |                            |                                      |         |         |             |         |              |         |  |  | 
|--------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------ | ------- | ------- | ----------- | ------- | ------------ | ------- |  |  | 
|                                                                      |                                                                                                                                                                                           |                            |                                      |         |         | March 31,   |         | December 31,
|                                                                      |                                                                                                                                                                                           |                            |                                      |         |         | 2002        |         | 2001        
|                                                                      |                                                                                                                                                                                           |                            |                                      |         |         |             |         |             
|                                                                      |                                                                                                                                                                                           |                            |                                      |         |         | (Unaudited) |         | (Note 1)    
|                                                                      |                                                                                                                                                                                           |                            |                                      | ASSETS  |         |             |         |              |         |  |  | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Current assets:                                                       |                                                                                                                                                                                           |                            |                                      |         |         |             |         |             
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Cash and cash equivalents                                                                                                                                                                 |                            | $                                    | 46,143  |         |             | $       | 39,375       |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accounts receivable, less allowance for doubtful accounts
of $57,069 in 2002 and $49,678 in 2001                                                                                          |                            |                                      | 118,325 |         |             |         | 109,826      |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Inventories                                                                                                                                                                               |                            |                                      | 17,410  |         |             |         | 15,926       |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Prepaid expenses and other                                                                                                                                                                |                            |                                      | 10,591  |         |             |         | 21,515       |        
|                                                                      |                                                                                                                                                                                           |                            |                                      |         |         |             |         |             
|                                                                      |                                                                                                                                                                                           | Total current assets       |                                      |         | 192,469 |             |         |              | 186,642 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Property, plant and equipment, net                                    |                                                                                                                                                                                           |                            | 384,832                              |         |         |             | 306,494 |             
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Goodwill, net of accumulated amortization of $23,496 in 2002
and 2001 |                                                                                                                                                                                           |                            | 208,881                              |         |         |             | 180,497 |             
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Unallocated purchase price                                            |                                                                                                                                                                                           |                            | 670                                  |         |         |             | 49,013  |             
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Other                                                                 |                                                                                                                                                                                           |                            | 38,809                               |         |         |             | 37,251  |             
|                                                                      |                                                                                                                                                                                           |                            |                                      |         |         |             |         |             
|Total assets                                                          |                                                                                                                                                                                           | $                          | 825,661                              |         |         | $           | 759,897 |             
|                                                                      |                                                                                                                                                                                           |                            |                                      |         |         |             |         |             
|                                                                      |                                                                                                                                                                                           |                            | LIABILITIES AND STOCKHOLDERS EQUITY |         |         |             |         |              |         |  | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Current liabilities:                                                  |                                                                                                                                                                                           |                            |                                      |         |         |             |         |             
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accounts payable                                                                                                                                                                          |                            | $                                    | 22,193  |         |             | $       | 17,515       |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accrued salaries and benefits                                                                                                                                                             |                            |                                      | 19,771  |         |             |         | 18,867       |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accrued expenses                                                                                                                                                                          |                            |                                      | 18,697  |         |             |         | 12,139       |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Current maturities of long-term obligations                                                                                                                                               |                            |                                      | 1,835   |         |             |         | 1,879        |        
|                                                                      |                                                                                                                                                                                           |                            |                                      |         |         |             |         |             
|                                                                      |                                                                                                                                                                                           | Total current liabilities  |                                      |         | 62,496  |             |         |              | 50,400  | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Long-term obligations, less current maturities                        |                                                                                                                                                                                           |                            | 369,053                              |         |         |             | 330,838 |             
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Other liabilities                                                     |                                                                                                                                                                                           |                            | 15,783                               |         |         |             | 14,000  |             
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Minority interest                                                     |                                                                                                                                                                                           |                            | 2,691                                |         |         |             | 2,654   |             
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Stockholders equity:                                                 |                                                                                                                                                                                           |                            |                                      |         |         |             |         |             
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Common stock  $0.01 par value; 50,000,000
shares authorized; issued and outstanding
47,605,860 and 47,488,984 shares at March 31, 2002
and December 31, 2001, respectively (See Note 9.) |                            |                                      | 476     |         |             |         | 475          |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Additional paid-in-capital                                                                                                                                                                |                            |                                      | 290,709 |         |             |         | 288,948      |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Retained earnings                                                                                                                                                                         |                            |                                      | 84,453  |         |             |         | 72,582       |        
|                                                                      |                                                                                                                                                                                           |                            |                                      |         |         |             |         |             
|                                                                      |                                                                                                                                                                                           | Total stockholders equity |                                      |         | 375,638 |             |         |              | 362,005 | 
|                                                                      |                                                                                                                                                                                           |                            |                                      |         |         |             |         |             
|Total liabilities and stockholders equity                            |                                                                                                                                                                                           | $                          | 825,661                              |         |         | $           | 759,897 |             
|                                                                      |                                                                                                                                                                                           |                            |                                      |         |         |             |         |             

See accompanying notes.

