10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

Form 10-Q

________________

(Mark One)
☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to

Commission file number: 000-51251

________________

LifePoint Health, 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.)
330 Seven Springs Way Brentwood, Tennessee	37027
(Address Of Principal Executive Offices)	(Zip Code)

(615) 920-7000

(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 ☑    No ☐

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 ☑    No ☐

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

Large accelerated filer ☑	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
(Do not check if a smaller reporting company)	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of July 20, 2018, the number of outstanding shares of the registrant’s Common Stock was38,725,509.

LifePoint Health, 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	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56
Item 4.	Controls and Procedures	56

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 6.	Exhibits	61

i

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements.

LIFEPOINT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(In millions, except per share amounts)

	Three Months Ended				Six Months Ended
	June 30,				June 30
	2018		2017		2018		2017
Revenues	$	1,569.8	$	1,594.8	$	3,172.6	$	3,225.0
Salaries and benefits		740.2		762.0		1,502.7		1,558.9
Supplies		256.0		263.2		522.0		531.4
Other operating expenses, net		386.6		377.4		772.4		746.9
Depreciation and amortization		81.4		88.7		163.0		176.8
Interest expense, net		37.0		37.6		74.0		75.0
Other non-operating (gains) losses, net		(3.2)		(4.5)		69.5		(30.4)
		1,498.0		1,524.4		3,103.6		3,058.6
Income before income taxes		71.8		70.4		69.0		166.4
Provision for income taxes		17.0		24.4		19.5		56.4
Net income		54.8		46.0		49.5		110.0
Less:  Net income attributable to noncontrolling interests and
redeemable noncontrolling interests		(2.4)		(3.5)		(5.9)		(7.6)
Net income attributable to LifePoint Health, Inc.	$	52.4	$	42.5	$	43.6	$	102.4
Weighted average shares outstanding - basic		38.8		40.3		38.9		40.2
Effect of dilutive stock options and other stock-based awards		0.7		1.0		0.6		1.0
Weighted average shares outstanding - diluted		39.5		41.3		39.5		41.2
Earnings per share attributable to LifePoint Health, Inc. stockholders:
Basic	$	1.35	$	1.06	$	1.12	$	2.55
Diluted	$	1.33	$	1.03	$	1.10	$	2.49

See accompanying notes

1

LIFEPOINT HEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except per share amounts)

	June 30,		December 31,
	2018		2017 (a)
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	143.8	$	112.0
Accounts receivable		802.7		822.4
Inventories		152.9		153.1
Prepaid expenses		76.5		67.2
Other current assets		101.3		110.5
		1,277.2		1,265.2
Property and equipment:
Land		181.3		182.4
Buildings and improvements		2,557.5		2,564.7
Equipment		2,349.3		2,340.4
Construction in progress (estimated costs to complete after June 30, 2018 is $359.7)		341.6		353.8
		5,429.7		5,441.3
Accumulated depreciation		(2,426.0)		(2,351.0)
		3,003.7		3,090.3
Intangible assets, net		78.2		76.3
Other long-term assets		123.2		116.8
Goodwill		1,733.8		1,737.8
Total assets	$	6,216.1	$	6,286.4
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	186.6	$	210.3
Accrued salaries		203.9		216.3
Other current liabilities		277.4		296.0
Current maturities of long-term debt		22.6		22.3
		690.5		744.9
Long-term debt, net		2,905.8		2,877.4
Deferred income taxes		10.2		32.3
Long-term portion of reserves for self-insurance claims		141.0		140.9
Other long-term liabilities		85.9		80.1
Total liabilities		3,833.4		3,875.6
Redeemable noncontrolling interests		93.1		125.0
Equity:
LifePoint Health, 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; 68,250,713 and
67,990,507 shares issued at June 30, 2018 and December 31, 2017, respectively		0.7		0.7
Capital in excess of par value		1,624.9		1,620.8
Accumulated other comprehensive loss		(3.6)		(3.6)
Retained earnings		1,922.9		1,879.3
Common stock in treasury, at cost, 29,525,204 and 28,632,630 shares at June 30, 2018
and December 31, 2017, respectively		(1,297.6)		(1,254.7)
Total LifePoint Health, Inc. stockholders' equity		2,247.3		2,242.5
Noncontrolling interests		42.3		43.3
Total equity		2,289.6		2,285.8
Total liabilities and equity	$	6,216.1	$	6,286.4

_________________________________

(a) Derived from audited consolidated financial statements.

See accompanying notes

2

LIFEPOINT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In Millions)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Cash flows from operating activities:
Net income	$	54.8	$	46.0	$	49.5	$	110.0
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock-based compensation		6.5		5.3		14.7		11.9
Depreciation and amortization		81.4		88.7		163.0		176.8
Other non-cash amortization		2.7		3.1		5.3		6.4
Other non-operating (gains) losses, net		(3.2)		(4.5)		69.5		(30.4)
Deferred income taxes		3.4		0.1		(22.1)		(1.0)
Reserve for self-insurance claims, net of payments		0.5		(5.1)		(1.6)		(36.8)
Increase (decrease) in cash from operating assets and liabilities,
net of effects from acquisitions and divestitures:
Accounts receivable		26.6		21.0		7.3		11.5
Inventories, prepaid expenses and other current assets		20.2		20.3		14.3		20.4
Accounts payable, accrued salaries and other current liabilities		(50.7)		(32.7)		(82.0)		(35.2)
Income taxes payable/receivable		(12.7)		(30.5)		13.6		(22.2)
Other		5.3		(1.1)		3.9		(9.1)
Net cash provided by operating activities		134.8		110.6		235.4		202.3
Cash flows from investing activities:
Purchases of property and equipment		(81.4)		(89.2)		(137.6)		(157.7)
Proceeds from sale of businesses		-		2.1		1.5		14.9
Other		2.7		0.8		(4.0)		(2.4)
Net cash used in investing activities		(78.7)		(86.3)		(140.1)		(145.2)
Cash flows from financing activities:
Proceeds from borrowings		75.0		60.0		125.0		140.0
Payments of borrowings		(64.4)		(64.4)		(93.8)		(148.8)
Repurchases of common stock		(10.1)		(20.5)		(42.9)		(26.4)
Redemptions of noncontrolling interests and redeemable
noncontrolling interests, net of sales		(36.9)		(0.2)		(34.7)		(0.2)
Distributions to noncontrolling interests and
redeemable noncontrolling interests		(15.1)		(3.0)		(16.3)		(4.8)
Proceeds from exercise of stock options		0.4		5.9		1.7		15.3
Other		(1.3)		3.0		(2.5)		2.6
Net cash used in financing activities		(52.4)		(19.2)		(63.5)		(22.3)
Change in cash and cash equivalents		3.7		5.1		31.8		34.8
Cash and cash equivalents at beginning of period		140.1		125.8		112.0		96.1
Cash and cash equivalents at end of period	$	143.8	$	130.9	$	143.8	$	130.9
Supplemental disclosure of cash flow information:
Interest payments	$	65.5	$	63.3	$	72.2	$	68.8
Capitalized interest	$	3.7	$	1.5	$	6.9	$	3.0
Income tax payments, net	$	26.3	$	54.8	$	28.0	$	79.6

