SOURCE: Vanguard Health Systems, Inc.

September 19, 2006 16:05 ET

Vanguard Reports Fourth Quarter and Year-End Results

NASHVILLE, TN -- (MARKET WIRE) -- September 19, 2006 -- Vanguard Health Systems, Inc. ("Vanguard") today announced results for the fourth quarter and fiscal year ended June 30, 2006.

Total revenues for the quarter ended June 30, 2006 were $682.5 million, an increase of $50.1 million or 7.9% from the prior year quarter. Patient service revenues and health plan premium revenues increased $36.0 million and $14.1 million, respectively, from the prior year quarter. The increase in total revenues was primarily a result of an increase in patient acuity and improved reimbursement for services provided at our hospitals and pricing improvements at our health plans primarily as a result of our new Medicare and Medicaid dual eligible health plan in Arizona that began enrollee coverage on January 1, 2006.

For the quarter ended June 30, 2006, Vanguard reported a loss before income taxes of $21.8 million compared to income before income taxes of $9.0 million during the prior year quarter. The current quarter loss before income taxes was primarily attributable to the $15.0 million impairment charge related to the expected sale of our California hospitals discussed below and increases to net interest, depreciation and amortization and other operating expenses, such as repairs and maintenance and rent. Our net loss was $13.6 million for the quarter ended June 30, 2006 compared to net income of $7.8 million for the prior year quarter.

Adjusted EBITDA was $60.0 million for the quarter ended June 30, 2006, a decrease of $5.1 million or 7.8% from the prior year quarter. A reconciliation of Adjusted EBITDA to net income (loss) as determined in accordance with generally accepted accounting principles for the quarters ended June 30, 2005 and 2006 is included in the attached supplemental financial information.

The consolidated operating results for the quarter ended June 30, 2006 reflect a 1.2% decrease in discharges and a 2.5% decrease in hospital adjusted discharges compared to the prior year quarter. Similar to others in the hospital industry, Vanguard experienced a softening in demand for inpatient services during the current year quarter. Quarter over quarter emergency room visits decreased by 2.3%. Quarter over quarter outpatient surgeries decreased by 2.0% primarily due to Vanguard's sale of a majority of its partnership interests in an outpatient surgery center in San Antonio to an independent third party in October 2005.

Total revenues for the year ended June 30, 2006 were $2,652.7 million, an increase of $383.8 million or 16.9% from the prior year. Patient service revenues and health plan premium revenues increased $342.3 million and $41.5 million, respectively, from the prior year. $247.4 million of the year over year increase was attributable to Vanguard's acquisition of three acute care hospitals in Massachusetts on December 31, 2004. Total revenues, on a same hospital basis, increased by $136.4 million or 6.7% during the current year compared to the prior year primarily as a result of increased acuity and improved reimbursement for services provided at our hospitals and increased premium revenues at our health plans.

For the year ended June 30, 2006, Vanguard reported income before income taxes of $23.3 million compared to a loss before income taxes of $111.7 million during the prior year. The prior year loss before income taxes resulted from costs directly attributable to the Blackstone transaction including stock compensation of $96.7 million, debt extinguishment costs of $62.2 million and merger expenses of $23.3 million. Net income for the year ended June 30, 2006 was $12.9 million compared to a net loss of $78.1 million during the prior year. Vanguard's prior year net loss resulted from the after tax effect of the Blackstone-related costs.

Adjusted EBITDA was $256.6 million for the year ended June 30, 2006, an increase of $11.8 million or 4.8% from the prior year. A reconciliation of Adjusted EBITDA to net income (loss) as determined in accordance with generally accepted accounting principles for the years ended June 30, 2005 and 2006 is included in the attached supplemental financial information.

The consolidated operating results for the year ended June 30, 2006 reflect a 6.6% increase in discharges and a 10.1% increase in hospital adjusted discharges compared to the prior year. These volume improvements are attributable to Vanguard's acquisition of the Massachusetts hospitals on December 31, 2004. On a same hospital basis, year over year discharges and hospital adjusted discharges decreased by 2.5% and 1.7%, respectively. On a same hospital basis, year over year emergency room visits decreased by 0.3%. Same hospital outpatient surgeries decreased by 3.9% during the year ended June 30, 2006 compared to the prior year primarily due to Vanguard's sale of a majority of its partnership interests in an outpatient surgery center in San Antonio to an independent third party in October 2005.

