UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

 

(Mark One)
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to         

Commission file number: 000-51251

 

LifePoint Hospitals, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware		20-1538254
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

103 Powell Court Brentwood, Tennessee		37027
(Address Of Principal Executive Offices)		(Zip Code)

(615) 372-8500

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of October 19, 2012, the number of outstanding shares of the registrant’s Common Stock was 49,348,523.

TABLE OF CONTENTS

LifePoint Hospitals, Inc.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements			1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			33
Item 3. Quantitative and Qualitative Disclosures About Market Risk			61
Item 4. Controls and Procedures			62
PART II – OTHER INFORMATION
Item 1. Legal Proceedings			63
Item 1A. Risk Factors			64
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			64
Item 5. Other Information			65
Item 6. Exhibits			66

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

LIFEPOINT HOSPITALS, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In millions, except per share amounts)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2012				2011				2012				2011
Revenues before provision for doubtful accounts		$	984.9			$	866.2			$	2,963.1			$	2,628.2
Provision for doubtful accounts			164.7				127.0				464.6				383.4
Revenues			820.2				739.2				2,498.5				2,244.8
Salaries and benefits			390.3				337.8				1,130.2				1,011.2
Supplies			129.3				113.9				382.7				346.7
Other operating expenses			205.3				171.1				589.5				495.8
Other income			(12.0	)			(11.0	)			(14.7	)			(15.2	)
Depreciation and amortization			47.7				40.7				139.7				121.0
Interest expense, net			24.5				24.3				75.7				81.6
Debt extinguishment costs			4.4				—				4.4				—
Impairment charge			—				—				3.1				—
			789.5				676.8				2,310.6				2,041.1
Income from continuing operations before income taxes			30.7				62.4				187.9				203.7
Provision for income taxes			11.4				22.8				69.8				76.5
Income from continuing operations			19.3				39.6				118.1				127.2
(Loss) income from discontinued operations, net of income taxes			—				(0.1	)			0.2				0.2
Net income			19.3				39.5				118.3				127.4
Less: Net income attributable to noncontrolling interests			(0.1	)			(0.7	)			(2.7	)			(2.2	)
Net income attributable to LifePoint Hospitals, Inc.		$	19.2			$	38.8			$	115.6			$	125.2
Basic earnings per share attributable to LifePoint Hospitals, Inc. stockholders:
Continuing operations		$	0.40			$	0.79			$	2.44			$	2.49
Discontinued operations			—				—				0.01				0.01
Net income		$	0.40			$	0.79			$	2.45			$	2.50
Diluted earnings per share attributable to LifePoint Hospitals, Inc. stockholders:
Continuing operations		$	0.39			$	0.77			$	2.38			$	2.43
Discontinued operations			—				—				—				0.01
Net income		$	0.39			$	0.77			$	2.38			$	2.44
Weighted average shares and dilutive securities outstanding:
Basic			47.5				49.3				47.3				50.2
Diluted			48.8				50.4				48.5				51.4
Amounts attributable to LifePoint Hospitals, Inc. stockholders:
Income from continuing operations, net of income taxes		$	19.2			$	38.9			$	115.4			$	125.0
(Loss) income from discontinued operations, net of income taxes			—				(0.1	)			0.2				0.2
Net income		$	19.2			$	38.8			$	115.6			$	125.2

 
 
See accompanying notes

TABLE OF CONTENTS

LIFEPOINT HOSPITALS, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited
(In millions)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2012				2011				2012				2011
Net income		$	19.3			$	39.5			$	118.3			$	127.4
Other comprehensive income, net of income taxes:
Unrealized (losses) gains on changes in fair value of interest rate swap, net of income tax provision of $2.8 for the nine months ended September 30, 2011			—				(1.1	)			—				4.0
Other comprehensive income			—				(1.1	)			—				4.0
Comprehensive income			19.3				38.4				118.3				131.4
Less: Net income attributable to noncontrolling interests			(0.1	)			(0.7	)			(2.7	)			(2.2	)
Comprehensive income attributable to LifePoint Hospitals, Inc.		$	19.2			$	37.7			$	115.6			$	129.2

 
 
See accompanying notes

TABLE OF CONTENTS

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

		September 30, 2012				December 31, 2011(a)
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	97.9			$	126.2
Accounts receivable, less allowances for doubtful accounts of $633.1 and $537.4 at September 30, 2012 and December 31, 2011, respectively			512.9				430.6
Inventories			96.0				87.2
Prepaid expenses			29.0				26.4
Income taxes receivable			—				1.6
Deferred tax assets			154.2				125.7
Other current assets			44.6				42.3
			934.6				840.0
Property and equipment:
Land			102.4				93.5
Buildings and improvements			1,802.8				1,631.6
Equipment			1,200.1				1,084.0
Construction in progress (estimated costs to complete and equip after September 30, 2012 is $64.2)			104.6				105.7
			3,209.9				2,914.8
Accumulated depreciation			(1,210.1	)			(1,084.4	)
			1,999.8				1,830.4
Deferred loan costs, net			22.7				21.7
Intangible assets, net			87.0				89.5
Other			38.9				19.8
Goodwill			1,602.2				1,568.7
Total assets		$	4,685.2			$	4,370.1
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	113.8			$	99.6
Accrued salaries			122.4				103.1
Income taxes payable			8.1				—
Other current liabilities			171.8				168.2
Current maturities of long-term debt			13.6				1.9
			429.7				372.8
Long-term debt			1,650.6				1,595.4
Deferred income tax liabilities			236.8				259.0
Long-term portion of reserves for self-insurance claims			133.1				118.3
Other long-term liabilities			69.8				20.8
Long-term income tax liability			17.9				18.0
Total liabilities			2,537.9				2,384.3
Redeemable noncontrolling interests			29.0				26.2
Equity:
LifePoint Hospitals, Inc. stockholders' equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized; no shares issued			—				—
Common stock, $0.01 par value; 90,000,000 shares authorized; 64,428,726 and 63,233,088 shares issued at September 30, 2012 and December 31, 2011, respectively			0.6				0.6
Capital in excess of par value			1,395.4				1,354.8
Retained earnings			1,182.5				1,066.9
Common stock in treasury, at cost, 15,083,845 and 14,925,875 shares at September 30, 2012 and December 31, 2011, respectively			(483.3	)			(477.1	)
Total LifePoint Hospitals, Inc. stockholders' equity			2,095.2				1,945.2
Noncontrolling interests			23.1				14.4
Total equity			2,118.3				1,959.6
Total liabilities and equity		$	4,685.2			$	4,370.1

 
 
See accompanying notes

TABLE OF CONTENTS

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

		Three Months Ended September 30,								Nine Months Ended September 30,
		2012				2011				2012				2011
Cash flows from operating activities:
Net income		$	19.3			$	39.5			$	118.3			$	127.4
Adjustments to reconcile net income to net cash provided by operating activities:
Loss (income) from discontinued operations			—				0.1				(0.2	)			(0.2	)
Stock-based compensation			7.0				6.4				20.3				17.7
Depreciation and amortization			47.7				40.7				139.7				121.0
Amortization of physician minimum revenue guarantees			4.9				5.0				14.7				14.3
Amortization of convertible debt discounts			6.5				6.1				19.2				18.0
Amortization of deferred loan costs			1.3				1.4				4.2				4.4
Debt extinguishment costs			4.4				—				4.4				—
Impairment charge			—				—				3.1				—
Deferred income tax benefit			(9.4	)			(15.3	)			(48.0	)			(34.7	)
Reserve for self-insurance claims, net of payments			1.8				2.7				(1.0	)			9.7
Increase (decrease) in cash from operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable			(6.7	)			(9.4	)			(42.4	)			(0.1	)
Inventories and other current assets			(9.5	)			(9.8	)			(2.2	)			(17.8	)
Accounts payable and accrued expenses			40.3				8.6				22.2				(2.6	)
Income taxes payable/receivable			(22.9	)			37.0				9.7				63.6
Other			(0.4	)			(3.0	)			0.3				(2.4	)
Net cash provided by operating activities –  continuing operations			84.3				110.0				262.3				318.3
Net cash (used in) provided by operating activities – discontinued operations			—				—				(0.7	)			0.2
Net cash provided by operating activities			84.3				110.0				261.6				318.5
Cash flows from investing activities:
Purchases of property and equipment			(47.3	)			(49.3	)			(157.4	)			(153.8	)
Acquisitions, net of cash acquired			(162.3	)			(36.6	)			(182.4	)			(63.1	)
Other			(0.1	)			(0.3	)			(0.4	)			(1.2	)
Net cash used in investing activities			(209.7	)			(86.2	)			(340.2	)			(218.1	)
Cash flows from financing activities:
Proceeds from borrowings			490.0				—				490.0				—
Payments of borrowings			(443.7	)			(0.1	)			(443.7	)			(0.1	)
Repurchases of common stock			(0.3	)			(99.4	)			(6.2	)			(141.2	)
Payment of debt financing costs			(9.6	)			(0.3	)			(9.6	)			(0.4	)
Proceeds from exercise of stock options			15.9				0.1				21.4				34.6
Proceeds from employee stock purchase plans			0.8				0.6				1.3				1.2
Distributions to noncontrolling interests			(1.4	)			(0.8	)			(2.8	)			(1.4	)
Sales of redeemable noncontrolling interests			—				—				1.6				—
Capital lease payments and other			(0.7	)			(0.3	)			(1.7	)			(1.1	)
Net cash provided by (used in) financing activities			51.0				(100.2	)			50.3				(108.4	)
Change in cash and cash equivalents			(74.4	)			(76.4	)			(28.3	)			(8.0	)
Cash and cash equivalents at beginning of period			172.3				275.8				126.2				207.4
Cash and cash equivalents at end of period		$	97.9			$	199.4			$	97.9			$	199.4
Supplemental disclosure of cash flow information:
Interest payments		$	7.0			$	21.0			$	43.8			$	65.0
Capitalized interest		$	0.6			$	0.5			$	1.9			$	1.3
Income tax payments, net		$	43.7			$	1.2			$	108.3			$	47.8