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share data)


|                                         |                                 |                       |        |                              |         |      |        |         |         | 
|---------------------------------------- | ------------------------------- | --------------------- | ------ | ---------------------------- | ------- | ---- | ------ | ------- | ------- | 
|                                         |                                 |                       |        | Three Months Ended March 31,
|                                         |                                 |                       |        |                             
|                                         |                                 |                       |        | 2002                         |         | 2001
|                                         |                                 |                       |        |                              |         |     
|Revenue:                                 |                                 |                       |        |                              |         |      |        |        
|                                        
|                                        
|                                        
|                                        
|                                         | Net patient service revenue     |                       | $      | 159,780                      |         |      | $      | 116,886 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Other                           |                       |        | 5,821                        |         |      |        | 5,550   |        
|                                         |                                 |                       |        |                              |         |      |        |        
|                                         |                                 | Net operating revenue |        |                              | 165,601 |      |        |         | 122,436 | 
|                                        
|                                        
|                                        
|                                        
|Expenses:                                |                                 |                       |        |                              |         |      |        |        
|                                        
|                                        
|                                        
|                                        
|                                         | Salaries, wages and benefits    |                       |        | 62,152                       |         |      |        | 46,955  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Purchased services              |                       |        | 17,091                       |         |      |        | 11,183  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Supplies                        |                       |        | 19,745                       |         |      |        | 13,775  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Provision for doubtful accounts |                       |        | 14,738                       |         |      |        | 10,919  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Other operating expenses        |                       |        | 18,396                       |         |      |        | 13,775  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Rentals and leases              |                       |        | 2,152                        |         |      |        | 1,728   |        
|                                        
|                                        
|                                        
|                                        
|                                         | Depreciation and amortization   |                       |        | 7,581                        |         |      |        | 6,682   |        
|                                        
|                                        
|                                        
|                                        
|                                         | Interest expense                |                       |        | 4,196                        |         |      |        | 2,622   |        
|                                        
|                                        
|                                        
|                                        
|                                         | Minority interest               |                       |        | 59                           |         |      |        | 98      |        
|                                        
|                                        
|                                        
|                                        
|                                         | Loss on sale of assets          |                       |        | 5                            |         |      |        | 30      |        
|                                         |                                 |                       |        |                              |         |      |        |        
|                                         |                                 | Total expenses        |        |                              | 146,115 |      |        |         | 107,767 | 
|                                         |                                 |                       |        |                              |         |      |        |        
|Income before provision for income taxes |                                 |                       | 19,486 |                              |         |      | 14,669 |        
|                                        
|                                        
|                                        
|                                        
|Income taxes                             |                                 |                       | 7,794  |                              |         |      | 6,161  |        
|                                         |                                 |                       |        |                              |         |      |        |        
|Net income                               |                                 | $                     | 11,692 |                              |         | $    | 8,508  |        
|                                         |                                 |                       |        |                              |         |      |        |        
|Net income per share (See Note 9.):      |                                 |                       |        |                              |         |      |        |        
|                                        
|                                        
|                                        
|                                        
|                                         | Basic                           |                       | $      | 0.25                         |         |      | $      | 0.18    |        
|                                         |                                 |                       |        |                              |         |      |        |        
|                                         | Diluted                         |                       | $      | 0.23                         |         |      | $      | 0.17    |        
|                                         |                                 |                       |        |                              |         |      |        |        

See accompanying notes.

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)


|                                                    |  |                              |         |      |  |   |         |  
|--------------------------------------------------- |  | ---------------------------- | ------- | ---- |  | - | ------- | -
|                                                    |  | Three Months Ended March 31,
|                                                    |  |                             
|                                                    |  | 2002                         |         | 2001
|                                                    |  |                              |         |     
|Net cash provided by operating activities           |  | $                            | 23,487  |      |  | $ | 11,474  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Investing activities                                |  |                              |         |      |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|Purchase of property, plant and equipment           |  |                              | (15,578 | )    |  |   | (12,749 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Other                                               |  |                              | (329    | )    |  |   |        |  
|                                                    |  |                              |         |      |  |   |         |  
|Net cash used in investing activities               |  |                              | (15,907 | )    |  |   | (12,749 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Financing activities                                |  |                              |         |      |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|Proceeds from long-term debt                        |  |                              | 11,425  |      |  |   | 23,519  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Repayments of debt                                  |  |                              | (13,774 | )    |  |   | (19,936 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Issuance of common stock                            |  |                              | 1,537   |      |  |   | 4,982   |  
|                                                    |  |                              |         |      |  |   |         |  
|Net cash provided by (used in) financing activities |  |                              | (812    | )    |  |   | 8,565   |  
|                                                    |  |                              |         |      |  |   |         |  
|Net increase in cash and cash equivalents           |  |                              | 6,768   |      |  |   | 7,290   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Cash and cash equivalents at beginning of period    |  |                              | 39,375  |      |  |   |        |  
|                                                    |  |                              |         |      |  |   |         |  
|Cash and cash equivalents at end of period          |  | $                            | 46,143  |      |  | $ | 7,290   |  
|                                                    |  |                              |         |      |  |   |         |  

See accompanying notes.

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


March 31, 2002

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. Interim results
are not necessarily indicative of results that may be expected for the full
year. In the opinion of management, the accompanying interim financial
statements contain all material adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the consolidated financial position,
results of operations and cash flows of Province Healthcare Company (the
Company).

The balance sheet at December 31, 2001, has been derived from the
audited consolidated financial statements at that date, but does not include all
of the financial information and footnotes required by accounting principles
generally accepted in the United States for complete financial statements.

For further information, refer to the consolidated financial statements
and footnotes thereto included in the Companys Annual Report on Form 10-K for
the year ended December 31, 2001.

2. USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management of the
Company to make estimates and assumptions that affect the amounts reported in
the condensed consolidated financial statements. Actual results could differ
from the estimates.