Cash flows from operating activities were $149.3 million for the year ended June 30, 2006, a decrease of $52.5 million from the prior year. The decrease was primarily due to a year over year increase in payments of liabilities, expedited medical claims payments at Vanguard's health plans during the current year and a year over year increase in interest payments. These current year increased cash outflows were offset by the Massachusetts working capital buildup during the prior year. Cash used in investing activities decreased to $245.4 million during the current year from $324.3 million during the prior year. During the prior year, Vanguard paid $50.9 million for Blackstone-related acquisition costs and $87.7 million to acquire the Massachusetts hospitals. Capital expenditures increased by $46.3 million or 19.4% during the current year primarily as a result of a $63.7 million year over year increase in expenditures related to the significant expansion projects underway at certain of Vanguard's San Antonio and Phoenix facilities. Cash flows from financing activities decreased by $11.1 million during the current year. Prior year cash flows from financing activities were significantly affected by the equity and debt transactions associated with the Blackstone transaction.

On August 4, 2006, Vanguard entered into a definitive agreement to sell its three California hospitals, West Anaheim Medical Center, Huntington Beach Hospital and La Palma Intercommunity Hospital, to Prime Healthcare Services, Inc. and its affiliates for $44.0 million excluding adjustments for certain current assets to be acquired less certain liabilities to be assumed. Vanguard believes that selling the three hospitals to a locally-based California company with a history of operational success is the best outcome for the communities, the medical staffs and the hospitals' employees and volunteers and will enable Vanguard to focus its attention and resources on its other core markets. Vanguard recorded an impairment charge of $15.0 million ($9.4 million net of taxes) as of June 30, 2006, to write down the long-lived assets of the California hospitals to fair value. As previously disclosed, Vanguard sold the medical office buildings located on these hospital campuses in March 2006 for approximately $28.7 million and recorded a gain on sale of $11.1 million ($8.3 million net of taxes). Vanguard expects the transaction to close on or about September 30, 2006.

"Our fiscal year 2006 results were pressured by a number of industry factors, including softened demand for inpatient services as well as the nationwide nursing shortage," commented Charles N. Martin, Jr., Chairman and Chief Executive Officer. "We were able to mitigate the impact of these pressures through improved patient acuity and management of certain costs and expenses. Although we do not anticipate an immediate recovery in the demand for inpatient services, we believe our focus on expanding and improving our capabilities to deliver quality patient services will enhance our competitive standing over time."

Vanguard will host a conference call for investors at 11:00 am EDT on September 20, 2006. All interested investors are invited to access a live audio broadcast of the call, via webcast. The live webcast can be accessed on the home page of Vanguard's Web site at www.vanguardhealth.com by clicking on Fourth Quarter Webcast or at http://visualwebcaster.com/event.asp?id=35378. If you are unable to participate during the live webcast, the call will be available on a replay basis on Vanguard's Web site www.vanguardhealth.com. To access the replay, click on Fourth Quarter Webcast on Vanguard's home page or later on the Latest News link on the Investor Relations page of www.vanguardhealth.com.

Vanguard owns and operates 19 acute care hospitals and complementary facilities and services in Chicago, Illinois; Phoenix, Arizona; Orange County, California; San Antonio, Texas and Massachusetts. The Company's strategy is to develop locally branded, comprehensive healthcare delivery networks in urban markets. Vanguard will pursue acquisitions where there are opportunities to partner with leading delivery systems in new urban markets. Upon acquiring a facility or network of facilities, Vanguard implements strategic and operational improvement initiatives including expanding services, strengthening relationships with physicians and managed care organizations, recruiting new physicians and upgrading information systems and other capital equipment. These strategies improve quality and network coverage in a cost effective and accessible manner for the communities we serve.