See accompanying notes

3

LIFEPOINT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

For the Six Months Ended June 30, 2018

Unaudited

(In Millions)

	LifePoint Health, Inc. Stockholders
						Accumulated
				Capital in		Other
	Common Stock			Excess of		Comprehensive		Retained		Treasury		Noncontrolling
	Shares	Amount		Par Value		Loss		Earnings		Stock		Interests		Total
Balance at December 31, 2017 (a)	39.3	$	0.7	$	1,620.8	$	(3.6)	$	1,879.3	$	(1,254.7)	$	43.3	$	2,285.8
Net income	-		-		-		-		43.6		-		0.1		43.7
Exercise of stock options	0.3		-		1.7		-		-		-		-		1.7
Stock-based compensation	-		-		14.7		-		-		-		-		14.7
Repurchases of common stock,
at cost	(0.9)		-		-		-		-		(42.9)		-		(42.9)
Fair value adjustments related to
redeemable noncontrolling interests	-		-		(12.6)		-		-		-		-		(12.6)
Proceeds from (distributions to)
noncontrolling interests	-		-		0.3		-		-		-		(1.1)		(0.8)
Balance at June 30, 2018	38.7	$	0.7	$	1,624.9	$	(3.6)	$	1,922.9	$	(1,297.6)	$	42.3	$	2,289.6

___________

(a) Derived from audited consolidated financial statements.

See accompanying notes

4

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

Note 1. Organization, Basis of Presentation and Recently Issued Accounting Standards

Organization

LifePoint Health, Inc., a Delaware corporation, acting through its subsidiaries, owns and operates community hospitals, regional health systems, physician practices, outpatient centers, and post-acute facilities in 22 states throughout the United States (“U.S.”). Unless the context otherwise indicates, LifePoint Health, Inc. and its subsidiaries are referred to herein as “LifePoint” or the “Company.”

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 six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. 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, 2017.

Additionally, the accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all subsidiaries and entities controlled by the Company through its direct or indirect ownership of a majority interest and exclusive rights granted to the Company as the sole general partner or controlling member of such entities, including Duke LifePoint Healthcare, a joint venture between LifePoint and a wholly-controlled affiliate of Duke University Health System, Inc., and the Regional Health Network of Kentucky and Southern Indiana, a joint venture between LifePoint and Norton Healthcare, Inc.  Furthermore, the Company consolidates any entities for which it receives the majority of the entity’s expected returns or is at risk for the majority of the entity’s expected losses based upon its investment or financial interest in the entity.  All significant intercompany accounts and transactions within the Company have been eliminated in consolidation.

Adoption of Recently Issued Accounting Standards

ASC 606-10, “Revenue from Contracts with Customers”

Effective January 1, 2018, the Company adopted the provisions of Accounting Standards Codification (“ASC”) 606-10, “Revenue from Contracts with Customers” (“ASC 606-10”), which supersedes most existing revenue recognition guidance, including industry-specific healthcare guidance, by applying the full retrospective method for all periods presented.  ASC 606-10 provides for a single comprehensive principles-based standard for the recognition of revenue across all industries through the application of the following five-step process:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

The adoption of the provisions of ASC 606-10 had no impact on the Company’s current or historical financial position, results of operations or cash flows.  Additionally, management does not anticipate that the provisions of ASC 606-10 will have an impact on the amount or timing of when the Company recognizes revenue prospectively.  However, in accordance with ASC 606-10, the Company now recognizes the majority of its previously reported provision for doubtful accounts, primarily related to its self-pay patient population, as a direct reduction to revenues as an implicit pricing concession, instead of separately as a discrete deduction to arrive at revenue, and the related presentation of the allowance for doubtful accounts has been eliminated for all periods presented.  The Company’s revenue recognition and accounts receivable policies are more fully described in Note 2.

5

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

SAB 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act”

The Company is applying the guidance in accordance with Staff Accounting Bulletin 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act”, when accounting for the enactment-date effects of the Tax Cuts and Jobs Act (the “Tax Act”).  As of June 30, 2018, the Company has not completed its accounting for all of the tax effects of the Tax Act, and the Company did not make any adjustments to the provisional amounts that it recorded at December 31, 2017 during the six months ended June 30, 2018.  As the Company completes its analysis of the Tax Act, including the collection of data and interpretation of any additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service, and other standard-setting bodies, it may make adjustments to the provisional amounts.  Those adjustments may materially impact the Company’s provision for income taxes in the period in which the adjustments are made.

Accounting Standards Not Yet Adopted

ASU 2016-2, “Leases”

In February 2016, the Financial Accounting Standards Board (“FASB”)issued Accounting Standards Update (“ASU”) 2016-2 “Leases” (“ASU 2016-2”).  ASU 2016-2 requires the rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet.  ASU 2016-2 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years.  Early adoption is permitted. The Company anticipates that the adoption of ASU 2016-2 will result in an increase in both total assets and total liabilities reflected in the Company’s balance sheets. The Company is still evaluating the impact that the adoption of this standard will have on its policies, procedures, financial disclosures, and control framework.