3. ACQUISITIONS AND GOODWILL

On March 14, 2002, the Company announced the signing of a definitive
agreement to acquire Los Alamos Medical Center in Los Alamos, New Mexico. The 47-bed facility is the only hospital in the community and serves a
population of approximately 50,000. Current annual revenues are approximately
$31.5 million. Closing of the acquisition is subject to
customary closing conditions and to the review and approval by the
Attorney General of New Mexico. The Attorney General
is currently reviewing the sellers proposed use of proceeds from the
sale and the seller has filed a claim in the U.S. District Court in
Albuquerque seeking an injunction to prevent the state from
interfering with the sale and the sellers use of the proceeds.
Although discussions between the seller and the Attorney General are
continuing, the Company cannot predict how or when the matter will be
resolved. The acquisition agreement provides that if the closing has
not occurred on or before May 31, 2002, both the seller and the
Company have the right to terminate the agreement.

On March 18, 2002, the Company announced the signing of a definitive
agreement to acquire Memorial Hospital of Martinsville and Henry County in
Martinsville, Virginia.

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (continued)

The 237-bed facility is the only hospital in the
county and serves a population in excess of 100,000. Current annual revenues are
approximately $80.3 million.

On June 29, 2001, the Financial Accounting Standards Board issued SFAS
No. 141, Business Combinations, which eliminates the pooling of interests method
of accounting for all business combinations initiated after June 30, 2001 and
addresses the initial recognition and measurement of goodwill and other
intangible assets acquired in a business combination. The Company has adopted
this accounting standard for business combinations initiated after June 30,
2001.

The Company adopted Statement of Financial Accounting Standards No. 142
(SFAS No. 142), Goodwill and Other Intangible Assets, effective January 1,
2002. Under SFAS No. 142, goodwill is no longer amortized, but is subject to
annual impairment tests, or more frequently if certain indicators arise. The
Company is required to complete the initial step of a transitional impairment
test of goodwill within six months of adoption and to complete the final step of
the transitional impairment test by the end of the fiscal year. Any subsequent
impairment loss resulting from the transitional impairment tests will be
recorded as a cumulative effect of a change in accounting principle. While the
transitional impairment tests have not been completed, management does not
anticipate that the results of the tests will have a significant effect on
operations or financial position of the Company. Any subsequent impairment losses after the
transitional period will be reflected in operating income in the statement of
income. Had the Company been accounting for its goodwill under SFAS No. 142 for
all periods presented, the Companys pro forma net income and earnings per share
would have been as follows:

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (continued)

|                                       |                                        |   |                    |      |      |   |       |      | 
|-------------------------------------- | -------------------------------------- | - | ------------------ | ---- | ---- | - | ----- | ---- | 
|                                       |                                        |   | Three Months Ended
|                                       |                                        |   | March 31,         
|                                       |                                        |   |                   
|                                       |                                        |   | 2002               |      | 2001
|                                       |                                        |   |                    |      |     
|Reported net income                    |                                        | $ | 11,692             |      |      | $ | 8,508 |     
|                                      
|                                      
|                                      
|                                      
|Add: Goodwill amortization, net of tax |                                        |   |                   |      |      |   | 1,129 |     
|                                       |                                        |   |                    |      |      |   |       |     
|Pro forma adjusted net income          |                                        | $ | 11,692             |      |      | $ | 9,637 |     
|                                       |                                        |   |                    |      |      |   |       |     
|Basic earnings per share:              |                                        |   |                    |      |      |   |       |     
|                                      
|                                      
|                                      
|                                      
|                                       | Reported net income                    |   | $                  | 0.25 |      |   | $     | 0.18 | 
|                                      
|                                      
|                                      
|                                      
|                                       | Add: Goodwill amortization, net of tax |   |                    |     |      |   |       | 0.02 | 
|                                       |                                        |   |                    |      |      |   |       |     
|                                       | Pro forma adjusted net income          |   | $                  | 0.25 |      |   | $     | 0.20 | 
|                                       |                                        |   |                    |      |      |   |       |     
|Diluted earnings per share:            |                                        |   |                    |      |      |   |       |     
|                                      
|                                      
|                                      
|                                      
|                                       | Reported net income                    |   | $                  | 0.23 |      |   | $     | 0.17 | 
|                                      
|                                      
|                                      
|                                      
|                                       | Add: Goodwill amortization, net of tax |   |                    |     |      |   |       | 0.02 | 
|                                       |                                        |   |                    |      |      |   |       |     
|                                       | Pro forma adjusted net income          |   | $                  | 0.23 |      |   | $     | 0.19 | 
|                                       |                                        |   |                    |      |      |   |       |     

At March 31, 2002, and December 31, 2001, goodwill totaled $232.4
million and $204.0 million, respectively. Accumulated amortization totaled $23.5
million at March 31, 2002, and December 31, 2001. The $28.4 million increase in
goodwill resulted primarily from the allocation of amounts recorded in
unallocated purchase price at December 31, 2001, for the five hospitals acquired
in the last six months of 2001. The Company has no other intangible assets.

4. LONG-TERM OBLIGATIONS

At March 31, 2002, the Company had outstanding letters of credit
totaling approximately $4.3 million, and $205.5 million available under its
credit facility. During the first quarter of 2002, the Company made the decision
to modify the terms of the end-loaded lease facility to enable it to account for
the properties and borrowings on the balance sheet. The Company recorded
approximately $46.7 million in property and equipment and approximately $40.2
million in long-term debt on the balance sheet related to these properties.