 
 
See accompanying notes

TABLE OF CONTENTS

LIFEPOINT HOSPITALS, INC.
  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

		LifePoint Hospitals, Inc. Stockholders
		Common Stock								Capital in Excess of Par Value				Retained Earnings				Treasury Stock				Noncontrolling Interests				Total
		Shares				Amount
Balance at December 31, 2011(a)			48.3			$	0.6			$	1,354.8			$	1,066.9			$	(477.1	)		$	14.4			$	1,959.6
Net income			—				—				—				115.6				—				2.7				118.3
Exercise of stock options and tax benefits of stock-based awards			0.7				—				24.2				—				—				—				24.2
Stock activity in connection with employee stock purchase plan			0.1				—				1.3				—				—				—				1.3
Stock-based compensation			0.5				—				20.3				—				—				—				20.3
Repurchases of common stock, at cost			(0.2	)			—				—				—				(6.2	)			—				(6.2	)
Noncash change in noncontrolling interests as a result of acquisition and other			—				—				(5.2	)			—				—				8.8				3.6
Cash distributions to noncontrolling interests			—				—				—				—				—				(2.8	)			(2.8	)
Balance at September 30, 2012			49.4			$	0.6			$	1,395.4			$	1,182.5			$	(483.3	)		$	23.1			$	2,118.3

 
 
See accompanying notes

TABLE OF CONTENTS

LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 1. Organization and Basis of Presentation

Organization

LifePoint Hospitals, Inc., a Delaware corporation, acting through its subsidiaries, operates general acute care hospitals primarily in non-urban communities in the United States (“U.S.”). Unless the context otherwise indicates, LifePoint Hospitals, Inc. and its subsidiaries are referred to herein as the “Company.” At September 30, 2012, on a consolidated basis, the Company operated 56 hospital campuses in 19 states. Unless noted otherwise, discussions in these notes pertain to the Company’s continuing operations, which exclude the results of those facilities that have previously been disposed.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) 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 notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, and disclosures considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Note 2. Revenue Recognition and Accounts Receivable

The Company recognizes revenues in the period in which services are performed. Accounts receivable primarily consist of amounts due from third-party payors and patients. The Company’s ability to collect outstanding receivables is critical to its results of operations and cash flows. Amounts the Company receives for treatment of patients covered by governmental programs such as Medicare and Medicaid and other third-party payors such as health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”) and other private insurers are generally less than the Company’s established billing rates. Additionally, to provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for doubtful accounts to reduce the carrying value of such receivables to their estimated net realizable value. Accordingly, the revenues and accounts receivable reported in the Company’s accompanying unaudited condensed consolidated financial statements are recorded at the net amount expected to be received.

On April 5, 2012, a settlement agreement (the “Rural Floor Settlement”) was signed between the U.S. Department of Health and Human Services (“HHS”), the Secretary of HHS, the Centers for Medicare and Medicaid Services (“CMS”) and a large number of healthcare service providers, including the Company’s hospitals. The Rural Floor Settlement is intended to resolve all claims that have been brought or could have been brought relating to CMS’s calculation of the rural floor budget neutrality adjustment that was created by the Balanced Budget Act of 1997 from federal fiscal year 1998 through and including federal fiscal year 2011 for healthcare service providers that participated in certain court cases and group appeals. As a result of the Rural Floor Settlement, the Company recognized $33.0 million of additional Medicare revenue during the nine months ended September 30, 2012.

TABLE OF CONTENTS

LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 2. Revenue Recognition and Accounts Receivable  – (continued)

The Company’s revenues before provision for doubtful accounts by payor and approximate percentages of revenues were as follows for the three and nine months ended September 30, 2012 and 2011 (in millions):

		Three Months Ended September 30,																Nine Months Ended September 30,
		2012								2011								2012								2011
		Amount				% of Revenues				Amount				% of Revenues				Amount				% of Revenues				Amount				% of Revenues
Medicare		$	279.2				34.0	%		$	251.9				34.1	%		$	881.3				35.3	%		$	788.5				35.1	%
Medicaid			124.7				15.2				108.4				14.7				362.6				14.5				324.5				14.5
HMOs, PPOs and other private insurers			397.8				48.5				356.2				48.2				1,191.6				47.7				1,066.3				47.5
Self-pay			170.4				20.8				138.6				18.7				491.1				19.7				419.4				18.7
Other			12.8				1.6				11.1				1.5				36.5				1.4				29.5				1.3
Revenues before provision for doubtful accounts			984.9				120.1				866.2				117.2				2,963.1				118.6				2,628.2				117.1
Provision for doubtful accounts			(164.7	)			(20.1	)			(127.0	)			(17.2	)			(464.6	)			(18.6	)			(383.4	)			(17.1	)
Revenues		$	820.2				100.0	%		$	739.2				100.0	%		$	2,498.5				100.0	%		$	2,244.8				100.0	%

The primary uncertainty of the Company’s accounts receivable lies with uninsured patient receivables and deductibles, co-payments or other amounts due from individual patients. The Company has an established process to determine the adequacy of the allowance for doubtful accounts that relies on a number of analytical tools and benchmarks to arrive at a reasonable allowance. No single statistic or measurement determines the adequacy of the allowance for doubtful accounts. Some of the analytical tools that the Company utilizes include, but are not limited to, historical cash collection experience, revenue trends by payor classification and revenue days in accounts receivable. Accounts receivable are written off after collection efforts have been followed in accordance with the Company’s policies.

The following is a summary of the Company’s activity in the allowance for doubtful accounts for the nine months ended September 30, 2012 (in millions):

Balance at January 1, 2012		$	537.4
Additions recognized as a reduction to revenues			464.6
Accounts written off, net of recoveries			(368.9	)
Balance at September 30, 2012		$	633.1

The allowances for doubtful accounts as a percent of gross accounts receivable, net of contractual discounts were 55.2% and 55.5% as of September 30, 2012 and December 31, 2011, respectively. Additionally, as of September 30, 2012 and December 31, 2011, the allowances for doubtful accounts plus certain contractual allowances related to self-pay patients as a percentage of self-pay receivables were 85.5% and 86.7%, respectively.

TABLE OF CONTENTS

LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 3. General and Administrative Costs

The majority of the Company’s expenses are “cost of revenue” items. Costs that could be classified as “general and administrative” by the Company would include its hospital support center overhead costs, which were $44.2 million and $35.4 million for the three months ended September 30, 2012 and 2011, respectively, and $127.9 million and $99.1 million for the nine months ended September 30, 2012 and 2011, respectively. Included in the Company’s hospital support center overhead costs are the transactional expenses related to the Company’s recent acquisitions, including legal and consulting fees. See Note 5 for a further discussion of the Company’s recent acquisition activity.

Note 4. Fair Value of Financial Instruments

In accordance with Accounting Standards Codification (“ASC”) 825-10, “Financial Instruments” and ASC 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), the fair value of the Company’s financial instruments are further described as follows.

Cash and Cash Equivalents, Accounts Receivable and Accounts Payable

The carrying amounts reported in the accompanying unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term maturity of these instruments.