ASU 2018-2, “Income Statement – Reporting Comprehensive Income”

In January 2018, the FASB issued ASU 2018-2, “Income Statement – Reporting Comprehensive Income (Topic 220)” (“ASU 2018-2”), which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded income tax effects resulting from the Tax Act.  ASU 2018-2 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years.  Early adoption is permitted.  The Company has not determined whether or not it will adopt ASU 2018-2, but the Company does not anticipate that the adoption of this standard would have a significant impact onits balance sheet. 

Note 2. Revenue Recognition and Accounts Receivable

Revenue from Contracts with Customers

Overview

The Company recognizes revenues in the period in which performance obligations are satisfied. Generally, the Company bills patients and third-party payers several days after the services are performed or the patient is discharged. Accounts receivable primarily consist of amounts due from third-party payers and patients. The Company’s ability to collect outstanding accounts receivable is critical to its results of operations and cash flows.  Amounts the Company receives for treatment of patients covered by governmental programs and third-party payers such as Medicare, Medicaid, health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”) and private insurers as well as directly from patients are subject to contractual adjustments, discounts and implicit price concessions.  Accordingly, the revenue and accounts receivable reported in the Company’s condensed consolidated financial statements are recorded at the net consideration to which the Company expects to be entitled to in exchange for providing patient care. 

6

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

The majority of the Company’s performance obligations are satisfied over time for the delivery of patient care in both outpatient and inpatient settings.  Revenue for performance obligations satisfied over time is recognized based on actual charges incurred in relation to total expected charges for services anticipated to be provided.  The Company believes that this method provides a faithful depiction of the transfer of services over the term of the performance obligation based on the remaining services needed to satisfy the obligation. Generally, unsatisfied or partially unsatisfied performance obligations at the end of the reporting period are related to patients admitted to the Company’s hospitals that have not yet been discharged.  The performance obligations for these patients are typically satisfied when the patients are discharged, which generally occurs within a matter of days of admission.  Patients are generally billed when discharged, though they may be billed on an interim basis for longer stays. Accordingly, because all of the Company’s performance obligations are part of a contract that is expected to have a duration of one year or less, the Company has elected to apply the exemption provided by ASC 606-10 to not disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of period end.

Subsequent adjustments that are determined to be the result of an adverse change in the patient’s or the payer’s ability to pay are recognized as bad debt expense.  With the adoption of ASC 606-10, bad debt expense is included under the caption “Other operating expenses, net” in the accompanying condensed consolidated statements of income, instead of separately as a deduction to arrive at revenue.  Bad debt expense for the three and six months ended June 30, 2018 and 2017 was not material for the Company. 

Contractual Discounts

The Company derives a significant portion of its revenues from Medicare, Medicaid and other payers that receive discounts from the Company’s established billing rates. The Company must estimate the total amount of these discounts to prepare its condensed consolidated financial statements. The Medicare and Medicaid regulations and various managed care contracts under which these discounts must be calculated are complex and are subject to interpretation and adjustment. The Company estimates contractual discounts on a payer-specific basis given its interpretation of the applicable regulations or contract terms. These interpretations sometimes result in payments that differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management. Subsequent changes in estimates for contractual discounts are reflected as an adjustment to revenues in the period of the change.  Medicare, Medicaid and other discounted payer accounts receivables are written off after they have been final settled with the payer.

Cost Report Settlements

Cost report settlements under reimbursement agreements with Medicare, Medicaid and certain other payers for retroactive adjustments due to audits, reviews or investigations are considered variable consideration and are included in the determination of the estimated transaction price for providing patient care.  These settlements are estimated based on the payment terms of the reimbursement agreement with the payer, correspondence from the payer, and the Company’s historical experience.  Estimated settlements are adjusted in future periods as final settlements are determined.  There is a reasonable possibility that recorded estimates will change by a material amount in the near term.  Net adjustments arising from a change in the transaction price for estimated settlements under reimbursement agreements resulted in increases to revenues of $1.4 million and $14.3  million during the three months ended June 30, 2018 and 2017, respectively, and $9.9 million and $21.1 million for the six months ended June 30, 2018 and 2017, respectively.

The net cost report settlements due from the Company at June 30, 2018 were $3.2million and are included under the caption “Other current liabilities” in the accompanying unaudited condensed consolidated balance sheet.  The net cost report settlements due to the Company at December 31, 2017 were $2.7 million and are included under the caption “Accounts receivable” in the accompanying unaudited condensed consolidated balance sheet.  The Company’s management believes that adequate provisions have been made for adjustments that may result from final determination of amounts earned under these programs consistent with the constraints that are required by ASC 606-10.

7

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

Self-Pay Revenues

Self-pay revenues are derived from patients who do not have any form of healthcare coverage as well as from patients with third party healthcare coverage related to the patient responsibility portion, including deductibles and co-payments.  The Company evaluates these patients, after the patient’s medical condition is determined to be stable, for their ability to pay based upon federal and state poverty guidelines, qualifications for Medicaid or other governmental assistance programs.  The Company estimates the transaction price for self-pay patients and the patient responsibility portion using a number of analytical tools, benchmarks and market conditions. No single statistic or measurement determines the transaction price for these patients.  Some of the analytical tools that the Company utilizes include, but are not limited to, historical cash collection experience, revenue trends by payer classification and revenue days in accounts receivable. 

The revenues associated with self-pay patients are reported at the net amount that the Company expects to collect.  Because the Company provides care to patients regardless of their ability to pay, the Company has determined that the differences between the amounts it bills based on gross or discounted charges and the amounts the Company expects to collect represent implicit price concessions.  The final amount that will be received from the patient is not known at the date of service, and the Company accounts for this variable consideration in accordance with the provisions of ASC 606-10.  Self-pay accounts receivable are written off after collection efforts have been followed in accordance with the Company’s policies. 