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (continued)

5. COMPREHENSIVE INCOME

The following table presents the components of comprehensive income,
net of related taxes (in thousands):

|                                               |  |                    |        |      |  |   |       |  
|---------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ----- | -
|                                               |  | Three Months Ended
|                                               |  | March 31,         
|                                               |  |                   
|                                               |  | 2002               |        | 2001
|                                               |  |                    |        |     
|Net income                                     |  | $                  | 11,692 |      |  | $ | 8,508 |  
|                                              
|                                              
|                                              
|                                              
|Net change in fair value of interest
rate swap |  |                    | 179    |      |  |   | (287  | )
|                                               |  |                    |        |      |  |   |       |  
|Comprehensive income                           |  | $                  | 11,871 |      |  | $ | 8,221 |  
|                                               |  |                    |        |      |  |   |       |  

The net change in fair value of interest rate swap is included in
retained earnings on the balance sheet.

6. INCOME TAXES

The income tax provision for the three months ended March 31, 2002 and
2001, differs from the statutory income tax computation primarily due to
permanent differences and the provision for state income taxes.

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (continued)

7. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share data) (See Note 9.):

|                                          |                                              |                         |      |                    |        |      |      |        |        | 
|----------------------------------------- | -------------------------------------------- | ----------------------- | ---- | ------------------ | ------ | ---- | ---- | ------ | ------ | 
|                                          |                                              |                         |      | Three Months Ended
|                                          |                                              |                         |      | March 31,         
|                                          |                                              |                         |      |                   
|                                          |                                              |                         |      | 2002               |        | 2001
|                                          |                                              |                         |      |                    |        |     
|Numerator:                                |                                              |                         |      |                    |        |      |      |       
|                                         
|                                         
|                                         
|                                         
|                                          | Net income                                   |                         | $    | 11,692             |        |      | $    | 8,508  |       
|                                         
|                                         
|                                         
|                                         
|                                          | Add  convertible notes interest, net of tax |                         |      | 2,407              |        |      |      |       |       
|                                          |                                              |                         |      |                    |        |      |      |       
|                                          | Adjusted net income                          |                         | $    | 14,099             |        |      | $    | 8,508  |       
|                                          |                                              |                         |      |                    |        |      |      |       
|Denominator:                              |                                              |                         |      |                    |        |      |      |       
|                                         
|                                         
|                                         
|                                         
|                                          | Denominator for basic income per share      |                         |      |                    |        |      |      |        |       
|                                         
|                                         
|                                         
|                                         
|                                          |                                              | Weighted-average shares |      |                    | 47,550 |      |      |        | 46,584 | 
|                                         
|                                         
|                                         
|                                         
|                                          | Effective of dilutive securities            |                         |      |                    |        |      |      |        |       
|                                         
|                                         
|                                         
|                                         
|                                          |                                              | Employee stock options  |      |                    | 1,745  |      |      |        | 2,061  | 
|                                         
|                                         
|                                         
|                                         
|                                          |                                              | Convertible notes       |      |                    | 11,899 |      |      |        |       | 
|                                          |                                              |                         |      |                    |        |      |      |       
|Denominator for diluted income per share |                                              |                         |      |                    |        |      |      |       
|                                         
|                                         
|                                         
|                                         
|                                          | Adjusted weighted average shares             |                         |      | 61,194             |        |      |      | 48,645 |       
|                                          |                                              |                         |      |                    |        |      |      |       
|Basic net income per share                |                                              | $                       | 0.25 |                    |        | $    | 0.18 |       
|                                          |                                              |                         |      |                    |        |      |      |       
|Diluted net income per share              |                                              | $                       | 0.23 |                    |        | $    | 0.17 |       
|                                          |                                              |                         |      |                    |        |      |      |       

During the three-month period ended March 31, 2002, employees exercised
options to acquire 57,859 shares of common stock at an average exercise price of
$8.75 per share, and the Company issued 59,022 shares of common stock at a price
of $17.49 per share under its Employee Stock Purchase Plan. There were 26% more
diluted shares outstanding in the first quarter of 2002, compared with the first
quarter of 2001, primarily as a result of the convertible subordinated notes.

8. CONTINGENCIES

Management continually evaluates contingencies based on the best
available evidence and believes that adequate provision for losses has been
provided to the extent necessary. In the

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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (continued)

opinion of management, the ultimate resolution of the following contingencies
will not have a material effect on the Companys results of operations or
financial position.

General and Professional Liability Risks

Effective January 1, 2002, the Company purchased a professional
liability claims made reporting policy for professional and general liability
risks. This coverage is subject to a $750,000 deductible per occurrence for
general and professional liability and an additional $2.0 million self-insured
retention for professional liability only. The policy provides coverage up to
$51.0 million for claims incurred during the annual policy term. The Company has
established reserves for estimated claims within the deductible and self-insured
retention.

Litigation

The Company currently is, and from time to time is expected to be,
subject to claims and suits arising in the ordinary course of business.

Net Patient Service Revenue

Final determination of amounts earned under the Medicare and Medicaid
programs often occurs in subsequent periods because of audits by the programs,
rights of appeal and the application of numerous technical provisions.
Differences between original estimates and subsequent revisions (including
settlements) are included in the consolidated statements of income in the period
in which revisions are made, and resulted in minimal adjustments for the three
month period ended March 31, 2002 and 2001.

Financial Instruments

Interest rate swap agreements are used to manage the Companys interest
rate exposure under the credit facility. The Company maintains a $28.5 million
interest rate swap agreement with a 5.625% fixed interest rate. This agreement
exposes the Company to credit losses in the event of non-performance by the
counterparty to the financial instrument. The Company anticipates that the
counterparty will fully satisfy its obligations under the contract.