Long-Term Debt

The carrying amounts and fair values of the Company’s senior secured term loan facility (the “Term Facility”) and senior secured revolving credit facility (the “Revolving Facility”) under its senior secured credit agreement with, among others, Citibank, N.A. (“Citibank”), as administrative agent, and the lenders party thereto (the “Senior Credit Agreement”), term B loans (the “Term B Loans”) under its prior credit agreement with Citicorp North America, Inc., as administrative agent and a syndicate of lenders (the “Prior Credit Agreement”), 6.625% unsecured senior notes due October 1, 2020 (the “6.625% Senior Notes”), 3½% convertible senior subordinated notes due May 15, 2014 (the “3½% Notes”) and 3¼% convertible senior subordinated debentures due August 15, 2025 (the “3¼% Debentures”) as of September 30, 2012 and December 31, 2011 were as follows (in millions):

		Carrying Amount								Fair Value
		September 30, 2012				December 31, 2011				September 30, 2012				December 31, 2011
Term Facility		$	450.0			$	—			$	443.3			$	—
Revolving Facility		$	40.0			$	—			$	37.6			$	—
Term B Loans		$	—			$	443.7			$	—			$	432.6
6.625% Senior Notes		$	400.0			$	400.0			$	430.0			$	413.0
3½% Notes, excluding unamortized discount		$	575.0			$	575.0			$	621.0			$	592.3
3¼% Debentures, excluding unamortized discount		$	225.0			$	225.0			$	225.6			$	230.3

The fair values of the Term Facility, the Revolving Facility, the Term B Loans and the 6.625% Senior Notes were estimated based on the average bid and ask price as determined using published rates and categorized as Level 2 within the fair value hierarchy in accordance with ASC 820-10. The fair values of the 3½% Notes and the 3¼% Debentures were estimated based on the quoted market prices determined using the closing share price of the Company’s common stock and categorized as Level 1 within the fair value hierarchy in accordance with ASC 820-10. Effective July 24, 2012, the Company repaid the $443.7 million outstanding Term B Loans with the issuance of the $450.0 million Term Facility, as more fully discussed in Note 7.

TABLE OF CONTENTS

LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 5. Acquisitions

Effective September 1, 2012, the Company, through Duke LifePoint Healthcare, a joint venture in which the Company owns a controlling interest between the Company and a wholly-controlled affiliate of Duke University Health System, Inc., acquired Marquette General Health System (“Marquette General”), a 315 bed hospital system located in Marquette, Michigan for cash consideration of approximately $132.7 million, including net working capital. The Company committed to invest in Marquette General $350.0 million in capital expenditures and improvements as well as for the continuation of existing or initiation of new physician recruiting activities over the next ten years, subject to certain offsets. The aggregate remaining capital and physician recruitment commitment as of September 30, 2012 was $321.7 million. The results of operations of Marquette General are included in the Company’s results of operations beginning on September 1, 2012.

The fair values assigned to certain assets and liabilities assumed by the Company have been prepared on a preliminary basis and are subject to change as new facts and circumstances emerge. Specifically, the Company is further assessing the valuation of acquired property and equipment, accounts receivable and certain equity investments as well as certain assumed and contingent obligations. The Company expects to finalize its analyses during the fourth quarter of 2012 or as the necessary information becomes available to complete the measurement process. Once finalized, the Company will adjust the purchase price allocations to reflect its final valuations. The preliminary fair values assigned to Marquette General’s assets acquired and liabilities assumed at the date of acquisition were as follows (in millions):

Current assets		$	50.4
Property and equipment			114.7
Other assets			16.6
Goodwill			22.2
Total assets acquired, excluding cash			203.9
Current liabilities			32.1
Other long-term liabilities			39.1
Total liabilities assumed			71.2
Net assets acquired		$	132.7

In connection with the acquisition of Marquette General, the Company agreed, pursuant to the asset purchase agreement that Marquette General Hospital, Inc. (the “Marquette Seller”) would receive net proceeds of $23.0 million at the closing of the transaction. To the extent that the Marquette Seller’s satisfaction of its retained liabilities causes its net proceeds to be reduced to less than $15.0 million, the Company has agreed to pay additional purchase consideration to the Marquette Seller.

As a result of the $15.0 million net proceeds requirement, the Company does not believe that the Marquette Seller will have sufficient funds available to fully satisfy all of its retained liabilities. As such, based on facts that existed as of the acquisition date, the Company’s management made reasonable estimates and recorded an aggregate of $25.3 million representing the preliminary fair values of its potential obligation to the Marquette Seller. This $25.3 million of contingent obligations (“Marquette Contingent Obligations”) consists primarily of pre-acquisition healthcare liabilities. The Company will continue to analyze and refine its estimate as changes in facts and circumstances warrant. The Company’s management does not control and cannot predict with certainty the progress or final outcome of any discussions with third parties, such as government agencies. Therefore, the final amounts paid in settlement of the pre-acquisition healthcare and other retained liabilities, if any, could materially differ from amounts currently recorded.

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September 30, 2012
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Note 5. Acquisitions  – (continued)

To the extent the Company is required to pay additional purchase consideration pursuant to the information described above, the amounts paid will reduce, on a dollar-for-dollar basis, the remaining $321.7 million of the initial $350.0 million capital improvements and physician recruitment commitment at Marquette General.

The Company also recorded a pension benefit obligation of $20.5 million relating to the assumed portion of Marquette General’s defined benefit pension plan. The Company’s estimate of its Marquette Contingent Obligations, its pension benefit obligation and other amounts are included in the Company’s preliminary fair values assigned at the date of acquisition of Marquette General, and these liabilities are reflected in the Company’s accompanying condensed consolidated balance sheet at September 30, 2012 under the captions “Other current liabilities” and “Other long-term liabilities”.

During the three months ended September 30, 2012 and as a result of the Marquette General acquisition, the Company recognized approximately $0.1 million in net pension plan expense related to the assumed portion of Marquette General’s defined benefit pension plan. The Company expects to contribute approximately $0.2 million to the pension plan trust during the fourth quarter of 2012 to comply with applicable pension funding regulations and laws.

Effective July 1, 2012, the Company acquired Woods Memorial Hospital (“Woods Memorial”), a 72 bed hospital and an 88 bed long-term care facility located in Etowah, Tennessee for approximately $17.7 million, including net working capital. The results of operations of Woods Memorial are included in the Company’s results of operations beginning on July 1, 2012.

Effective April 1, 2012, the Company, through Duke LifePoint Healthcare, acquired an 80% interest in Twin County Regional Hospital (“Twin County”), a 141 bed hospital located in Galax, Virginia for approximately $20.0 million, including 80% of the net working capital. The Company has committed to invest in Twin County an additional $20.0 million in capital expenditures and improvements over the next ten years as well as an additional $3.0 million for the continuation of existing or initiation of new physician recruiting activities over the next five years. The results of operations of Twin County are included in the Company’s results of operations beginning April 1, 2012.

Additionally, during the nine months ended September 30, 2012, the Company completed certain ancillary service-line acquisitions, including physician practices, totaling $12.0 million.

Note 6. Goodwill and Intangible Assets

Goodwill

The Company accounts for its acquisitions in accordance with ASC 805-10, “Business Combinations” using the acquisition method of accounting. Goodwill represents the excess of the cost of an acquired entity over the net amounts assigned to assets acquired and liabilities assumed. In accordance with ASC 350-10, “Intangibles — Goodwill and Other” goodwill and intangible assets with indefinite lives are reviewed by the Company at least annually for impairment. The Company’s business comprises a single operating reporting unit for impairment test purposes. For the purposes of these analyses, the Company’s estimates of fair value are based on a combination of the income approach, which estimates the fair value of the Company based on its future discounted cash flows, and the market approach, which estimates the fair value of the Company based on comparable market prices. The Company performed its most recent annual impairment test as of October 1, 2011 and did not incur an impairment charge.

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September 30, 2012
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Note 6. Goodwill and Intangible Assets  – (continued)

Intangible Assets

Summary of Intangible Assets

The following table provides information regarding the Company’s intangible assets, which are included in the accompanying unaudited condensed consolidated balance sheets at September 30, 2012 and December 31, 2011 (in millions):

		September 30, 2012				December 31, 2011
Amortized intangible assets:
Contract-based physician minimum revenue guarantees
Gross carrying amount		$	97.5			$	92.5
Accumulated amortization			(55.7	)			(48.7	)
Net total			41.8				43.8
Non-competition agreements
Gross carrying amount			34.8				32.8
Accumulated amortization			(18.7	)			(15.2	)
Net total			16.1				17.6
Other amortized intangible assets
Gross carrying amount			2.4				2.4
Accumulated amortization			(1.2	)			(0.3	)
Net total			1.2				2.1
Total amortized intangible assets
Gross carrying amount			134.7				127.7
Accumulated amortization			(75.6	)			(64.2	)
Net total			59.1				63.5
Indefinite-lived intangible assets:
Certificates of need and certificates of need exemptions			24.8				23.9
Licenses, provider numbers, accreditations and other			3.1				2.1
Net total			27.9				26.0
Total intangible assets:
Gross carrying amount			162.6				153.7
Accumulated amortization			(75.6	)			(64.2	)
Net total		$	87.0			$	89.5

Contract-Based Physician Minimum Revenue Guarantees

The Company has committed to provide certain financial assistance pursuant to recruiting agreements, or “physician minimum revenue guarantees,” with various physicians practicing in the communities it serves. In consideration for a physician relocating to one of its communities and agreeing to engage in private practice for the benefit of the respective community, the Company may advance certain amounts of money to a physician to assist in establishing his or her practice.