Charity Care

The Company provides care without charge to certain patients that qualify under the local charity care policy of each of its hospitals. The Company estimates that its costs of care provided under its charity care programs approximated $5.5 million and $6.7  million for the three months ended June 30, 2018 and 2017, respectively, and $10.8 million and $13.6 million for the six months ended June 30, 2018 and 2017, respectively.  The Company does not report a charity care patient’s charges in revenues as it is the Company’s policy not to pursue collection of amounts related to these patients, and therefore contracts with these patients do not exist.

The Company’s management estimates its costs of care provided under its charity care programs utilizing a calculated ratio of costs to gross charges multiplied by the Company’s gross charity care charges provided.  The Company’s gross charity care charges include only services provided to patients who are unable to pay and qualify under the Company’s local charity care policies.  To the extent the Company receives reimbursement through the various governmental assistance programs in which it participates to subsidize its care of indigent patients, the Company does not include these patients’ charges in its cost of care provided under its charity care program. 

Financing Component

The Company has elected to apply the practical expedient permitted under ASC 606-10 and does not adjust the estimated amount of consideration from patients and third-party payers for the effects of a significant financing component because the Company expects that the period between the time the service is provided to a patient and the time that the patient or a third-party payer pays for that service will be one year or less.

Rental Income

The Company leases certain real estate assets it owns to unrelated third parties, primarily medical office buildings to non-employed physicians. The Company recognizes rental income for these operating lease arrangements in which the Company is the lessor on a straight-line basis over the lease term in accordance with ASC 840-10, “Leases”. 

8

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

Concentration of Revenues

The Company’s revenues by source, as well as approximate percentages of revenues, were as follows for the three and six months ended June 30, 2018 and 2017 (in millions):

	Three Months Ended June 30,								Six Months Ended June 30,
	2018				2017				2018				2017
			% of				% of				% of				% of
	Amount		Revenues		Amount		Revenues		Amount		Revenues		Amount		Revenues
Medicare	$	577.3	36.8	%	$	594.8	37.3	%	$	1,185.2	37.4	%	$	1,225.2	38.0	%
Medicaid		219.7	14.0			229.9	14.4			439.4	13.8			472.7	14.6
HMOs, PPOs and other private insurers		736.5	46.9			736.1	46.1			1,475.1	46.5			1,454.4	45.1
Self-pay		6.6	0.4			6.0	0.4			12.8	0.4			12.0	0.4
Other		26.3	1.7			23.6	1.5			53.3	1.7			51.6	1.6
Revenue from contracts with customers		1,566.4	99.8			1,590.4	99.7			3,165.8	99.8			3,215.9	99.7
Rental income		3.4	0.2			4.4	0.3			6.8	0.2			9.1	0.3
Revenues	$	1,569.8	100.0	%	$	1,594.8	100.0	%	$	3,172.6	100.0	%	$	3,225.0	100.0	%

During the three months ended June 30, 2018 and 2017, approximately 50.8% and 51.7%, respectively, of the Company’s revenues related to patients participating in the Medicare and Medicaid programs, collectively.  During the six months ended June 30, 2018 and 2017, approximately 51.2% and 52.6%, respectively, of the Company’s revenues related to patients participating in the Medicare and Medicaid programs, collectively.The Company’s management recognizes that revenues and receivables from government agencies are significant to the Company’s operations, but it does not believe that there are significant credit risks associated with these government agencies. The Company’s management does not believe that there are any other significant concentrations of revenues from any particular payer that would subject the Company to any significant credit risks in the collection of its accounts receivable.

The Company’s revenues by primary service type and approximate percentages of revenues were as follows for the three and six months ended June 30, 2018 and 2017 (in millions):

	Three Months Ended June 30,								Six Months Ended June 30,
	2018				2017				2018				2017
			% of				% of				% of				% of
	Amount		Revenues		Amount		Revenues		Amount		Revenues		Amount		Revenues
Outpatient services	$	938.7	59.8	%	$	933.7	58.5	%	$	1,872.2	59.0	%	$	1,853.9	57.5	%
Inpatient services		601.4	38.3			633.1	39.7			1,240.3	39.1			1,310.4	40.6
Non-patient (ancillary goods,
services and rental income)		29.7	1.9			28.0	1.8			60.1	1.9			60.7	1.9
Revenues	$	1,569.8	100.0	%	$	1,594.8	100.0	%	$	3,172.6	100.0	%	$	3,225.0	100.0	%

9

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

The Company’s revenues are particularly sensitive to regulatory and economic changes in certain states where the Company generates significant revenues. The following is an analysis by state of revenues as a percentage of the Company’s total revenues for those states in which the Company generated significant revenues for the three and six months ended June 30, 2018 and 2017:

		Three Months Ended June 30,								Six Months Ended June 30,
	Hospital Campuses	2018				2017				2018				2017
	in State as of			% of				% of				% of				% of
	June 30, 2018	Amount		Revenues		Amount		Revenues		Amount		Revenues		Amount		Revenues
North Carolina	9	$	237.9	15.2	%	$	240.0	15.1	%	$	476.4	15.0	%	$	477.1	14.8	%
Kentucky	10		181.6	11.6			170.7	10.7			364.2	11.5			349.8	10.8
Virginia	6		164.7	10.5			158.7	10.0			335.0	10.6			325.2	10.1
Pennsylvania	4		133.4	8.5			140.9	8.8			266.4	8.4			281.7	8.7
Tennessee	10		120.4	7.7			114.9	7.2			238.0	7.5			232.2	7.2
Michigan	3		112.3	7.2			113.5	7.1			224.8	7.1			225.9	7.0
New Mexico	2		94.1	6.0			87.8	5.5			188.7	5.9			172.7	5.4

Any changes in the current demographic, economic, competitive or regulatory conditions, or to Medicaid programs, in the above-mentioned states could have an adverse effect on the Company’s revenues or results of operations.

Certain changes have been made to the Company’s classification of historical sources of revenues and revenue concentration by state to reflect the Company’s adoption of ASC 606-10. 