9. SUBSEQUENT EVENTS

On April 30, 2002, the Company effected a three-for-two stock split, in
the form of a 50% stock dividend, to stockholders of record on April 20, 2002.
The stock split resulted in the issuance of 15.9 million shares of common stock
and a transfer between additional paid in capital and common stock of $159,000.
All historical references to common share and earnings per share amounts
included in the condensed consolidated financial statements and notes thereto
have been restated to reflect the three-for-two split.

9



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##### Table of Contents






ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following along with the Condensed Consolidated
Financial Statements and accompanying notes.

OVERVIEW

We are a healthcare services company focused on acquiring and operating
hospitals in attractive non-urban markets in the United States. As of March 31,
2002, we owned or leased 18 general acute care hospitals in 11 states with a
total of 2,156 licensed beds, and managed 34 hospitals in 13 states, with a
total of 2,748 licensed beds.

Our owned and leased hospitals accounted for 97.7% and 96.6% of our net
operating revenue in the three months ended March 31, 2002 and 2001,
respectively.

IMPACT OF ACQUISITIONS

An integral part of our strategy is to acquire non-urban acute care
hospitals. Because of the financial impact of our recent acquisitions, it is
difficult to make meaningful comparisons between our financial statements for
the fiscal periods presented. In addition, because of the relatively small
number of owned and leased hospitals, each hospital acquisition can materially
affect our overall operating performance. Upon the acquisition of a hospital, we
typically take a number of steps to lower operating costs. The impact of such
actions may be offset by cost increases to expand services, strengthen medical
staff and improve market position. The benefits of these investments and of
other activities to improve operating margins generally do not occur
immediately. Consequently, the financial performance of a newly-acquired
hospital may adversely affect overall operating margins in the near term. As we
make additional hospital acquisitions, we expect that this effect will be
mitigated by the expanded financial base of existing hospitals and the
allocation of corporate overhead among a larger number of hospitals. We may also
divest certain hospitals in the future, if we determine a hospital no longer
fits within our strategy.

RESULTS OF OPERATIONS

The following table presents, for the periods indicated, information expressed as a
percentage of net operating revenue. Such information has been derived from our
unaudited Condensed Consolidated Statements of Income included elsewhere in this
report. The results of operations for the periods presented include hospitals
from their acquisition dates, as discussed or in our Annual Report on Form 10-K
for the year ended December 31, 2001.

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|                              |  |                              |       |                     |  |                   |       |   |  |  |       |  
|----------------------------- |  | ---------------------------- | ----- | ------------------- |  | ----------------- | ----- | - |  |  | ----- | -
|                              |  | Three Months Ended March 31, |       | Percentage         
|                              |  |                              |       | Increase (Decrease)
|                              |  | 2002                         |       | 2001                |  | of Dollar Amounts
|                              |  |                              |       |                     |  |                  
|Net operating revenue         |  |                              | 100.0 | %                   |  |                   | 100.0 | % |  |  | 35.3  | %
|                             
|                             
|                             
|                             
|Operating expenses (1)        |  |                              | (81.1 | )                   |  |                   | (80.3 | ) |  |  | 34.8  |  
|                              |  |                              |       |                     |  |                   |       |   |  |  |       |  
|EBITDA (2)                    |  |                              | 18.9  |                     |  |                   | 19.7  |   |  |  | 30.0  |  
|                             
|                             
|                             
|                             
|Depreciation and amortization |  |                              | (4.6  | )                   |  |                   | (5.5  | ) |  |  | 13.5  |  
|                             
|                             
|                             
|                             
|Interest                      |  |                              | (2.5  | )                   |  |                   | (2.1  | ) |  |  | 60.0  |  
|                             
|                             
|                             
|                             
|Other                         |  |                              | (0.0  | )                   |  |                   | (0.1  | ) |  |  | (50.0 | )
|                              |  |                              |       |                     |  |                   |       |   |  |  |       |  
|Income before income taxes    |  |                              | 11.8  |                     |  |                   | 12.0  |   |  |  | 32.8  |  
|                             
|                             
|                             
|                             
|Provision for income taxes    |  |                              | (4.7  | )                   |  |                   | (5.1  | ) |  |  | 26.5  |  
|                              |  |                              |       |                     |  |                   |       |   |  |  |       |  
|Net income                    |  |                              | 7.1   | %                   |  |                   | 6.9   | % |  |  | 37.4  | %
|                              |  |                              |       |                     |  |                   |       |   |  |  |       |  



---

|(1) |  | Operating expenses represent expenses before income taxes, interest,
minority interest, depreciation and amortization expense and loss on
sale of assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | EBITDA represents the sum of income before income taxes, interest,
minority interest, depreciation and amortization, and loss on sale of
assets. We understand that industry analysts generally consider EBITDA
to be one measure of the financial performance of a company that is
presented to assist investors in analyzing the operating performance of
the Company and its ability to service debt. We believe that an
increase in EBITDA level is an indicator of our improved ability to
service existing debt, to sustain potential future increases in debt
and to satisfy capital requirements. However, EBITDA is not a measure
of financial performance under accounting principles generally accepted
in the United States and should not be considered an alternative to net
income as a measure of operating performance or to cash flows from
operating, investing, or financing activities as a measure of
liquidity. Given that EBITDA is not a measurement determined in
accordance with accounting principles generally accepted in the United
States and is thus susceptible to varying calculations, EBITDA, as
presented, may not be comparable to other similarly titled measures of
other companies.