This press release contains forward-looking statements within the meaning of the federal securities laws, which are intended to be covered by the safe harbors created thereby. These forward-looking statements include all statements that are not historical statements of fact and those statements regarding Vanguard's intent, belief or expectations. Do not rely on any forward-looking statements as such statements are subject to numerous factors, risks and uncertainties that could cause Vanguard's actual outcomes, results, performance or achievements to be materially different from those projected. These factors, risks and uncertainties include, among others, Vanguard's high degree of leverage; Vanguard's ability to incur substantially more debt; operating and financial restrictions in Vanguard's debt agreements; Vanguard's ability to successfully implement its business strategies; Vanguard's ability to successfully integrate its recent and any future acquisitions; the highly competitive nature of the healthcare business; governmental regulation of the industry including Medicare and Medicaid reimbursement levels; changes in Federal, state or local regulation affecting the healthcare industry; the possible enactment of Federal or state healthcare reform; the ability to attract and retain qualified management and personnel, including physicians and nurses; claims and legal actions relating to professional liabilities or other matters; changes in accounting practices; changes in general economic conditions; Vanguard's exposure to the increased amounts of and collection risks associated with uninsured accounts and the co-pay and deductible portions of insured accounts; the impact of changes to Vanguard's charity care and self-pay discounting policies; the ability to enter into managed care provider and other payer arrangements on acceptable terms; the efforts of insurers, managed care payers, employers and others to contain healthcare costs; the availability and terms of capital to fund the expansion of Vanguard's business; the timeliness of reimbursement payments received under government programs; the potential adverse impact of known and unknown government investigations; and those factors, risks and uncertainties detailed in Vanguard's filings from time to time with the Securities and Exchange Commission, including, among others, its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q.

Although Vanguard believes that the assumptions underlying the forward-looking statements contained in this press release are reasonable, any of these assumptions could prove to be inaccurate, and, therefore, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, you should not regard the inclusion of such information as a representation by Vanguard that its objectives and plans anticipated by the forward-looking statements will occur or be achieved, or if any of them do, what impact they will have on Vanguard's results of operations and financial condition. Vanguard undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.





                  VANGUARD HEALTH SYSTEMS, INC.
        Consolidated Statements of Operations (Unaudited)
                          (In millions)

                                        Three months ended
                                              June 30,
                            ---------------------------------------------
                                     2005                    2006
                            ---------------------------------------------
Patient service revenues    $     545.7       86.3% $     581.7      85.2%
Premium revenues                   86.7       13.7        100.8      14.8
                            ----------- ----------  ----------- ---------
Total revenues                    632.4      100.0        682.5     100.0

Costs and Expenses:
   Salaries and benefits
    (includes stock
    compensation of
    $0.3 and $0.6,
    respectively)                 268.8       42.5        287.0      42.0
   Supplies                       105.4       16.7        110.1      16.1
   Medical claims expense          58.1        9.2         73.6      10.8
   Provision for doubtful
    accounts                       41.1        6.5         42.4       6.2
   Other operating expenses        94.2       14.9        110.0      16.1
   Depreciation and
    amortization                   29.0        4.6         33.0       4.9
   Interest, net                   26.0        4.1         28.6       4.2
   Merger expenses                  0.1        0.0            –       0.0
   Impairment expense                 –        0.0         15.0       2.2
   Other                            0.7        0.1          4.6       0.7
                            ----------- ----------  ----------- ---------
      Total costs and
       expenses                   623.4       98.6        704.3     103.2
                            ----------- ----------  ----------- ---------
Income (loss) before income
 taxes                              9.0        1.4        (21.8)     (3.2)
Income tax expense
 (benefit)                          1.2        0.2         (8.2)     (1.2)
                            ----------- ----------  ----------- ---------
Net income (loss)           $       7.8        1.2% $     (13.6)     (2.0)%
                            ===========             ===========




                             VANGUARD HEALTH SYSTEMS, INC.
                         Consolidated Statements of Operations
                                    (In millions)


                                                Year Ended
                                                 June 30,
                                ------------------------------------------
                                         2005
                                  (combined basis)           2006
                                ------------------------------------------
Patient service revenues        $ 1,935.4       85.3% $ 2,277.7       85.9%
Premium revenues                    333.5       14.7      375.0       14.1
                                ---------  ---------  ---------  ---------
Total revenues                    2,268.9      100.0    2,652.7      100.0