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September 30, 2012
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Note 6. Goodwill and Intangible Assets  – (continued)

The Company accounts for its physician minimum revenue guarantees in accordance with the provisions of ASC 460-10, “Guarantees” (“ASC 460-10”). In accordance with ASC 460-10, the Company records a contract-based intangible asset and a related guarantee liability for new physician minimum revenue guarantees. The contract-based intangible asset is amortized over the period of the physician contract, which typically ranges from four to five years and is included as an expense under the caption “Other operating expenses” in the accompanying unaudited condensed consolidated statements of operations. As of September 30, 2012 and December 31, 2011, the Company’s liability for contract-based physician minimum revenue guarantees was $15.2 million and $13.6 million, respectively. These amounts are included as a current liability under the caption “Other current liabilities” in the Company’s accompanying unaudited condensed consolidated balance sheets.

Non-Competition Agreements

The Company has entered into non-competition agreements with certain physicians and other individuals which are amortized on a straight-line basis over the term of the agreements.

Certificates of Need and Certificates of Need Exemptions

The construction or acquisition of new facilities, the expansion of existing facilities and the addition of new services and certain equipment at the Company’s facilities may be subject to state laws that require prior approval by state regulatory agencies. These certificate of need laws generally require that a state agency determine the public need and give approval prior to the construction or acquisition of facilities or the addition of new services. The Company operates hospitals in certain states that have adopted certificate of need laws. The Company has determined that these intangible assets have an indefinite useful life.

Licenses, Provider Numbers, Accreditations and Other

To operate hospitals, the Company must obtain certain licenses, provider numbers and accreditations from federal, state and other accrediting agencies. The Company has determined that these intangible assets have an indefinite useful life.

Note 7. Senior Credit Agreement and Debt Extinguishment Costs

Senior Credit Agreement

Terms

Effective July 24, 2012, the Company replaced the Prior Credit Agreement with the Senior Credit Agreement maturing on July 24, 2017. The Senior Credit Agreement provides for the $450.0 million Term Facility and the $350.0 million Revolving Facility. The proceeds from the Term Facility were used to repay the $443.7 million outstanding Term B Loans under the Prior Credit Agreement and to pay fees and expenses related to the Senior Credit Agreement. The Term Facility requires scheduled quarterly repayments in an amount equal to 2.5% per annum for each of the first, second and third years and 5.0% per annum for the fourth year and first three quarters of the fifth year, with the balance due at maturity. Additionally, the Term Facility is subject to mandatory prepayments based on excess cash flow, as well as upon the occurrence of certain other events, as specifically described in the Senior Credit Agreement. The Senior Credit Agreement is guaranteed on a senior basis by the Company’s subsidiaries with certain limited exceptions.

Letters of Credit and Availability

The Senior Credit Agreement provides for the issuance of letters of credit up to $75.0 million. Issued letters of credit reduce the amounts available under the Revolving Facility. As of September 30, 2012, the Company had $29.8 million in letters of credit outstanding that were related to the self-insured retention level of its general and professional liability insurance and workers’ compensation programs as security for payment of claims.

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September 30, 2012
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Note 7. Senior Credit Agreement and Debt Extinguishment Costs  – (continued)

During September 2012, the Company borrowed $40.0 million under the Revolving Facility for general purposes. Under the terms of the Senior Credit Agreement, amounts available for borrowing under the Revolving Facility were $280.2 million as of September 30, 2012.

Interest Rates

Interest on the outstanding borrowings under the Senior Credit Agreement is payable at the Company’s option at either an adjusted London Interbank Offer Rate (“LIBOR”) or an adjusted base rate plus an applicable margin. The applicable margin under the Senior Credit Agreement ranges from 1.50% to 2.50% for LIBOR loans and from 0.50% to 1.50% for adjusted base rate loans based on the Company’s total leverage ratio, calculated in accordance with the Senior Credit Agreement.

As of September 30, 2012, the applicable annual interest rates under the Term Facility and the Revolving Facility were 1.97% and 1.98%, respectively, which were based on the 30-day adjusted LIBOR plus the applicable margins. The 30-day adjusted LIBOR was 0.22% and 0.23% for the Term Facility and the Revolving Facility, respectively, as of September 30, 2012. The weighted-average applicable annual interest rate for the three months ended September 30, 2012 under the Senior Credit Agreement was 2.02%.

Covenants

The Senior Credit Agreement requires the Company to satisfy a maximum total leverage ratio not to exceed 5.00:1.00 through June 30, 2014 with a step-down to 4.75:1.00 through June 30, 2015, 4.50:1.00 through June 30, 2016 and 4.25:1.00 through the remaining term and as determined on a trailing four quarter basis. The Company was in compliance with this covenant as of September 30, 2012.

In addition, the Senior Credit Agreement contains certain customary affirmative and negative covenants, which among other things, limit the Company’s ability to incur additional debt, create liens, merge, consolidate, enter into acquisitions, sell assets, effect sale leaseback transactions, pay dividends, pay subordinated debt and effect transactions with its affiliates. It does not contain provisions that would accelerate the maturity dates upon a downgrade in the Company’s credit rating. However, a downgrade in the Company’s credit rating could adversely affect its ability to obtain other capital sources in the future and could increase the Company’s cost of borrowings.

Debt Extinguishment Costs

In connection with the Company’s replacement of the Prior Credit Agreement with the Senior Credit Agreement during the three months ended September 30, 2012, the Company recorded $4.4 million of debt extinguishment costs. The debt extinguishment costs include $2.4 million of previously capitalized loan costs and $2.0 million of loan costs related to the issuance of the Senior Credit Agreement.

Note 8. Interest Rate Swap and Comprehensive Income

Through May 30, 2011, the Company had an interest rate swap agreement in effect with Citibank as counterparty. Effective May 30, 2011, the Company’s interest rate swap agreement matured. Prior to its maturity, the interest rate swap agreement required the Company to make quarterly fixed rate payments to Citibank calculated on a notional amount at an annual fixed rate of 5.585% while Citibank was obligated to make quarterly floating payments to the Company based on the three-month LIBOR on the same referenced notional amount. The notional amount in effect during 2011 through May 30, 2011 was $300.0 million.

The Company entered into the interest rate swap agreement to mitigate the floating interest rate risk on a portion of its outstanding borrowings under the Prior Credit Agreement. In accordance with ASC 815-10 “Derivatives and Hedging”, the Company designated its interest rate swap as a cash flow hedge. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified

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September 30, 2012
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Note 8. Interest Rate Swap and Comprehensive Income  – (continued)

into earnings in the same period or periods during which the hedged transactions affect earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. Through May 30, 2011, the Company assessed the effectiveness of its interest rate swap and determined the hedge to be effective. During the three months ended September 30, 2011, the Company reclassed $1.1 million in previously recognized ineffective losses to OCI in connection with the maturity of the Company’s interest rate swap agreement. During the nine months ended September 30, 2011, changes in the fair value of the Company’s interest rate swap resulted in pretax comprehensive gains of $6.8 million, or $4.0 million net of taxes.

Since the Company’s interest rate swap was not traded on a market exchange, the fair value was determined using a valuation model that involved a discounted cash flow analysis on the expected cash flows. This cash flow analysis reflected the contractual terms of the interest rate swap agreement, including the period to maturity, and used observable market-based inputs, including the three-month LIBOR forward interest rate curve. The fair value of the Company’s interest rate swap agreement was determined by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts were based on the expectation of future interest rates based on the observable market three-month LIBOR forward interest rate curve and the notional amount being hedged. In addition, the Company incorporated credit valuation adjustments to appropriately reflect both its own and Citibank’s non-performance or credit risk in the fair value measurements. The interest rate swap agreement exposed the Company to credit risk in the event of non-performance by Citibank. The majority of the inputs used to value its interest rate swap agreement, including the three-month LIBOR forward interest rate curve and market perceptions of the Company’s credit risk used in the credit valuation adjustments, were observable inputs available to a market participant. As a result, the Company made the determination that the interest rate swap valuation was categorized as Level 2 within the fair value hierarchy, in accordance with ASC 820-10.