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Selected Operating Statistics  Owned or Leased Hospitals

The following table sets forth certain operating statistics for our
companys owned or leased hospitals for each of the periods presented.

|                                          |  |                    |             |      |  |   |             |  
|----------------------------------------- |  | ------------------ | ----------- | ---- |  | - | ----------- | -
|                                          |  | Three Months Ended
|                                          |  | March 31,         
|                                          |  |                   
|                                          |  | 2002               |             | 2001
|                                          |  |                    |             |     
|Consolidated Hospitals:                   |  |                    |             |      |  |   |             |  
|                                         
|                                         
|                                         
|                                         
|Number of hospitals at end of period      |  |                    | 18          |      |  |   | 14          |  
|                                         
|                                         
|                                         
|                                         
|Licensed beds at end of period            |  |                    | 2,156       |      |  |   | 1,358       |  
|                                         
|                                         
|                                         
|                                         
|Beds in service at end of period          |  |                    | 1,831       |      |  |   | 1,256       |  
|                                         
|                                         
|                                         
|                                         
|Inpatient admissions                      |  |                    | 17,999      |      |  |   | 13,413      |  
|                                         
|                                         
|                                         
|                                         
|Patient days                              |  |                    | 80,329      |      |  |   | 56,837      |  
|                                         
|                                         
|                                         
|                                         
|Adjusted patient days                     |  |                    | 129,896     |      |  |   | 92,680      |  
|                                         
|                                         
|                                         
|                                         
|Average length of stay (days)             |  |                    | 4.5         |      |  |   | 4.2         |  
|                                         
|                                         
|                                         
|                                         
|Occupancy rates (average licensed beds)   |  |                    | 41.4        | %    |  |   | 46.5        | %
|                                         
|                                         
|                                         
|                                         
|Occupancy rates (average beds in service) |  |                    | 48.7        | %    |  |   | 50.3        | %
|                                         
|                                         
|                                         
|                                         
|Gross inpatient revenue                   |  | $                  | 215,389,177 |      |  | $ | 149,107,615 |  
|                                         
|                                         
|                                         
|                                         
|Gross outpatient revenue                  |  |                    | 132,867,090 |      |  |   | 93,973,875  |  

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

Net operating revenue was $165.6 million for the three months ended
March 31, 2002, compared to $122.4 million for the comparable period of 2001, an
increase of $43.2 million, or 35.3%. This represented an increase in net patient
service revenue generated by hospitals owned during both periods of $9.4
million, or 8.1%, resulting from inpatient volume increases, price increases and
an 8.3% increase in emergency room visits. The remaining increase is due
primarily to net operating revenues generated by the five hospitals acquired in
2001.

Operating expenses were $134.3 million, or 81.1% of net operating
revenue, for the three months ended March 31, 2002, compared to $98.3 million,
or 80.3% of net operating revenue, for the comparable period of 2001. Purchased
services, as a percentage of net operating revenue, increased to 10.3% for the
three months ended March 31, 2002, compared to 9.1% for the comparable period of
the prior year. This increase is primarily attributable to the hospitals
acquired in the last six months of 2001. Also, temporary outside vendors are
being utilized to assist with accounts receivable management, resulting in
aggressive collection efforts and reduction in accounts receivable days.
Supplies were $19.7 million, or 11.9% of net operating revenue, for the three
months ended March 31, 2002, compared to $13.8 million, or 11.3% of net
operating revenue, for the comparable period of 2001, due to the hospitals
acquired in 2001. The provision for doubtful accounts was 8.9% of net operating
revenue for the three months ended March 31, 2002 and 2001.

EBITDA was $31.3 million, or 18.9% of net operating revenue, for the
three months ended March 31, 2002, compared to $24.1 million, or 19.7% of net
operating revenue, for the

12



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comparable period of 2001, primarily as a result of
improved operations at hospitals owned during both periods.

Depreciation and amortization expense was $7.6 million, or 4.6% of net
operating revenue, for the three months ended March 31, 2002, compared to $6.7
million, or 5.5% of net operating revenue for the comparable period of 2001. The
increase in depreciation and amortization resulted primarily from capital
expenditures at hospitals owned during both periods, offset by a decrease in
amortization expense related to our adoption of SFAS No. 142.

Interest expense was $4.2 million for the three months ended March 31,
2002, compared to $2.6 million for the comparable period of 2001, an increase of
$1.6 million or 60.0%, primarily related to interest on the 4 1/2% Convertible
Subordinated Notes issued in October 2001.

Income before provision for income taxes was $19.5 million for the
three months ended March 31, 2002, compared to $14.7 million for the comparable
period of 2001, an increase of $4.8 million or 32.8%.

Our provision for income taxes was $7.8 million for the three months
ended March 31, 2002, compared to $6.2 million for the comparable period of
2001. These provisions reflect effective income tax rates of 40% for the 2002
period, compared to 42% for the 2001 period.

As a result of the foregoing, our net income was $11.7 million, or 7.1%
of net operating revenue, for the three months ended March 31, 2002, compared to
$8.5 million, or 6.9% of net operating revenue for the comparable period of
2001. The comparison of net income for the three months ended March 31, 2002,
to the comparable period of 2001, was materially impacted by the
adoption of Statement of Financial Accounting Standards No. 142, effective
January 1, 2002, which requires that goodwill no longer be amortized.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2002, we had working capital of $130.0 million, including
cash and cash equivalents of $46.1 million. The ratio of current assets to
current liabilities was 3.1 to 1.0 at March 31, 2002, and 3.7 to 1.0 at December
31, 2001.