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 health support center overhead costs, which were $52.4million and $56.9million for the three months ended June 30, 2018 and 2017, respectively, and $111.6 million and $118.7 million for the six months ended June 30, 2018 and 2017, respectively.

Note 4. Fair Value of Financial Instruments

In accordance with 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.

10

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

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. as administrative agent,and the lenders party thereto (the “Senior Credit Agreement”),  5.5% unsecured senior notes due December 1, 2021 (the “5.5% Senior Notes”),5.875% unsecured senior notes due December 1, 2023 (the “5.875% Senior Notes”) and 5.375% unsecured senior notes due May 1, 2024 (the “5.375% Senior Notes”), excluding unamortized debt issuance costs and premium,as of June 30, 2018 and December 31, 2017 were as follows (in millions):

	Carrying Amount				Fair Value
	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Senior Credit Agreement:
Term Facility	$	665.0	$	673.8	$	665.0	$	673.8
Revolving Facility	$	40.0	$	-	$	40.0	$	-
5.5% Senior Notes	$	1,100.0	$	1,100.0	$	1,102.8	$	1,117.9
5.875% Senior Notes	$	500.0	$	500.0	$	496.9	$	504.4
5.375% Senior Notes	$	500.0	$	500.0	$	478.8	$	498.1

The fair values of the Company’s long-term debt instruments 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.  

Note 5. Other Non-Operating Gains and Losses

Louisiana Market Divestitures

In March 2018, the Company entered into definitive agreements to sell the assets of Mercy Regional Medical Center (“Mercy”) located in Ville Platte, Louisiana, Acadian Medical Center (“Acadian”), which is a campus of Mercy located in Eunice, Louisiana, and Minden Medical Center (“Minden”) located in Minden, Louisiana. The Company anticipates these sales will be completed during the third quarter of 2018.

Included in the Company’s consolidated results of operations for the three months ended June 30, 2018 and 2017 are net operating losses before income taxes attributable to these threehospitals of $0.5 million and $2.0million, respectively. Additionally, included in the Company’s consolidated results of operations for the six months ended June 30, 2018 and 2017 are net operating losses before income taxes attributable to these three hospitals of $1.7 million and $3.4 million, respectively.

The Company has recorded both an asset and a liability of$26.9 millionand$4.3 million, respectively, related to the assets and liabilities held for sale in connection with these transactions included under the captions “Other current assets” and “Other current liabilities” in the accompanying unaudited condensed consolidated balance sheet as of June 30, 2018.

During the six months ended June 30, 2018, the Company recognized impairment losses in the aggregate of $74.3million, $58.2million net of income taxes, or $1.47loss per diluted share, primarily in connection with the Company’s entry into definitive agreements to sell the assets of Mercy, Acadian and Minden, which is included under the caption “Other non-operating (gains) losses, net” in the accompanying unaudited condensed consolidated statement of incomefor the six months ended June 30, 2018.  The impairment losses include the write-down of property, equipment, allocated goodwill and certain other assets to their estimated fair values.

In-Home Healthcare Partnership

Effective January 1, 2017, the Company entered into a joint venture agreement with a wholly-owned subsidiary of LHC Group, Inc. (“LHC”) to form In-Home Healthcare Partnership (“IHHP”), the purpose of which is to own and operate the Company’s home health agencies and hospices and certain of LHC’s home health agencies and hospices, leveraging the combined expertise of the Company and LHC to enhance home health and hospice services in the communities served by the Company’s hospitals.  The Company accounts for its ownership interest in IHHP as an equity method investment in accordance with ASC 323-10, “Investments – Equity Method and Joint Ventures”. 

11

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

Throughout 2017, ownership and management of 19 of the Company’s home health agencies and 10 of the Company’s hospices were transferred to IHHP over the course of three phases.  Additionally, effective February 2, 2018, ownership and management of one remaining home health agency was transferred to IHHP in a fourth and final phase (“Phase IV”).  In connection with Phase IV, the Company transferred assets primarily comprised of accounts receivable and allocated goodwill in exchange for cash, and recognized a gain of approximately $1.6 million, $1.2 net of income taxes, or $0.03 earnings per diluted share, which is included under the caption “Other non-operating (gains) losses, net” in the accompanying unaudited condensed consolidated statement of income for the six months ended June 30, 2018.

Gain on Sale of Ancillary Rehabilitation Facility

During the three months ended June 30, 2018, the Company recognized a net gain of $3.2 million, $2.4 million net of income taxes, or $0.06 earnings per diluted share, primarily attributable to the sale of an ancillary rehabilitation facility at one of our hospital campuses.

Note 6. Redeemable Noncontrolling Interests

Certain of the Company’s joint venture partners’ noncontrolling interests include redemption features that cause these interests not to meet the requirements for classification as equity in accordance with ASC 480-10-S99-3, “Distinguishing Liabilities from Equity”. Redemption features related to these interests could require the Company to deliver cash, if exercised.  Accordingly, these redeemable noncontrolling interests are classified in the mezzanine section of the Company’s accompanying unaudited condensed consolidated balance sheets under the caption “Redeemable noncontrolling interests”. 

Effective June 1, 2018, the Company purchased its joint venture partner’s 20%noncontrolling interest in Fauquier Health (“Fauquier”), a 97 bed hospital and 113 bed long-term care facility located in Warrenton, Virginia,for approximately $49.9million.  The total transaction price includes the estimated fair value of the joint venture partner’s 20% interest in Fauquier in addition to undistributed earningsallocable to the joint venture partner as of the transaction date.As a result of this transaction,  Fauquier became a wholly-owned subsidiary of the Company.

The following table presents the changes in the Company’s redeemable noncontrolling interests, which are included in the accompanying unaudited condensed consolidated balance sheets at June 30, 2018 and December 31, 2017 (in millions):

Balance at December 31, 2017	$	125.0
Net income attributable to redeemable noncontrolling interests		5.8
Fair value adjustments		12.6
Redemptions, net of sales		(35.1)
Distributions		(15.2)
Balance at June 30, 2018	$	93.1

Note 7. 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 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, 2017 and did not incur an impairment charge.