Note 9. Common Stock in Treasury and Repurchases of Common Stock

In accordance with repurchase plans adopted in 2010 and 2011, the Company’s Board of Directors authorized the repurchase of outstanding shares of its common stock either in the open market or through privately negotiated transactions, subject to market conditions, regulatory constraints and other customary factors. The 2010 repurchase plan provided for the repurchase of up to $150.0 million in shares of the Company’s common stock, and the Company has repurchased all shares authorized for repurchase under this plan. The 2011 plan provides for the repurchase of up to $250.0 million in shares of the Company’s common stock. The Company is not obligated to repurchase any specific number of shares under its 2011 repurchase plan. The Company has designated the shares repurchased in accordance with the 2010 and 2011 repurchase plans as treasury stock.

In connection with the 2010 repurchase plan, the Company repurchased approximately 2.0 and 3.0 million shares for an aggregate purchase price, including commissions, of approximately $67.3 million and $103.6 million at an average purchase price of $33.46 and $35.24 per share for the three and nine months ended September 30, 2011, respectively. There were no repurchases made in accordance with the 2010 repurchase plan during the three or nine months ended September 30, 2012.

In connection with the 2011 repurchase plan, the Company repurchased approximately 0.9 million shares for an aggregate purchase price, including commissions, of $31.7 million at an average purchase price of $35.39 per share for both the three and nine months ended September 30, 2011. Additionally, during the nine months ended September 30, 2012, the Company repurchased a nominal number of shares for an aggregate purchase price, including commissions, of $0.1 million at an average purchase price of $35.01 per share in connection with the 2011 repurchase plan. There were no repurchases made in accordance with the 2011 repurchase plan during the three months ended September 30, 2012. Through September 30, 2012, the

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
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Note 9. Common Stock in Treasury and Repurchases of Common Stock  – (continued)

Company had repurchased approximately 1.8 million shares for an aggregate purchase price, including commissions, of approximately $65.2 million in accordance with the 2011 repurchase plan. As of September 30, 2012, the Company had remaining authority to repurchase up to an additional $184.8 million in shares in accordance with the 2011 repurchase plan. In connection with the 2011 repurchase plan, the Company recently entered into a trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, to facilitate repurchases of the Company’s common stock during the Company’s blackout period (the “10b5-1 Trading Plan”). The 10b5-1 Trading Plan became effective on September 15, 2012 and will expire on October 30, 2012.

Additionally, the Company redeems shares from employees for minimum statutory tax withholding purposes upon vesting of certain stock awards granted pursuant to the Company’s Amended and Restated 1998 Long-Term Incentive Plan (“LTIP”) and Amended and Restated Management Stock Purchase Plan (“MSPP”). The Company redeemed a nominal number of certain vested LTIP and MSPP shares during the three months ended September 30, 2012 and 2011. During the nine months ended September 30, 2012 and 2011, the Company redeemed approximately 0.2 million and 0.1 million shares of certain vested LTIP and MSPP shares for an aggregate purchase price of approximately $6.1 million and $5.9 million, respectively. The Company has designated these shares as treasury stock.

Note 10. Stock-Based Compensation

Overview

The Company issues stock-based awards, including stock options and other stock-based awards (nonvested stock, restricted stock, restricted stock units, performance shares and deferred stock units) to certain officers, employees and non-employee directors in accordance with the Company’s various stockholder-approved stock-based compensation plans. The Company accounts for its stock-based awards in accordance with the provisions of ASC 718-10, “Compensation — Stock Compensation” (“ASC 718-10”), and accordingly recognizes compensation expense over each of the stock-based award’s requisite service period based on the estimated grant date fair value.

Stock Options

The Company granted options to purchase 789,800 and 724,190 shares of the Company’s common stock to certain officers and employees in accordance with the LTIP during the nine months ended September 30, 2012 and 2011, respectively. Options to purchase shares granted to the Company’s officers and employees in accordance with the LTIP were granted with an exercise price equal to the fair market value of the Company’s common stock on the day prior to the grant date. The options granted during the nine months ended September 30, 2012 and 2011 become ratably exercisable beginning one year from the date of grant to three years after the date of grant and expire ten years from the date of grant.

The Company estimated the fair value of stock options granted using the Hull-White II (“HW-II”) lattice option valuation model and a single option award approach. The Company uses the HW-II because it considers characteristics of fair value option pricing, such as an option’s contractual term and the probability of exercise before the end of the contractual term. In addition, the complications surrounding the expected term of an option are material, as indicated in ASC 718-10. Given the Company’s relatively large pool of unexercised options, the Company believes a lattice model that specifically addresses this fact and models a full term of exercises is the most appropriate and reliable means of valuing its stock options. The Company is amortizing the fair value on a straight-line basis over the requisite service period of the awards, which is the vesting period of three years. The stock options vest 33.3% on each grant anniversary date over three years of continued employment.

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September 30, 2012
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Note 10. Stock-Based Compensation  – (continued)

The following table shows the weighted average assumptions the Company used to develop the fair value estimates under its HW-II option valuation model and the resulting estimates of weighted-average fair value per share of stock options granted during the nine months ended September 30, 2012 and 2011:

		Nine Months Ended September 30,
		2012				2011
Expected volatility			36.0%				36.0%
Risk free interest rate (range)			0.03% – 1.97%				0.02% – 3.58%
Expected dividends			—				—
Average expected term (years)			5.3				5.3
Fair value per share of stock options granted			$12.18				$11.77

The total intrinsic value of stock options exercised during the nine months ended September 30, 2012 and 2011 was $8.2 million and $12.7 million, respectively. The Company received $15.9 million and $0.1 million in cash from stock option exercises for the three months ended September 30, 2012 and 2011, respectively, and $21.4 million and $34.6 million during the nine months ended September 30, 2012 and 2011, respectively. The actual tax benefit realized for the tax deductions from stock option exercises totaled $2.8 million and $1.6 million for the nine months ended September 30, 2012 and 2011, respectively. There was a nominal amount of tax benefit realized for the tax deductions from stock options exercised during the three months ended September 30, 2012 and 2011.

As of September 30, 2012, there was $13.5 million of total estimated unrecognized compensation cost related to stock option compensation arrangements. Total estimated unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. The Company expects to recognize that cost over a weighted average period of 1.3 years.

Other Stock-Based Awards

The Company granted 521,011 and 489,294 shares of nonvested stock awards to certain officers, employees and non-employee directors in accordance with the LTIP, MSPP and Outside Directors Stock and Incentive Compensation Plan during the nine months ended September 30, 2012 and 2011, respectively. The fair value of these other stock-based awards is determined based on the closing price of the Company’s common stock on the day prior to the grant date. The nonvested stock awards granted during the nine months ended September 30, 2012 and 2011 have either cliff-vesting periods from the grant date of three years, cliff-vesting periods from the grant date of six months and one day or ratable vesting periods beginning one year from the date of grant to three years after the date of grant.

Of the nonvested stock awards granted during the nine months ended September 30, 2012 and 2011, 320,000 and 297,000, respectively, were performance-based. In addition to requiring continuing service of an employee, the vesting of these nonvested stock awards is contingent upon the satisfaction of certain financial goals, specifically related to the achievement of targeted annual revenues or earnings goals within a three-year period. If these goals are achieved, the nonvested stock awards will cliff-vest three years after the grant date. The performance criteria for the 297,000 performance-based nonvested stock awards granted during 2011 have been certified as met by the Compensation Committee of the Company’s Board of Directors, however, these awards are still subject to continuing service requirements and the three year cliff-vesting provisions. For purposes of estimating compensation expense for the performance-based nonvested stock awards granted during the nine months ended September 30, 2012, the Company has assumed that the performance goals will be achieved. If the performance goals are not met for the performance-based awards granted during the nine months ended September 30, 2012, no compensation expense will be recognized, and any previously recognized compensation expense will be reversed.

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September 30, 2012
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Note 10. Stock-Based Compensation  – (continued)

Notwithstanding the specific grant vesting requirements, nonvested stock awards and performance-based awards granted under the LTIP become fully vested upon the death or disability of the participant. Additionally, in the event of termination without cause of a participant, the nonvested stock awards and performance-based awards otherwise subject to cliff-vesting become vested in a percentage equal to the number of full months of continuous employment following the date of grant through the date of termination divided by the total number of months in the vesting period, and in the case of performance-based awards, only in the event that the performance goals are attained.

The Company received $0.8 million and $0.6 million for the issuance of nonvested stock in accordance with the MSPP during the three months ended September 30, 2012 and 2011, respectively, and $1.3 million and $1.2 million during the nine months ended September 30, 2012 and 2011, respectively.