Costs and Expenses:
   Salaries and benefits
    (includes stock
    compensation of
    $97.4 and $1.7,
    respectively)                 1,033.4       45.5    1,118.6       42.2
   Supplies                         374.2       16.5      428.9       16.2
   Medical claims expense           237.2       10.5      270.3       10.2
   Provision for doubtful
    accounts                        151.3        6.7      178.1        6.7
   Other operating expenses         325.4       14.4      401.9       15.1
   Depreciation and
    amortization                     82.0        3.6      107.5        4.0
   Interest, net                     88.3        3.9      111.0        4.2
   Debt extinguishment costs         62.2        2.7        0.1        0.0
   Merger expenses                   23.3        1.0          –        0.0
   Impairment expense                   –        0.0       15.0        0.6
   Other                              3.3        0.1       (2.0)      (0.1)
                                ---------  ---------  ---------  ---------
      Total costs and expenses    2,380.6      104.9    2,629.4       99.1
                                ---------  ---------  ---------  ---------
Income (loss) before income
 taxes                             (111.7)      (4.9)      23.3        0.9
Income tax expense (benefit)        (33.6)      (1.5)      10.4        0.4
                                ---------  ---------  ---------  ---------
Net income (loss)                   (78.1)      (3.4)      12.9        0.5
Preferred dividends                  (1.0)      (0.1)         –        0.0
                                ---------  ---------  ---------  ---------
Net income (loss) attributable
 to common stockholders         $   (79.1)      (3.5)%$    12.9        0.5%
                                =========             =========




                          VANGUARD HEALTH SYSTEMS, INC.
                      Consolidated Statements of Operations
                                  (In millions)

                                     Predecessor
                                     -----------  September 23,   Year
                                    July 1, 2004     2004         ended
                                      through      through       June 30,
                                    September 22,   June 30,      2005
                                       2004          2005       (combined
                                                                  basis)
                                     -----------  ------------ -----------

Patient service revenues             $     377.3  $    1,558.1 $   1,935.4
Premium revenues                            72.3         261.2       333.5
                                     -----------  ------------ -----------
Total revenues                             449.6       1,819.3     2,268.9

Costs and expenses:
   Salaries and benefits (includes
    stock compensation
    of $96.7, $0.7 and $97.4,
    respectively)                          275.4         758.0     1,033.4
   Supplies                                 72.3         301.9       374.2
   Medical claims expense                   55.0         182.2       237.2
   Provision for doubtful accounts          31.5         119.8       151.3
   Other operating expenses                 65.0         260.4       325.4
   Depreciation and amortization            17.4          64.6        82.0
   Interest, net                             9.8          78.5        88.3
   Debt extinguishment costs                62.2             –        62.2
   Merger expenses                          23.1           0.2        23.3
   Other                                    (0.1)          3.4         3.3
                                      ----------  ------------ -----------
      Total costs and expenses             611.6       1,769.0     2,380.6
                                      ----------  ------------ -----------
Income (loss) before income taxes         (162.0)         50.3      (111.7)
Income tax expense (benefit)               (51.3)         17.7       (33.6)
                                      ----------  ------------ -----------
Net income (loss)                         (110.7)         32.6       (78.1)
Preferred stock dividends                   (1.0)            –        (1.0)
                                      ----------  ------------ -----------
Net income (loss) attributable to
 common stockholders                 $    (111.7) $       32.6 $     (79.1)
                                     ===========  ============ ===========




                      VANGUARD HEALTH SYSTEMS, INC.
                   Supplemental Financial Information
         Reconciliation of Adjusted EBITDA to Net Income (Loss)
                               (In millions)

                                    (Unaudited)
                                 Three months ended        Year ended
                                     June 30,               June 30,
                                --------------------  --------------------
                                                        2005
                                                      (combined
                                  2005        2006       basis)     2006
                                ---------  ---------  ---------  ---------
Net income (loss)               $     7.8  $   (13.6) $   (78.1) $    12.9
Interest, net                        26.0       28.6       88.3      111.0
Income tax expense (benefit)          1.2       (8.2)     (33.6)      10.4
Depreciation and amortization        29.0       33.0       82.0      107.5
Minority interests                    0.1        0.2       (0.4)       2.5
Loss (gain) on sale of assets        (0.4)       2.4        0.6       (9.6)
Equity method loss (income)          (0.3)       0.7       (0.9)      (0.1)
Stock compensation                    0.3        0.6       97.4        1.7
Debt extinguishment costs               –          –       62.2        0.1
Merger expenses                       0.1          –       23.3          –
Impairment expense                      –       15.0          –       15.0
Monitoring fees                       1.3        1.3        4.0        5.2
                                ---------  ---------  ---------  ---------
 Adjusted EBITDA (a)            $    65.1  $    60.0  $   244.8  $   256.6
                                =========  =========  =========  =========


