SEGMENT INFORMATION

The Company’s acute care hospitals and related health care businesses are similar in their activities and the economic environments in which they operate (i.e., urban and suburban areas). Accordingly, the Company’s reportable operating segments consist of 1) acute care hospitals and related health care businesses, collectively, and 2) health plans, including Chicago Health Systems, a contracting entity for outpatient services under multiple contracts and inpatient services for one contract provided by MacNeal Hospital and Weiss Memorial Hospital and participating physicians in the Chicago area; Phoenix Health Plan, a Medicaid managed health plan operating in Arizona; Abrazo Advantage Health Plan, a Medicare and Medicaid dual eligible managed health plan operating in Arizona; ProCare Health Plan, a Medicaid managed health plan operating in Michigan; and Valley Baptist Insurance Company, which offers health maintenance organization, preferred provider organization, and self-funded products to its members in the form of large group, small group, and individual product offerings in south Texas.

The following tables provide unaudited condensed financial information by operating segment for the years ended June 30, 2011, 2012 and 2013, including a reconciliation of Segment EBITDA to income (loss) from continuing operations before income taxes (in millions).



	Year ended June 30, 2011
	Acute Care Services			Health Plans			Eliminations			Consolidated
Patient service revenues, net ⁽¹⁾	$	3,712.3		$	—		$	—		$	3,712.3
Premium revenues	—			869.4			—			869.4
Inter-segment revenues	41.3			—			(41.3		)	—
Total revenues	3,753.6			869.4			(41.3		)	4,581.7

Salaries and benefits (excludes stock compensation)	1,981.9			33.7			—			2,015.6
Health plan claims expense ⁽¹⁾	—			686.3			—			686.3
Supplies	669.8			0.1			—			669.9
Other operating expenses-external	758.1			40.7			—			798.8
Operating expenses-intersegment	—			41.3			(41.3		)	—
Medicare and Medicaid EHR incentives	(10.1		)	—			—			(10.1		)
Segment EBITDA ⁽²⁾	353.9			67.3			—			421.2
Less:
Interest, net	173.1			(1.9		)	—			171.2
Depreciation and amortization	189.3			4.5			—			193.8
Equity method income	(0.9		)	—			—			(0.9		)
Stock compensation	4.8			—			—			4.8
Gain on disposal of assets	(0.2		)	—			—			(0.2		)
Realized gains on investments	(1.3		)	—			—			(1.3		)
Monitoring fees and expenses	31.3			—			—			31.3
Acquisition related expenses	12.5			—			—			12.5
Impairment and restructuring charges	6.0			—			—			6.0
Pension credits	(2.1		)	—			—			(2.1		)
Income (loss) from continuing operations before income taxes	$	(58.6	)	$	64.7		$	—		$	6.1

Segment assets	$	4,199.1		$	397.8		$	—		$	4,596.9

Capital expenditures	$	206.1		$	0.4		$	—		$	206.5

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(1)	The Company eliminates in consolidation those patient service revenues earned by its health care facilities attributable to services provided to members in its owned health plans and eliminates the corresponding medical claims expenses incurred by the health plans for those services.

(2)

Segment EBITDA is defined as income from continuing operations before income taxes less interest expense (net of interest income), depreciation and amortization, equity method income, stock compensation, gain or loss on disposal of assets, realized gains or losses on investments, monitoring fees and expenses, acquisition related expenses, debt extinguishment costs, impairment and restructuring charges, and pension expense (credits). Management uses Segment EBITDA to measure the performance of the Company’s segments and to develop strategic objectives and operating plans for those segments. Segment EBITDA eliminates the uneven effect of non-cash depreciation of tangible assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting. Segment EBITDA also eliminates the effects of changes in interest rates, which management believes relate to general trends in global capital markets, but are not necessarily indicative of the operating performance of the Company’s segments. Management believes that Segment EBITDA provides useful information to investors, lenders, financial analysts and rating agencies about the financial performance of the Company’s segments. Additionally, management believes that investors and lenders view Segment EBITDA as an important factor in making investment decisions and assessing the value of the Company. Segment EBITDA is not 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. Segment EBITDA, as presented, may not be comparable to similar measures of other companies.