As of September 30, 2012, there was $21.3 million of total estimated unrecognized compensation cost related to other stock-based awards granted in accordance with the LTIP and MSPP. Total estimated unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. The Company expects to recognize that cost over a weighted average period of 1.8 years.

The following table summarizes the Company’s total stock-based compensation expense as well as the total recognized tax benefits related thereto for the three and nine months ended September 30, 2012 and 2011 (in millions):

		Three Months Ended September 30,								Nine Months Ended September 30,
		2012				2011				2012				2011
Other stock-based awards		$	4.4			$	4.1			$	12.4			$	10.8
Stock options			2.6				2.3				7.9				6.9
Total stock-based compensation expense		$	7.0			$	6.4			$	20.3			$	17.7
Tax benefit on stock-based compensation expense		$	2.8			$	2.4			$	8.1			$	7.1

The Company did not capitalize any stock-based compensation cost during the three or nine months ended September 30, 2012 or 2011. As of September 30, 2012, there was $34.8 million of total estimated unrecognized compensation cost related to all of the Company’s stock-based compensation arrangements. Total estimated unrecognized compensation cost may be adjusted for future changes in estimated forfeitures. The Company expects to recognize that cost over a weighted-average period of 1.6 years.

Note 11. Commitments and Contingencies

Legal Proceedings and General Liability Claims

Hospitals are subject to the regulation and oversight of various state and federal governmental agencies. Further, under the federal False Claims Act, private parties have the right to bring qui tam, or “whistleblower,” suits against hospitals that submit false claims for payments to, or improperly retain overpayments from, governmental payors. Some states have adopted similar state whistleblower and false claims provisions. The healthcare industry has seen a number of ongoing investigations related to patient referrals, physician recruiting practices, cost reporting and billing practices, laboratory and home healthcare services, physician ownership of hospitals and other healthcare providers, and joint ventures involving hospitals and physicians. Hospitals continue to be one of the primary focal areas of the Office of the Inspector General (“OIG”) and other governmental fraud and abuse programs. Certain of our individual facilities have received, and from time to time, other facilities may receive, government inquiries from federal and state

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Note 11. Commitments and Contingencies  – (continued)

agencies. Depending on whether the underlying conduct in these or future inquiries or investigations could be considered systemic, their resolution could have a material adverse effect on our financial position, results of operations and liquidity.

In addition, the hospitals are, from time to time, subject to claims and suits arising in the ordinary course of business, including claims for damages for personal injuries, medical malpractice, breach of contracts, wrongful restriction of or interference with physicians’ staff privileges and employment related claims. In certain of these actions, plaintiffs request payment for damages, including punitive damages that may not be covered by insurance.

In May 2009, the Company’s hospital in Andalusia, Alabama (Andalusia Regional Hospital) produced documents responsive to a request received from the U.S. Attorney’s Office for the Western District of New York regarding an investigation they are conducting with respect to the billing of kyphoplasty (spine related) procedures. Based on a review of the number of the kyphoplasty procedures performed at all of the Company’s other hospitals, as part of its effort to cooperate with the U.S. Attorney’s Office, by letter dated January 20, 2010 the Company’s management identified to the U.S. Attorney’s Office four additional facilities at which the number of inpatient kyphoplasty procedures approximated those performed at Andalusia Regional Hospital. The Company’s management has completed its review of the relevant medical records and is continuing to cooperate with the government’s investigation.

In December 2011, Jackson Purchase Medical Center, in Mayfield, Kentucky, received a request from an agent of the OIG, HHS, for information regarding the relationship between the hospital and a physician on its medical staff and that physician’s use of a hospital-employed advanced nurse practitioner, as well as lease arrangements between the hospital and physician. The U.S. Attorney’s Office for the Western District of Kentucky is also involved in this inquiry. The hospital is currently subject to a Corporate Integrity Agreement with the OIG, effective June 26, 2011. We have, and will continue to, cooperate with the government in this matter.

Self-Disclosure Activity

In addition to legal proceedings initiated by government agencies and third parties, all hospitals have an obligation to report and refund promptly any overpayments received once identified. “Overpayments” in this context include any amount received from a government program by a provider to which it is not entitled, regardless of the cause. Such overpayments become obligations in violation of the False Claims Act if not reported and refunded within 60 days of identification. Hospitals can meet the obligation to report and refund in three ways: (1) refunding overpayments directly to the program, (2) self-disclosing the overpayment to the OIG via its voluntary self disclosure protocol (with respect to False Claims Act and other violations not related to the Stark law), and (3) self-disclosing to CMS via the self-referral disclosure protocol (with respect to overpayments caused by potential violations of the Stark law only) for which CMS has the authority to reduce the amounts otherwise owed.

In connection with the acquisition of Marquette General, the Company agreed that, to the extent that the Marquette Seller’s satisfaction of its retained liabilities, which includes the Marquette Seller’s healthcare liabilities related to the self disclosure obligations as well as other obligations, causes its net proceeds to be reduced to less than $15.0 million, the Company would pay additional purchase consideration to the Marquette Seller. The Company’s management made reasonable estimates and recorded an aggregate of $25.3 million representing the preliminary fair values of its potential obligation to the Marquette Seller related to the Marquette Contingent Obligations. The Company’s management does not control and cannot predict with certainty the amount the Marquette Seller will owe any agency or creditor. Therefore, the final amounts paid in settlement, if any, could materially differ from amounts currently recorded. To the extent the Company is required to pay additional purchase consideration pursuant to the information described above, the amounts

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LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 11. Commitments and Contingencies  – (continued)

paid will reduce on a dollar-for-dollar basis, the remaining $321.7 million of the initial $350.0 million in capital improvements and physician recruitment commitment at Marquette General. The Company’s Marquette Contingent Obligations are further described in Note 5.

During August 2012, Minden Medical Center (“Minden”) finalized an independent review of the medical necessity of certain services rendered to patients in its intensive outpatient psychiatric (“IOP”) program, which was managed by a third party, Allegiance Health Management, Inc. (“Allegiance”). This review was commenced by Minden in 2011 and, in August 2011, the hospital voluntarily disclosed its concerns regarding these services to the OIG pursuant to the OIG’s self disclosure protocol. On January 3, 2012, Minden received notice that it had been accepted into the OIG’s self disclosure protocol. Shortly after receiving this notice, Bolivar Medical Center (“Bolivar”) received a subpoena from the OIG seeking information about its IOP program and its relationship with Allegiance. Minden and Bolivar continue to cooperate with the government in addressing these matters.

Physician Commitments

The Company has committed to provide certain financial assistance pursuant to recruiting agreements with various physicians practicing in the communities it serves. In consideration for a physician’s relocating to one of its communities and agreeing to engage in private practice for the benefit of the respective community, the Company may advance certain amounts of money to a physician, normally over a period of one year, to assist in establishing the physician’s practice. The Company has committed to advance a maximum amount of approximately $38.5 million at September 30, 2012. The actual amount of such commitments to be subsequently advanced to physicians is estimated at $15.2 million and often depends upon the financial results of a physician’s private practice during the guarantee period. Generally, amounts advanced under the recruiting agreements may be forgiven pro rata over a period of 36 to 48 months contingent upon the physician continuing to practice in the respective community. Pursuant to the Company’s standard physician recruiting agreement, any breach or non-fulfillment by a physician under the physician recruiting agreement gives the Company the right to recover any payments made to the physician under the agreement.

Capital Expenditure Commitments

The Company is reconfiguring some of its hospitals to more effectively accommodate patient services and to provide for a greater variety of services, as well as implementing various information system initiatives in its efforts to comply with the Health Information Technology for Economic and Clinical Health Act. The Company has incurred approximately $104.6 million in costs related to uncompleted projects as of September 30, 2012, which is included under the caption “Construction in progress” in the Company’s accompanying unaudited condensed consolidated balance sheet. At September 30, 2012, these uncompleted projects had an estimated cost to complete and equip of approximately $64.2 million. Additionally, the Company is subject to annual capital expenditure commitments in connection with several of its facilities, including the remaining $321.7 million of an initial $350.0 million over the next ten years, subject to certain offsets, and $20.0 million over the next ten years for the Company’s recently acquired Marquette General and Twin County, respectively.

Shared Centralized Resource Model Arrangements

The Company recently entered into agreements with a third party to provide certain nonclinical business functions to the Company, including supply chain management and revenue cycle functions under a shared centralized resource model for periods ranging from eight to ten years. In connection with the Company’s entry into these agreements, the Company extended its current technology support agreement with this same third party. These agreements are in addition to the Company’s existing agreement with this third party to provide payroll processing services.