(a) Adjusted EBITDA is defined as income before interest expense (net of
    interest income), income taxes, depreciation and amortization, minority
    interests, gain or loss on the sale of assets, equity method income or
    loss, stock compensation, debt extinguishment costs, merger expenses,
    impairment expense and monitoring fees.  Adjusted EBITDA is not
    intended as a substitute for net income, operating cash flows or other
    cash flow statement data determined in accordance with accounting
    principles generally accepted in the United States.  Due to varying
    methods of calculation, Adjusted EBITDA as presented may not be
    comparable to similarly titled measures of other companies.




                          VANGUARD HEALTH SYSTEMS, INC.
                           Consolidated Balance Sheets
                                  (In millions)

                                              June 30,       June 30,
                                                2005           2006
                                             --------       --------
                    ASSETS
Current assets:
    Cash and cash equivalents                $   79.2       $  123.6
    Accounts receivable, net of allowance for
     uncollectible accounts of approximately
     $90.1 and $103.5 at June 30, 2005 and
     2006, respectively                         286.0          294.1
    Inventories                                  43.5           48.8
    Prepaid expenses and other current assets    36.1           51.2
                                             --------       --------
        Total current assets                    444.8          517.7

Property, plant and equipment, net            1,072.8        1,199.4
Goodwill                                        813.1          815.8
Intangible assets, net                           74.3           69.4
Investments in unconsolidated subsidiaries        9.0            8.2
Other assets                                     57.7           40.0
                                             --------       --------
        Total assets                         $2,471.7       $2,650.5
                                             ========       ========

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
    Accounts payable                         $  145.5       $  152.4
    Accrued salaries and benefits                86.4           85.3
    Accrued health claims                        51.2           44.0
    Accrued interest                             14.5           13.3
    Other accrued expenses and current
     liabilities                                 61.9           64.7
    Current maturities of long-term debt          7.6            8.3
                                             --------       --------
        Total current liabilities               367.1          368.0
Minority interests in equity of consolidated
 entities                                        10.4            9.4
Other liabilities                                68.9           73.0
Long-term debt, less current maturities       1,349.5        1,510.9
Commitments and contingencies

Stockholders’ equity:
Common Stock                                        –              –
Additional paid-in capital                      643.2          643.7
Retained earnings                                32.6           45.5
                                             --------       --------
        Total liabilities and stockholders'
         equity                              $2,471.7       $2,650.5
                                             ========       ========




                       VANGUARD HEALTH SYSTEMS, INC.
                   Consolidated Statements of Cash Flows
                               (In millions)

                                                Year ended June 30,
                                        -----------------------------
                                              2005
                                       (combined basis)          2006
                                           --------           --------
Operating activities:
Net income (loss)                          $  (78.1)          $   12.9
Adjustments to reconcile net income (loss)
 to net cash provided by operating activities:
    Depreciation and amortization              82.0              107.5
    Provision for doubtful accounts           151.3              178.1
    Deferred income taxes                     (37.6)               8.5
    Amortization of loan costs                  3.2                4.0
    Accretion of principal on senior discount
     notes                                     11.0               15.7
    Loss (gain) on sale of assets               0.6               (9.6)
    Stock compensation                         97.4                1.7
    Debt extinguishment costs                  62.2                0.1
    Merger expenses                            23.3                  –
    Impairment expense                            –               15.0
    Changes in operating assets and
     liabilities, net of effects of
     acquisitions:
        Accounts receivable                  (159.4)            (186.6)
        Establishment of accounts receivable
         for acquisitions                     (53.3)                 –
        Inventories                            (2.9)              (5.5)
        Prepaid expenses and other current
         assets                                (6.2)               3.9
        Accounts payable                       58.3                4.4
        Accrued expenses and other liabilities 50.0               (0.8)
                                           --------           --------
Net cash provided by operating activities     201.8              149.3