Cash provided by operations was $23.5 million for the three months
ended March 31, 2002. Cash used in investing activities was $15.9 million for
the three months ended March 31, 2002, relating primarily to capital
expenditures. Net cash used in financing activities was $0.8 million for the
three months ended March 31, 2002, primarily as a result of net repayments under
our revolving credit facility and issuance of common stock through exercises of
stock options and through the Employee Stock Purchase Plan.

Total long-term obligations, less current maturities, increased to
$369.1 million at March 31, 2002, from $330.8 million at December 31, 2001. The
increase resulted primarily from the $40.2 million in long-term debt related to
the properties financed under our amended end-loaded lease facility.

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On April 30, 2002, we effected a three-for-two stock split, in the form
of a 50% stock dividend, to stockholders of record on April 20, 2002. All
historical references to common share and earnings per share amounts included in
this Report and in our condensed consolidated
financial statements and notes thereto have been restated to reflect the
three-for-two split.

We intend to acquire additional acute care facilities, and are actively
seeking out such acquisitions. There can be no assurance that we will not
require additional debt or equity financing for any particular acquisition.
Also, we continually review our capital needs and financing opportunities and
may seek additional equity or debt financing for our acquisition program or
other needs.

In April 2002, we filed a shelf registration statement on Form S-3 with
the Securities and Exchange Commission (SEC) providing for the offer, from
time to time, of common stock and debt securities, up to an aggregate of $300.0
million. Once declared effective by the SEC, the shelf registration statement
will enable us to raise funds from the offering of any individual securities
covered by the shelf registration statement as well as any combination thereof,
subject to market conditions and our capital needs.

Capital expenditures, excluding acquisitions, for the three months
ended March 31, 2002 and 2001, were $15.6 million and $12.7 million,
respectively, inclusive of construction projects. Capital expenditures for the
owned hospitals may vary from year to year depending on facility improvements
and service enhancements undertaken by the hospitals. We expect to make total
capital expenditures in 2002 of approximately $27.4 million, exclusive of any
acquisitions of businesses. Planned capital expenditures for 2002 consist
principally of capital improvements to owned and leased hospitals. We expect to
fund these expenditures through cash provided by operating activities and
borrowings under our revolving credit facility.

CRITICAL ACCOUNTING POLICIES AND IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

Critical accounting policies were disclosed in our Annual Report on
Form 10-K for the year ended December 31, 2001. There have been no changes in
those policies since year end.

Effective January 1, 2002, we adopted Statement of Financial Accounting
Standards No. 142 (SFAS No. 142), Goodwill and Other Intangible Assets. Under the new
rules in SFAS No. 142, goodwill and indefinite lived intangible assets are no
longer amortized, but are subject to annual impairment tests, or more frequently
if certain indicators arise. We have no intangible assets, other than goodwill.

We applied the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
nonamortization provisions of SFAS No. 142 is expected to result in an increase
in net income of approximately $4.4 million ($0.09 per share) per year.
Amortization, net of tax, totaled $1.1 million for the three months ended March
31, 2001. The first of the required impairment tests of goodwill as of January
1, 2002, will be completed prior to the end of the second quarter of 2002, and
we do not expect the results of these tests to have a significant effect on
operations or financial position.

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MARKET RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS

Our interest expense is sensitive to changes in the general level of
interest rates. To mitigate the impact of fluctuations in interest rates, we
generally maintain 50%  75% of our debt at a fixed rate, either by
borrowings on a long-term basis or entering into an interest rate swap.

At March
31, 2002, approximately 100% of our outstanding debt amounts were effectively at
a fixed rate. Our interest rate swap contract allows us to periodically exchange
fixed rate and floating rate payments over the life of the agreement.
Floating-rate payments are based on LIBOR and fixed-rate payments are dependent
upon market levels at the time the interest rate swap was consummated. Our
interest rate swap is a cash flow hedge, which effectively converts an aggregate
notional amount of $28.5 million of floating rate borrowings to fixed rate
borrowings at March 31, 2002. Our policy is not to hold or issue derivatives for
trading purposes and to avoid derivatives with leverage features. We are exposed
to credit losses in the event of nonperformance by the counterparty to the
financial instrument. We anticipate that the counterparty will fully satisfy its
obligations under the contract.

GENERAL

The Medicare program accounted for approximately 57.5% and 55.1% of
hospital patient days for the three months ended March 31, 2002 and 2001,
respectively. The Medicaid programs accounted for approximately 19.1% and 18.3%
of hospital patient days for the three months ended March 31, 2002 and 2001,
respectively. The payment rates under the Medicare program for inpatients are
prospective, based upon the diagnosis of a patient. The Medicare payment rate
increases historically have been less than actual inflation.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires us to make estimates
and assumptions that affect the amounts reported in our financial statements.
Resolution of matters, for example, final settlements with third party payors,
may result in changes from those estimates. The timing and amount of such
changes in estimates may cause fluctuations in our quarterly or annual operating
results.

FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this report contain some forward-looking
statements. Forward-looking statements give our current expectations or
forecasts of future events. You can identify these statements by the fact that
they do not relate strictly to historical or current facts. Such statements may
include words such as anticipate, estimate, expect, project, intend,
plan, believe and other words and terms of similar meaning in connection
with any discussion of future operating or financial performance. Any or all of
our forward-looking statements in this report may turn out to be wrong. They can
be affected by inaccurate assumptions we might make or by known or unknown risks
and uncertainties. Many factors mentioned in our discussion in this report will
be important in determining future results. Consequently, no forward-looking
statement can be guaranteed. Actual future results may vary materially. Factors
that may cause our plans, expectations, future financial condition and results
to change include, but are not limited to:

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| |  |  | the highly competitive nature of the healthcare business;                                                                                                     
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the efforts of insurers, healthcare providers and others to contain
healthcare costs;                                                                         
|
| |  |  | the financial condition of managed care organizations that pay us for
healthcare services;                                                                    
|
| |  |  | possible changes in the levels and terms of reimbursement for our
charges by government programs, including Medicare and Medicaid or other
third-party payors;
|
| |  |  | changes in or failure to comply with federal, state or local laws and
regulations affecting the healthcare industry;                                          
|
| |  |  | the possible enactment of federal or state healthcare reform;                                                                                                 
|
| |  |  | the departure of key members of our management;                                                                                                               
|
| |  |  | claims and legal actions relating to professional liability;                                                                                                  
|
| |  |  | our ability to implement successfully our acquisition and development
strategy;                                                                               
|
| |  |  | our ability to attract and retain qualified personnel and recruit
physicians;                                                                                 
|
| |  |  | potential federal or state investigations;                                                                                                                    
|
| |  |  | fluctuations in the market value of our common stock or notes;                                                                                                
|
| |   |  | changes in accounting principles generally accepted in the United States
or in our critical accounting policies;                                              
|
| |  |  | changes in demographic, general economic and business conditions, both
nationally and in the regions in which we operate; and                                 
|
| |  |  | other risks described in this report.                                                                                                                         

Except as required by law, we undertake no obligation to publicly
update any forward-looking statements, whether as a result of new information,
future events or otherwise. You are advised, however, to consult any additional
disclosures we make in our Form 10-K, 10-Q and 8-K reports to the Securities and
Exchange Commission, as well as the discussion of risks and uncertainties under
the caption Risk Factors contained in our Registration Statement on Form S-3,
filed with the Securities and Exchange Commission on December 20, 2001,
effective as of January 16, 2002 (Commission File No. 333-75646), and any
amendments to such registration statement. These are factors that we think could
cause our actual results to differ materially from expected results. Other
factors besides those listed here also could affect us adversely. This
discussion is provided as permitted by the Private Securities Litigation Reform
Act of 1995.

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##### Table of Contents






ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the three months ended March 31, 2002, there were no material
changes in the quantitative and qualitative disclosures about market risks
presented in our Annual Report on Form 10-K for the year ended December 31,
2001. Our only derivative instrument relates to an interest rate swap agreement.

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##### Table of Contents



PART II
OTHER INFORMATION

Item 5. Other Information

The deadline for delivering your notice of a shareholder proposal,
other than a proposal to be included in the proxy statement, for the 2003 annual
meeting of shareholders will be March 7, 2003, pursuant to Rule 14a-4 under the
Securities Exchange Act of 1934. The persons named as proxies in the proxy
statement may exercise discretionary voting authority with respect to any matter
that is not submitted to us by such date.

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Number  |  | Description of Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.1     |  | Amended and Restated Certificate of Incorporation of Province Healthcare Company, as
filed with the Delaware Secretary of State on June 16, 2000 (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       
|       
|       
|       
|3.2     |  | Amended and Restated Bylaws of Province Healthcare Company (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       
|       
|       
|       
|4.1     |  | Amendment No. 1 to Certain Operative Agreements dated
as of March 29, 2002, among Province Healthcare
Company, as the Lessee and as the Construction Agent,
the various parties thereto from time to time, as
guarantors, Wells Fargo Bank Northwest, National
Association (formerly known as First Security Bank,
National Association), as the Owner Trustee, the
various banks and other lending institutions which
are parties thereto from time to time, as holders,
the various banks and lending institutions which are
parties thereto from time to time, as lenders and
First Union National Bank, as the agent for the
Lenders and respecting the Security Documents, as the
agent for the Lenders and the Holders, to the extent
of their interests. *



---

|(a) |  | Incorporated by reference to the exhibits filed with the Registrants Quarterly Report
filed on Form 10-Q, for the quarterly period ended June 30, 2000, Commission File No.
0-23639.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Incorporated by reference to the exhibits filed with the Registrants Registration
Statement on Form S-1, Registration No. 333-34421.                                                
|   
|*   |  | filed herewith                                                                                                                                                                       

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##### Table of Contents



(b)  Reports on Form 8-K

During the three months ended March 31, 2002, we filed the following
reports on Form 8-K:



| |                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Form 8-K, filed on February 27, 2002, with respect to the announcement of the
appointment of John M. Rutledge, Stephen M. Ray and David R. Klock to the Board of
Directors.                                                                                                                                                                            
|
| | (ii) Form 8-K, filed on March 25, 2002, with respect to
the announcement of a definitive agreement to acquire
substantially all of the assets of Los Alamos Medical
Center in Los Alamos, New Mexico and a definitive
agreement to acquire substantially all of the assets
of Memorial Hospital of Martinsville and Henry County
in Martinsville, Virginia.

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##### Table of Contents



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                   |  |  |  |                             |  |                                                                   
|------------------ |  |  |  | --------------------------- |  | ------------------------------------------------------------------
|                   |  |  |  | PROVINCE HEALTHCARE COMPANY
|                  
|Date: May 14, 2002 |  |  |  | By:                         |  | /s/ Brenda B. RectorBrenda B. Rector
Vice President and Controller

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