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LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 11. Commitments and Contingencies  – (continued)

The Company’s management believes this model of sharing centralized resources to support common business functions across multi-facility enterprises provides it efficiencies and is the most cost effective approach to managing these nonclinical business functions. The Company recently completed the implementation of the payroll processing services and expects to implement the supply chain management and revenue cycle functions over the next 21 to 27 months. Primarily in connection with the implementation process, the Company incurred severance and retention costs for its affected workforce of approximately $1.8 million and $2.0 million for the three and nine months ended September 30, 2012, respectively. The Company estimates it will recognize approximately $6.1 million of additional severance and retention costs over the remaining implementation periods.

Hospital Support Center Lease

The Company has entered into an agreement with an unrelated third party to lease a new hospital support center with a targeted occupancy date in the fourth quarter of 2013. Under the terms of the lease agreement, the Company will lease from the third party the newly constructed hospital support center for a period of just over 15 years following construction completion. The Company’s management has determined that it has substantially all of the risks of ownership of the new hospital support center during the construction period and in accordance with ASC 840-40, “Leases — Sale-Leaseback Transactions” (“ASC 840-40”) has recorded an asset under the caption “Construction in progress” and related financing obligation under the caption “Reserves for self-insurance claims and other liabilities” in the accompanying unaudited condensed consolidated balance sheet of $7.7 million as of September 30, 2012. This asset and related liability represents the cumulative costs incurred to date and funded by the unrelated third party to construct the new hospital support center. Once construction is complete, the Company will consider the applicable requirements of ASC 840-40 for sale-leaseback treatment, including the transfer back of all risks of ownership to the unrelated third party and whether the Company has any continuing involvement in the leased property. Currently, the Company anticipates that its lease agreement will qualify as a financing lease in accordance with ASC 840-40 and accordingly, the Company will depreciate the completed hospital support center and amortize the related financing obligation over the expected lease agreement term.

Marquette Acquisition Contingent Obligations

In connection with the acquisition of Marquette General, the Company recorded $25.3 million of Marquette Contingent Obligations. The Company’s management made reasonable estimates of the Marquette Contingent Obligations based on facts that existed as of the acquisition date. The Company will continue to analyze and refine its estimate as changes in facts and circumstances warrant. The Company’s management does not control and cannot predict with certainty the progress or final outcome of any discussions with third parties, such as government agencies. Therefore, the final amounts paid in settlement of the pre-acquisition healthcare and other retained liabilities, if any, could materially differ from amounts currently recorded. To the extent the Company is required to pay additional purchase consideration pursuant to the information described above, the amounts paid will reduce, on a dollar-for-dollar basis, the remaining $321.7 million of the initial $350.0 million capital improvements and physician recruitment commitment at Marquette General. The Company’s Marquette Contingent Obligations are further described in Note 5.

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LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 12. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2012 and 2011 (dollars and shares in millions, except per share amounts):

		Three Months Ended September 30,								Nine Months Ended September 30,
		2012				2011				2012				2011
Numerator for basic and diluted earnings per share attributable to LifePoint Hospitals, Inc.:
Income from continuing operations		$	19.3			$	39.6			$	118.1			$	127.2
Less: Net income attributable to noncontrolling interests			(0.1	)			(0.7	)			(2.7	)			(2.2	)
Income from continuing operations attributable to LifePoint Hospitals, Inc. stockholders			19.2				38.9				115.4				125.0
(Loss) income from discontinued operations, net of income taxes			—				(0.1	)			0.2				0.2
Net income attributable to LifePoint Hospitals, Inc.		$	19.2			$	38.8			$	115.6			$	125.2
Denominator:
Weighted average shares outstanding – basic			47.5				49.3				47.3				50.2
Effect of dilutive securities: stock options and other stock-based awards			1.3				1.1				1.2				1.2
Weighted average shares outstanding – diluted			48.8				50.4				48.5				51.4
Basic earnings per share attributable to LifePoint Hospitals, Inc. stockholders:
Continuing operations		$	0.40			$	0.79			$	2.44			$	2.49
Discontinued operations			—				—				0.01				0.01
Net income		$	0.40			$	0.79			$	2.45			$	2.50
Diluted earnings per share attributable to LifePoint Hospitals, Inc. stockholders:
Continuing operations		$	0.39			$	0.77			$	2.38			$	2.43
Discontinued operations			—				—				—				0.01
Net income		$	0.39			$	0.77			$	2.38			$	2.44

The 3½% Notes and the 3¼% Debentures are included in the calculation of diluted earnings per share whether or not the contingent requirements have been met for conversion if the conversion price of $51.79 and $61.22, respectively, is less than the average market price of the Company’s common stock for the period. Upon conversion, the par value is settled in cash, and only the conversion premium is settled in shares of the Company’s common stock. The impact of the 3½% Notes and the 3¼% Debentures has been excluded because the effects would have been anti-dilutive for the three and nine months ended September 30, 2012 and 2011. Additionally, certain outstanding stock-based awards have been excluded from the calculation of diluted earnings per share to the extent they were anti-dilutive for the three and nine months ended September 30, 2012 and 2011.

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LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 13. Guarantor and Non-Guarantor Supplementary Information

The 6.625% Senior Notes are jointly and severally guaranteed on an unsecured senior basis by substantially all of the Company’s existing subsidiaries that guarantee the Senior Credit Agreement. The following presents the condensed consolidating financial information for the parent issuer, guarantor subsidiaries, non-guarantor subsidiaries, certain eliminations and the Company for the three and nine months ended September 30, 2012 and 2011 and as of September 30, 2012 and December 31, 2011:

LIFEPOINT HOSPITALS, INC.
Condensed Consolidating Statements of Operations
For the Three Months Ended September 30, 2012
(In millions)

		Parent Issuer				Guarantors				Non- Guarantors				Eliminations				Consolidated
Revenues before provision for doubtful accounts		$	—			$	844.1			$	140.8			$	—			$	984.9
Provision for doubtful accounts			—				142.5				22.2				—				164.7
Revenues			—				701.6				118.6				—				820.2
Salaries and benefits			7.0				326.4				56.9				—				390.3
Supplies			—				107.3				22.0				—				129.3
Other operating expenses			—				180.8				24.5				—				205.3
Other income			—				(11.7	)			(0.3	)			—				(12.0	)
Equity in earnings of affiliates			(31.7	)			—				—				31.7				—
Depreciation and amortization			—				40.8				6.9				—				47.7
Interest expense, net			5.3				17.3				1.9				—				24.5
Debt extinguishment costs			4.4				—				—				—				4.4
Management (income) fees			—				(2.0	)			2.0				—				—
			(15.0	)			658.9				113.9				31.7				789.5
Income from continuing operations before taxes			15.0				42.7				4.7				(31.7	)			30.7
(Benefit) provision for income taxes			(4.2	)			15.6				—				—				11.4
Net income			19.2				27.1				4.7				(31.7	)			19.3
Less: Net (income) loss attributable to noncontrolling interests			—				(1.1	)			1.0				—				(0.1	)
Net income attributable to LifePoint Hospitals, Inc.		$	19.2			$	26.0			$	5.7			$	(31.7	)		$	19.2

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LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 13. Guarantor and Non-Guarantor Supplementary Information  – (continued)

LIFEPOINT HOSPITALS, INC.
Condensed Consolidating Statements of Operations
For the Three Months Ended September 30, 2011
(In millions)

		Parent Issuer				Guarantors				Non- Guarantors				Eliminations				Consolidated
Revenues before provision for doubtful accounts		$	—			$	791.5			$	74.7			$	—			$	866.2
Provision for doubtful accounts			—				117.0				10.0				—				127.0
Revenues			—				674.5				64.7				—				739.2
Salaries and benefits			6.4				307.9				23.5				—				337.8
Supplies			—				102.0				11.9				—				113.9
Other operating expenses			—				159.7				11.4				—				171.1
Other income			—				(11.0	)			—				—				(11.0	)
Equity in earnings of affiliates			(50.4	)			—				—				50.4				—
Depreciation and amortization			—				36.8				3.9				—				40.7
Interest expense, net			5.8				17.9				0.6				—				24.3
Management (income) fees			—				(2.3	)			2.3				—				—
			(38.2	)			611.0				53.6				50.4				676.8
Income from continuing operations before taxes			38.2				63.5				11.1				(50.4	)			62.4
(Benefit) provision for income taxes			(0.6	)			23.4				—				—				22.8
Income from continuing operations			38.8				40.1				11.1				(50.4	)			39.6
Loss from discontinued operations, net of taxes			—				(0.1	)			—				—				(0.1	)
Net income			38.8				40.0				11.1				(50.4	)			39.5
Less: Net income attributable to noncontrolling interests			—				—				(0.7	)			—				(0.7	)
Net income attributable to LifePoint Hospitals, Inc.		$	38.8			$	40.0			$	10.4			$	(50.4	)		$	38.8