	Year ended June 30, 2012
	Acute Care Services			Health Plans			Eliminations			Consolidated
Patient service revenues, net ⁽¹⁾	$	5,191.6		$	—		$	—		$	5,191.6
Premium revenues	—			757.4			—			757.4
Inter-segment revenues	42.4			—			(42.4		)	—
Total revenues	5,234.0			757.4			(42.4		)	5,949.0

Salaries and benefits (excludes stock compensation)	2,699.9			37.8			—			2,737.7
Health plan claims expense ⁽¹⁾	—			578.9			—			578.9
Supplies	911.5			0.1			—			911.6
Other operating expenses-external	1,130.5			42.8			—			1,173.3
Operating expenses-intersegment	—			42.4			(42.4		)	—
Medicare and Medicaid EHR incentives	(28.2		)	—			—			(28.2		)
Segment EBITDA ⁽²⁾	520.3			55.4			—			575.7
Less:
Interest, net	184.7			(1.9		)	—			182.8
Depreciation and amortization	253.9			4.4			—			258.3
Equity method income	(1.5		)	—			—			(1.5		)
Stock compensation	9.2			—			—			9.2
Loss on disposal of assets	0.6			—			—			0.6
Acquisition related expenses	14.0			—			—			14.0
Debt extinguishment costs	38.9			—			—			38.9
Impairment and restructuring charges	(0.1		)	—			—			(0.1		)
Pension credits	(5.1		)	—			—			(5.1		)
Income from continuing operations before income taxes	$	25.7		$	52.9		$	—		$	78.6

Segment assets	$	4,552.6		$	235.5		$	—		$	4,788.1

Capital expenditures	$	291.9		$	1.4		$	—		$	293.3

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(1)	The Company eliminates in consolidation those patient service revenues earned by its health care facilities attributable to services provided to members in its owned health plans and eliminates the corresponding medical claims expenses incurred by the health plans for those services.

(2)



	Year ended June 30, 2013
	Acute Care Services			Health Plans		Eliminations			Consolidated
Patient service revenues, net ⁽¹⁾	$	5,262.3		$	—	$	—		$	5,262.3
Premium revenues	—			737.1		—			737.1
Inter-segment revenues	40.1			—		(40.1		)	—
Total revenues	5,302.4			737.1		(40.1		)	5,999.4

Salaries and benefits (excludes stock compensation)	2,696.5			37.7		—			2,734.2
Health plan claims expense ⁽¹⁾	—			577.4		—			577.4
Supplies	916.9			0.1		—			917.0
Other operating expenses-external	1,209.3			44.0		—			1,253.3
Operating expenses-intersegment	—			40.1		(40.1		)	—
Medicare and Medicaid EHR incentives	(38.0		)	—		—			(38.0		)
Segment EBITDA ⁽²⁾	517.7			37.8		—			555.5
Less:
Interest, net	196.4			0.6		—			197.0
Depreciation and amortization	252.9			4.2		—			257.1
Equity method income	(1.8		)	—		—			(1.8		)
Stock compensation	6.4			—		—			6.4
Gain on disposal of assets	(13.3		)	—		—			(13.3		)
Realized losses on investments	0.3			—		—			0.3
Acquisition related expenses	8.1			—		—			8.1
Debt extinguishment costs	2.1			—		—			2.1
Impairment and restructuring charges	5.2			—		—			5.2
Pension credits	(15.4		)	—		—			(15.4		)
Income from continuing operations before income taxes	$	76.8		$	33.0	$	—		$	109.8

Segment assets	$	4,796.5		$	246.1	$	—		$	5,042.6

Capital expenditures	$	419.8		$	0.7	$	—		$	420.5

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(1)	The Company eliminates in consolidation those patient service revenues earned by its health care facilities attributable to services provided to members in its owned health plans and eliminates the corresponding medical claims expenses incurred by the health plans for those services.

(2)