12

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

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 June 30, 2018 and December 31, 2017 (in millions):

	June 30,		December 31,
	2018		2017
Amortized intangible assets:
Contract-based physician minimum revenue guarantees
Gross carrying amount	$	33.7	$	30.1
Accumulated amortization		(17.2)		(16.5)
Net total		16.5		13.6
Non-competition agreements and other
Gross carrying amount		18.2		18.2
Accumulated amortization		(14.2)		(13.3)
Net total		4.0		4.9
Total amortized intangible assets
Gross carrying amount		51.9		48.3
Accumulated amortization		(31.4)		(29.8)
Net total		20.5		18.5
Indefinite-lived intangible assets:
Certificates of need and certificates of need exemptions		35.9		35.9
Licenses, provider numbers, accreditations and other		21.8		21.9
Net total		57.7		57.8
Total intangible assets:
Gross carrying amount		109.6		106.1
Accumulated amortization		(31.4)		(29.8)
Net total	$	78.2	$	76.3

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.

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 three to five years and is included as an expense under the caption “Other operating expenses, net” in the accompanying unaudited condensed consolidated statements of income.  The Company’s liability for contract-based physician minimum revenue guarantees was $9.9million and $6.5 millionas ofJune 30, 2018 and December 31, 2017, respectively.These amounts are included in the accompanying unaudited condensed consolidated balance sheets under the caption “Other current liabilities”.

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.

13

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

Certificates of Need and Certificates of Need Exemptions

The construction of new facilities, the acquisition or 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 has acquired facilities 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, Trade Names and Other

To operate certain of its facilities, including facilities acquired by the Company, the Company must obtain certain licenses, provider numbers and accreditations from federal, state and other accrediting agencies.  Additionally, the Company has acquired trade names in connection with certain acquisitions.  The Company has determined that these intangible assets have an indefinite useful life.

Note 8.  Common Stock in Treasury

The Company’s Board of Directors authorizes, from time to time, plans for 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 Company repurchased approximately 0.8 million and 0.3 million shares for an aggregate purchase price, including commissions, of $40.0 million and $20.4 million at an average purchase price of $48.35 and $64.32 per share during the six months ended June 30, 2018 and 2017, respectively.As of June 30, 2018, the Company had remaining authority to repurchase approximately $190.0 million in sharesthrough April 24, 2019in accordance with a repurchase plan approved by the Company’s Board of Directors on October 24, 2017. The Company is not obligated to repurchase any specific number of shares under its repurchase plan.  The Company has designated the shares repurchased in accordance with its repurchase plans as treasury stock.

The Company redeems shares from employees for minimum statutory tax withholding purposes upon vesting of certain stock awards granted pursuant to the Company’s various stockholder approved stock-based compensation plans. The Company redeemed approximately  0.1 million shares vested under these plans during each ofthe six months ended June 30, 2018 and 2017for aggregate purchase prices of approximately $2.9million and $6.0million,respectively. The Company has designated these shares as treasury stock.

Note 9. 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 and performance shares) to certain officers, employees and non-employee directors in accordance with the Company’s stockholder-approved Amended and Restated 2013 Long-Term Incentive Plan(the “LTIP”). 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.

Notwithstanding the specific grant vesting requirements, award agreements under the LTIP may provide for accelerated vesting in certain circumstances.  Award agreements generally provide for full vesting upon the death or disability of the participant or upon a change in control or termination of employment.  Some award agreements also provide for partial or full vesting upon involuntary termination of employment, provided that if the award is performance-based then the accelerated vesting would occur only if the performance goals are attained.

14

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

Stock Options

The Company granted options to purchase496,781and 885,122shares of the Company’s common stock to certain officers and employees in accordance with the LTIP during the six months ended June 30, 2018 and 2017, 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 of grant, determined based on the closing price on the trading date immediately prior to the grant date. The options granted during the six months ended June 30, 2018 and 2017 become ratably exercisable beginning one year from the date of grant to either three or four 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 a binomial lattice option valuation model and a single option award approach.  The Company uses a binomial lattice option valuation model 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 binomial lattice option valuation 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 or four years.  The stock options vest at either 33.3% or 25.0%on each grant anniversary date over three or four years of continued employment, respectively.

The following table shows the weighted average assumptions the Company used to develop the fair value estimates under its lattice option valuation models and the resulting estimates of weighted-average fair value per share of stock options granted during the sixmonths ended June 30, 2018 and 2017:

	Six Months Ended June 30,
	2018			2017
Expected volatility		33.1	%		32.9	%
Risk-free interest rate		2.88	%		2.37	%
Expected dividends		-			-
Average expected term (years)		6.6			6.1
Fair value per share of stock options granted	$	16.46		$	21.42

The total intrinsic value of stock options exercised during the six months ended June 30, 2018 and 2017 was $1.1million and $9.6million, respectively. The Company received$1.7million and $15.3million in cash from stock option exercises duringthe six months ended June 30, 2018 and 2017, respectively. The actual tax benefit realized for the tax deductions from stock option exercises was $0.2million and $2.0 millionfor the six months ended June 30, 2018 and 2017, respectively.

As of June 30, 2018, there was $20.8million 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 1.7years.

Other Stock-Based Awards

The Company granted  309,511and  141,882restricted stock units to certain officers,employees and non-employee directorsin accordance with the LTIP during the six months ended June 30, 2018 and 2017, respectively. Vesting and payment of these restricted stock units are generally subject to continuing service of the employeeor non-employee director over the ratable vesting periods beginning one year from the date of grant to either three or four years after the date of grant, or cliff-vesting periods one year from the date of grant.  The fair values of these restricted stock units were determined based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date. 

15

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

During the six months ended June 30, 2018 and 2017,  the Company granted272,671and 144,535targeted performance-based restricted stock units, respectively, that vest subject to the achievement of performance and market conditions.  In addition to the achievement of the performance and market conditions, these performance-based restricted stock units are generally subject to the continuing service of the employeeover cliff-vesting periods of three or four years from the grant date.