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LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 13. Guarantor and Non-Guarantor Supplementary Information  – (continued)

LIFEPOINT HOSPITALS, INC.
Condensed Consolidating Statements of Operations
For the Nine Months Ended September 30, 2012
(In millions)

		Parent Issuer				Guarantors				Non- Guarantors				Eliminations				Consolidated
Revenues before provision for doubtful accounts		$	—			$	2,581.7			$	381.4			$	—			$	2,963.1
Provision for doubtful accounts			—				402.1				62.5				—				464.6
Revenues			—				2,179.6				318.9				—				2,498.5
Salaries and benefits			20.3				973.3				136.6				—				1,130.2
Supplies			—				325.5				57.2				—				382.7
Other operating expenses			—				523.9				65.6				—				589.5
Other income			—				(13.4	)			(1.3	)			—				(14.7	)
Equity in earnings of affiliates			(152.7	)			—				—				152.7				—
Depreciation and amortization			—				119.1				20.6				—				139.7
Interest expense, net			18.3				52.6				4.8				—				75.7
Debt extinguishment costs			4.4				—				—				—				4.4
Impairment charge			—				3.1				—				—				3.1
Management (income) fees			—				(6.1	)			6.1				—				—
			(109.7	)			1,978.0				289.6				152.7				2,310.6
Income from continuing operations before taxes			109.7				201.6				29.3				(152.7	)			187.9
(Benefit) provision for income taxes			(5.9	)			75.7				—				—				69.8
Income from continuing operations			115.6				125.9				29.3				(152.7	)			118.1
Income from discontinued operations, net of taxes			—				0.2				—				—				0.2
Net income			115.6				126.1				29.3				(152.7	)			118.3
Less: Net income attributable to noncontrolling interests			—				(0.9	)			(1.8	)			—				(2.7	)
Net income attributable to LifePoint Hospitals, Inc.		$	115.6			$	125.2			$	27.5			$	(152.7	)		$	115.6

TABLE OF CONTENTS

LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 13. Guarantor and Non-Guarantor Supplementary Information  – (continued)

LIFEPOINT HOSPITALS, INC.
Condensed Consolidating Statements of Operations
For the Nine Months Ended September 30, 2011
(In millions)

		Parent Issuer				Guarantors				Non- Guarantors				Eliminations				Consolidated
Revenues before provision for doubtful accounts		$	—			$	2,395.9			$	232.3			$	—			$	2,628.2
Provision for doubtful accounts			—				352.4				31.0				—				383.4
Revenues			—				2,043.5				201.3				—				2,244.8
Salaries and benefits			17.7				921.5				72.0				—				1,011.2
Supplies			—				308.9				37.8				—				346.7
Other operating expenses			—				460.7				35.1				—				495.8
Other income			—				(13.9	)			(1.3	)			—				(15.2	)
Equity in earnings of affiliates			(167.1	)			—				—				167.1				—
Depreciation and amortization			—				109.9				11.1				—				121.0
Interest expense, net			27.6				52.6				1.4				—				81.6
Management (income) fees			—				(7.1	)			7.1				—				—
			(121.8	)			1,832.6				163.2				167.1				2,041.1
Income from continuing operations before taxes			121.8				210.9				38.1				(167.1	)			203.7
(Benefit) provision for income taxes			(3.4	)			79.9				—				—				76.5
Income from continuing operations			125.2				131.0				38.1				(167.1	)			127.2
Income from discontinued operations, net of taxes			—				0.2				—				—				0.2
Net income			125.2				131.2				38.1				(167.1	)			127.4
Less: Net income attributable to noncontrolling interests			—				(0.4	)			(1.8	)			—				(2.2	)
Net income attributable to LifePoint Hospitals, Inc.		$	125.2			$	130.8			$	36.3			$	(167.1	)		$	125.2

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LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 13. Guarantor and Non-Guarantor Supplementary Information  – (continued)

LIFEPOINT HOSPITALS, INC.
Condensed Consolidating Statements of Comprehensive Income
For the Three Months Ended September 30, 2011
(In millions)

		Parent Issuer				Guarantors				Non- Guarantors				Eliminations				Consolidated
Net income		$	38.8			$	40.0			$	11.1			$	(50.4	)		$	39.5
Other comprehensive income, net of income taxes:
Unrealized losses on changes in fair value of interest rate swap			(1.1	)			—				—				—				(1.1	)
Other comprehensive income			(1.1	)			—				—				—				(1.1	)
Comprehensive income			37.7				40.0				11.1				(50.4	)			38.4
Less: Net income attributable to noncontrolling interests			—				—				(0.7	)			—				(0.7	)
Comprehensive income attributable to LifePoint Hospitals, Inc.		$	37.7			$	40.0			$	10.4			$	(50.4	)		$	37.7

LIFEPOINT HOSPITALS, INC.
Condensed Consolidating Statements of Comprehensive Income
For the Nine Months Ended September 30, 2011
(In millions)

		Parent Issuer				Guarantors				Non- Guarantors				Eliminations				Consolidated
Net income		$	125.2			$	131.2			$	38.1			$	(167.1	)		$	127.4
Other comprehensive income, net of income taxes:
Unrealized gains on changes in fair value of interest rate swap			4.0				—				—				—				4.0
Other comprehensive income			4.0				—				—				—				4.0
Comprehensive income			129.2				131.2				38.1				(167.1	)			131.4
Less: Net income attributable to noncontrolling interests			—				(0.4	)			(1.8	)			—				(2.2	)
Comprehensive income attributable to LifePoint Hospitals, Inc.		$	129.2			$	130.8			$	36.3			$	(167.1	)		$	129.2

TABLE OF CONTENTS

LIFEPOINT HOSPITALS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
Unaudited

Note 13. Guarantor and Non-Guarantor Supplementary Information  – (continued)

LIFEPOINT HOSPITALS, INC.
Condensed Consolidating Balance Sheets
September 30, 2012
(In millions)

		Parent Issuer				Guarantors				Non- Guarantors				Eliminations				Consolidated
ASSETS
Current assets:
Cash and cash equivalents		$	—			$	55.2			$	42.7			$	—			$	97.9
Accounts receivable, net			—				404.7				108.2				—				512.9
Inventories			—				76.2				19.8				—				96.0
Prepaid expenses			0.2				24.3				4.5				—				29.0
Deferred tax assets			154.2				—				—				—				154.2
Other current assets			—				36.4				8.2				—				44.6
			154.4				596.8				183.4				—				934.6
Property and equipment:
Land			—				74.5				27.9				—				102.4
Buildings and improvements			—				1,512.3				290.5				—				1,802.8
Equipment			—				1,093.6				106.5				—				1,200.1
Construction in progress			—				96.6				8.0				—				104.6
			—				2,777.0				432.9				—				3,209.9
Accumulated depreciation			—				(1,137.2	)			(72.9	)			—				(1,210.1	)
			—				1,639.8				360.0				—				1,999.8
Deferred loan costs, net			22.7				—				—				—				22.7
Intangible assets, net			—				48.9				38.1				—				87.0
Investments in subsidiaries			1,615.4				—				—				(1,615.4	)			—
Other			1.2				19.0				18.7				—				38.9
Goodwill			—				1,440.7				161.5				—				1,602.2
Total assets		$	1,793.7			$	3,745.2			$	761.7			$	(1,615.4	)		$	4,685.2
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	—			$	85.4			$	28.4			$	—			$	113.8
Accrued salaries			—				97.8				24.6				—				122.4
Income taxes payable			8.1				—				—				—				8.1
Other current liabilities			22.3				119.9				29.6				—				171.8
Current maturities of long-term debt			11.3				1.6				0.7				—				13.6
			41.7				304.7				83.3				—				429.7
Long-term debt			1,642.4				5.8				2.4				—				1,650.6
Intercompany			(2,240.3	)			2,018.1				222.2				—				—
Deferred income tax liabilities			236.8				—				—				—				236.8
Long-term portion of reserves for self-insurance claims			—				108.2				24.9				—				133.1
Other long-term liabilities			—				30.0				39.8				—				69.8
Long-term income tax liability			17.9				—				—				—				17.9
Total liabilities			(301.5	)			2,466.8				372.6				—				2,537.9
Redeemable noncontrolling interests			—				—				29.0				—				29.0
Total LifePoint Hospitals, Inc. stockholders' equity			2,095.2				1,276.9				338.5				(1,615.4	)			2,095.2
Noncontrolling interests			—				1.5				21.6								23.1
Total equity			2,095.2				1,278.4				360.1				(1,615.4	)			2,118.3
Total liabilities and equity		$	1,793.7			$	3,745.2			$	761.7			$	(1,615.4	)		$	4,685.2