Investing activities:
Acquisitions                                 (138.6)              (1.2)
Capital expenditures                         (238.2)            (284.5)
Purchases of short-term investments           (87.8)            (128.4)
Sales of short-term investments               145.8              128.4
Proceeds from asset sales                       0.7               39.7
Other                                          (6.2)               0.6
                                           --------           --------
Net cash used in investing activities        (324.3)            (245.4)

Financing activities:
Proceeds from long-term debt                1,347.7              175.0
Payments of long-term debt and capital
 leases                                      (690.4)             (31.4)
Payments of loan costs and debt termination
 fees                                         (44.4)              (0.7)
Proceeds from issuance of common stock        495.5                  –
Payments to retire stock, equity incentive
 units and stock options                     (964.9)              (2.5)
Proceeds from joint venture partner
 contributions                                  8.0                  –
Proceeds from the exercise of stock options     0.1                0.1
                                           --------           --------
Net cash provided by financing activities     151.6              140.5
                                           --------           --------

Net increase in cash and cash equivalents      29.1               44.4
Cash and cash equivalents, beginning of
 period                                        50.1               79.2
                                           --------           --------
Cash and cash equivalents, end of period   $   79.2           $  123.6
                                           ========           ========
Net cash paid for interest                 $   79.4           $  101.3
                                           ========           ========
Net cash paid (received) for income taxes  $   (1.0)          $    2.1
                                           ========           ========




                      VANGUARD HEALTH SYSTEMS, INC.
                  Consolidated Statements of Cash Flows
                              (In millions)


                                             Predecessor
                                              --------
                                              July 1,   Sept 23, Year ended
                                                2004      2004     June 30,
                                              through   through     2005
                                              Sept 22,  June 30,  (combined
                                                2004      2005      basis)
                                              --------  --------  --------
Operating activities:
Net income (loss)                             $ (110.7) $   32.6  $  (78.1)
Adjustments to reconcile net income (loss) to
 net cash provided by operating activities:
   Depreciation and amortization                  17.4      64.6      82.0
   Provision for doubtful accounts                31.5     119.8     151.3
   Deferred income taxes                         (50.9)     13.3     (37.6)
   Amortization of loan costs                      0.5       2.7       3.2
   Accretion of principal on senior discount
    notes                                            -      11.0      11.0
   Loss on sale of assets                          0.6         -       0.6
   Stock compensation                             96.7       0.7      97.4
   Debt extinguishment costs                      62.2         -      62.2
   Merger expenses                                23.1       0.2      23.3
    Changes in operating assets and
     liabilities, net of effects of
     acquisitions:
      Accounts receivable                        (42.1)   (117.3)   (159.4)
      Establishment of accounts receivable
       for acquisitions                              -     (53.3)    (53.3)
      Inventories                                 (0.3)     (2.6)     (2.9)
      Prepaid expenses and other current
       assets                                      2.4      (8.6)     (6.2)
      Accounts payable                            41.4      16.9      58.3
      Accrued expenses and other liabilities       7.0      43.0      50.0
                                              --------  --------  --------
Net cash provided by operating activities         78.8     123.0     201.8

Investing activities:
Acquisitions                                     (50.8)    (87.8)   (138.6)
Capital expenditures                             (29.8)   (208.4)   (238.2)
Purchases of short-term investments                  -     (87.8)    (87.8)
Sales of short-term investments                   30.0     115.8     145.8
Proceeds from asset sales                          0.5       0.2       0.7
Other                                              0.1      (6.3)     (6.2)
                                              --------  --------  --------
Net cash used in investing activities            (50.0)   (274.3)   (324.3)