The performance condition for the targeted performance-based restricted stock units granted during each of the six months ended June 30, 2018 and 2017 is based on the Company’s average level of achievement ofannually established targets for diluted earnings per share over a three year performance measurement period.  Additionally, the number of shares payable under certain of the targeted performance-based restricted stock units granted during each of the six months ended June 30, 2018 and 2017 are based, in part, on the Company’s three-year annualized total shareholder return relative to a peer group, Standard and Poor’s Global Industry Classification Standard’s Sub-Industry:  Health Care Facilities with over $500.0 million in revenues or its equivalent.  For these restricted stock units, the number of shares payable at the end of the vesting periods ranges from 0% to 200% of the targeted units based on the Company’s actual performance results compared to the targets. For the restricted stock units not subject to the Company’s total shareholder return,  the number of shares payable at the end of the vesting periods ranges from 50% to 150% of the targeted units based on the Company’s actual performance results compared to the targets.

The fair value of these restricted stock units was determined based on a combination, where applicable, of the closing price of the Company’s common stock on the trading date immediately prior to the grant date for units subject to performance conditions, or at its Monte-Carlo simulation value for units subject to market conditions.  The Company recognizes compensation expense for the portion of the targeted performance-based restricted stock units subject to market conditions even if the condition is never satisfied. However, if the performance conditions are not met for the portion of the targeted performance-based restricted stock units subject to such performance conditions, no compensation expense will be recognized, and any previously recognized compensation expense will be reversed.

As of June 30, 2018, there was $31.8million of total estimated unrecognized compensation cost related to other stock-based awards. 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 2.6years.

The following table summarizes the Company’s total stock-based compensation expense as well as the total recognized tax benefits related thereto for the threeand six months ended June 30, 2018 and 2017 (in millions):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Equity awards:
Other stock-based awards	$	3.7	$	2.1	$	8.5	$	5.0
Stock options		2.8		3.2		6.2		6.9
Total stock-based compensation expense	$	6.5	$	5.3	$	14.7	$	11.9
Tax benefit on stock-based compensation expense	$	1.5	$	2.1	$	3.3	$	4.6

The Company did not capitalize any stock-based compensation cost during the sixmonths ended June 30, 2018 or 2017.  As of June 30, 2018, there was $52.6million 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  2.2years.

16

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

Note 10. Commitments and Contingencies

Legal Proceedings and General Liability Claims

Healthcare facilities 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 addition, healthcare facilities 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 healthcare facilities that submit false claims for payments to, or improperly retain identified overpayments from, governmental payers. Some states have adopted similar state whistleblower and false claims provisions. These qui tam or “whistleblower” actions initiated under the civil False Claims Act may be pending but placed under seal by the court to comply with the False Claims Act’s requirements for filing such suits. As a result, they could be proceeding without the Company’s knowledge. If a provider is found to be liable under the federal False Claims Act, the provider may be required to pay up to three times the actual damages sustained by the government plusmandatory civil monetary penalties of between $11,181to $22,363 for each separate false claim, subject to annual adjustment for inflation.

Although the healthcare industry has seen numerous ongoing investigations related to compliance and billing practices, hospitals, in particular, continue to be a primary enforcement target for the Office of Inspector General (“OIG”), the Department of Justice  (“DOJ”) and other governmental agencies and fraud and abuse programs. Certain of the Company’s individual facilities have received, and from time to time, other facilities may receive, inquiries or subpoenas from Medicare Administrative Contractors, and federal and state agencies. Any proceedings against the Company may involve potentially substantial amounts as well as the possibility of civil, criminal, or administrative fines, penalties, or other sanctions, which could be material. Settlements of suits involving Medicare and Medicaid issues routinely require both monetary payments as well as corporate integrity agreements. 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 the Company’s financial position, results of operations and liquidity.

The Company does not control and cannot predict with certainty the progress or final outcome of discussions with government agencies, investigations and legal proceedings against the Company.  Therefore, the final amounts paid to resolve such matters, claims and obligations could be material and could materially differ from amounts currently recorded, if any.  Any such changes in the Company’s estimates or any adverse judgments could materially adversely impact the Company’s future results of operations and cash flows.

On September 16, 2013, the Company and two of its affiliated hospitals, Vaughan Regional Medical Center, located in Selma, Alabama, and Raleigh General Hospital, located in Raleigh, West Virginia, made a voluntary self-disclosure to the Civil Division of the DOJ. The voluntary self-disclosures related to concerns regarding the clinical appropriateness of certain interventional cardiology procedures conducted by one physician in each of these hospitals’ cardiac catheterization laboratories. The Company cooperated with the government in its investigations of the voluntary self-disclosure and provided additional documentation, as requested. The Company believes that the government’s investigations are now closed.   Following reviews by independent interventional cardiologists, the Company notified patients of these two physicians who may have received an unnecessary procedure of such fact.

The Company and/or Vaughan Regional Medical Center and several of the Company’s subsidiaries, as well as Dr. Seydi V. Aksut and certain parties unaffiliated with the Company, were named defendants in 26 individual lawsuits filed since December 2014 in the Circuit Court of Dallas County, Alabama, alleging that patients at Vaughan Regional Medical Center underwent improper interventional cardiology procedures.  These lawsuits, as they pertain to entities affiliated with the Company, were settled and dismissed in February 2017.

17

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

Two putative class action lawsuits were filed in the Circuit Court of Dallas County, Alabama.  The first putative class action lawsuit, filed in November 2014, sought certification of a class consisting of all Alabama citizens who underwent an invasive cardiology procedure at any Company-owned Alabama hospital and who received notice regarding the medical necessity of that procedure.  The Company reached an agreement in principle to settle this lawsuit, and on August 14, 2017, the Court entered an order certifying this class for settlement purposes only and granted the parties’ motion for preliminary approval of settlement.  A fairness hearing to determine whether the settlement was fair, reasonable, and adequate, and whether it should be approved by the Court, wasconducted on November 8, 2017, at which time the settlement was approved. The Court’s order approving settlement became final and non-appealable on January 2, 2018.