Financing activities:
Proceeds from long-term debt                   1,174.7     173.0   1,347.7
Payments of long-term debt and capital leases   (683.9)     (6.5)   (690.4)
Payments of loan costs and debt termination
 fees                                            (40.9)     (3.5)    (44.4)
Proceeds from issuance of common stock           494.9       0.6     495.5
Payments to retire stock and stock options      (964.9)        -    (964.9)
Proceeds from joint venture partner
 contributions                                       -       8.0       8.0
Exercise of stock options                          0.1         -       0.1
                                              --------  --------  --------
Net cash provided by (used in) financing
 activities                                      (20.0)    171.6     151.6
                                              --------  --------  --------
Net increase in cash and cash equivalents          8.8      20.3      29.1
Cash and cash equivalents, beginning of
 period                                           50.1      58.9      50.1
                                              --------  --------  --------
Cash and cash equivalents, end of period      $   58.9  $   79.2  $   79.2
                                              ========  ========  ========
Net cash paid for interest                    $   23.6  $   55.8  $   79.4
                                              ========  ========  ========
Net cash received for income taxes            $   (0.1) $   (0.9) $   (1.0)
                                              ========  ========  ========




                     VANGUARD HEALTH SYSTEMS, INC.
                Selected Operating Statistics (Unaudited)


                                              Three months ended
                                                    June 30,
                                              ------------------
                                                 2005      2006    % Change
                                              -----------------------------
Actual:
Number of hospitals at end of period               19         19
Licensed beds at end of period                  4,557      4,587
Discharges                                     46,240     45,685     (1.2)%
Adjusted discharges-hospitals                  74,475     72,640     (2.5)%
Average length of stay                           4.34       4.34      0.0 %
Patient days                                  200,638    198,401     (1.1)%
Adjusted patient days-hospitals               323,151    315,462     (2.4)%
Patient revenue per adjusted
 discharge-hospitals                          $ 6,823    $ 7,556     10.7 %
Outpatient surgeries                           21,067     20,655     (2.0)%
Emergency room visits                         165,240    161,387     (2.3)%

Charity care as a percent of patient
service revenues (prior to charity
 deductions)                                      3.2%       3.3%

Provision for doubtful accounts as a
 percent of patient service revenues              7.5%       7.3%

Net patient revenue payer mix:
  Medicare                                         30%        28%
  Medicaid                                          7%         7%
  Managed care                                     48%        51%
  Commercial                                        5%         4%
  Self pay                                         10%        10%
                                              -------    -------
    Total                                         100%       100%
                                              =======    =======




                          VANGUARD HEALTH SYSTEMS, INC.
                   Selected Operating Statistics (Unaudited)


                                             Year ended
                                              June 30,
                                       ----------------------
                                          2005
                                       (combined)        2006      % Change
                                       ------------------------------------
Actual:
Number of hospitals at end of period          19           19
Licensed beds at end of period             4,557        4,587
Discharges                               171,110      182,386        6.6 %
Adjusted discharges-hospitals            262,780      289,333       10.1 %
Average length of stay                      4.28         4.40        2.8 %
Patient days                             731,797      802,650        9.7 %
Adjusted patient days-hospitals        1,123,846    1,273,304       13.3 %
Patient revenue per adjusted
 discharge-hospitals                   $   6,899    $   7,421        7.6 %
Outpatient surgeries                      73,921       81,240        9.9 %
Emergency room visits                    591,886      645,539        9.1 %

Charity care as a percent of patient
 service revenues (prior to charity
 deductions)                                 2.8%         3.3%

Provision for doubtful accounts as a
 percent
 of patient service revenues                 7.8%         7.8%

Net patient revenue payer mix:
  Medicare                                    31%          29%
  Medicaid                                     7%           7%
  Managed care                                46%          50%
  Commercial                                   5%           4%
  Self pay                                    11%          10%
                                       ---------    ---------
    Total                                    100%         100%
                                       =========    =========

Same hospital:
Number of hospitals                           16           16
Total revenues (in millions)           $ 2,028.7    $ 2,165.1        6.7 %
Discharges                               154,089      150,169       (2.5)%
Adjusted discharges-hospitals            229,619      225,667       (1.7)%
Average length of stay                      4.22         4.35        3.1 %
Patient days                             649,708      653,905        0.6 %
Adjusted patient days-hospitals          968,174      982,658        1.5 %
Patient revenue per adjusted
 discharge-hospitals                   $   6,907    $   7,468        8.1 %
Outpatient surgeries                      64,081       61,567       (3.9)%
Emergency room visits                    534,971      533,136       (0.3)%

Contact Information

  • Contact:
    Vanguard Health Systems, Inc.
    Aaron Broad
    Director Investor Relations
    (615) 665-6131