The second putative class action lawsuit, filed in February 2015 , sought certification of a class of individuals that underwent an interventional cardiology procedure that was not medically necessary and performed by Dr. Aksut, and asserted, among other claims, claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). In March 2015, the Company removed the second class action to the U.S. District Court in Mobile, Alabama which dismissed with prejudice the RICO claims and refused to exercise jurisdiction over the remaining state law claims, and the lawsuit was remanded for further proceedings.  In July 2017, this lawsuit was settled and dismissed as it pertained to entities affiliated with the Company.

Additionally, the Company and two of its subsidiaries, including Raleigh General Hospital, as well as Dr. Kenneth Glaser, have been named in 82 individual lawsuits filed in the circuit court of Raleigh County, West Virginia.  Additionally, three patients had notified Raleigh General Hospital of their claims and intent to file a lawsuit.  These lawsuits and claims alleged that patients at Raleigh General Hospital underwent unnecessary interventional cardiology procedures.  In January 2017, all parties to these lawsuits and claims entered into settlement agreements settling all claims against the Company, its subsidiaries, Raleigh General Hospital and Dr. Kenneth Glaser.  Following these settlements, two additional lawsuits were filed against the same parties alleging the same claims.  These two lawsuits were settled in March 2017.  In February 2017, the Company received a notice of a threatened claim with respect to a putative class action lawsuit in the Circuit Court of Raleigh County, West Virginia against it, two of its subsidiaries, Raleigh General Hospital and Dr. Glaser, alleging that patients at Raleigh General Hospital underwent medically unnecessary interventional cardiology procedures and seeking to certify a class of such patients.  The threatened claims seek compensatory and punitive damages, costs, attorneys’ fees and other available damages.

The settlements described above were accomplished within the amounts previously accrued for loss contingencies for cardiology-related lawsuits. Additional claims with respect to these matters, including claims involving patients to whom the Company did not send notice, may be asserted against the Company or the hospitals.Any present or future claims that are ultimately successful could result in the Company and/or the hospitals being found liable, and such liability could be material.The Company accrues an estimate for a contingent liability when losses are both probable and reasonably estimable.  The Company reviews its accruals each quarter and adjusts them to reflect the impact of developments, advice of legal counsel and other information pertaining to a particular matter.

18

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

Capital Expenditure Commitments

The Company is reconfiguring some of its facilities to more effectively accommodate patient services and to provide for a greater variety of services. The Company has incurred approximately $341.6million in costs related to uncompleted projects as of June 30, 2018, which is included under the caption “Construction in progress” in the accompanying unaudited condensed consolidated balance sheet. At June 30, 2018, these uncompleted projects had an estimated cost to complete of approximately $359.7million.The estimated timeframe for completion of these projects generally ranges from less than one year up to three years.  Additionally, the Company is subject to annual capital expenditure commitments in connection with several of its facilities.  As part of the Company’s current acquisition strategy, management expects capital expenditure commitments to be a component of future acquisitions.At June 30, 2018, the Company estimated its total remaining capital expenditure commitments, including commitments for routine projects, to be approximately $1,229.2million, which generally have remaining terms of four to eight years.

Marquette Replacement Facility

In December 2015, the Company acquired a parcel of land in Marquette, Michigan,and in May 2016, began constructing a replacement hospital for the existing Marquette General Hospital (“Marquette General”).  The Company anticipates that it will continue to operate the existing hospital campus until such point that the replacement hospital is ready for its intended use.  The Company currently expects that the construction of the replacement hospital will conclude in early 2019.  The assets associated with Marquette General are currently recorded at their estimated fair value as measured under ASC 820-10, using estimated future net cash flows expected to be generated by market participants. The estimate of fair value is subject to change as a result of negotiations with interested parties, regulatory approvals, or changes in market conditions.

Acquisitions

The Company has historically acquired businesses with prior operating histories. Acquired businesses may have unknown or contingent liabilities, including liabilities for failure to comply with healthcare laws and regulations, medical and general professional liabilities, workers compensation liabilities, previous tax liabilities and unacceptable business practices. Although the Company institutes policies designed to conform practices to its standards following completion of acquisitions, there can be no assurance that the Company will not become liable for past activities that may later be asserted to be improper by private plaintiffs or government agencies. Although the Company generally seeks to obtain indemnification from prospective sellers covering such matters, there can be no assurance that any such matter will be covered by indemnification, or if covered, that such indemnification will be adequate to cover potential losses and fines.

19

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

Note 11. Guarantor and Non-Guarantor Supplementary Information

The 5.5%Senior Notes, 5.875% Senior Notes and 5.375% Senior Notes are jointly and severally guaranteed on an unsecured senior basis by substantially all of the Company’s existing subsidiaries that guarantee the Company’s Senior Credit Agreement. The guarantors are 100% owned by the Company. Additionally, the guarantees are full and unconditional and are subject to customary release provisions as set forth in the agreements for the 5.5% Senior Notes, 5.875% Senior Notes and 5.375% Senior Notes.

The condensed consolidating financial information for the parent issuer, 100% owned guarantor subsidiaries, non-guarantor subsidiaries, certain eliminations and the Company is presented below for the three and six months ended June 30, 2018 and 2017 and as of June 30, 2018and December 31, 2017.

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Income
For the Three Months Ended June 30, 2018

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Revenues	$	-	$	918.8	$	651.0	$	-	$	1,569.8
Salaries and benefits		6.5		434.4		299.3		-		740.2
Supplies		-		141.2		114.8		-		256.0
Other operating expenses, net		(1.0)		231.4		156.2		-		386.6
Equity in earnings of affiliates		(80.2)		-		-		80.2		-
Depreciation and amortization		-		51.5		29.9		-		81.4
Interest expense, net		28.7		2.1		6.2		-		37.0
Other non-operating gain, net		-		-		(3.2)		-		(3.2)
Management (income) fees		-		(18.2)		18.2		-		-
		(46.0)		842.4		621.4		80.2		1,498.0
Income before income taxes		46.0		76.4		29.6		(80.2)		71.8
(Benefit) provision for income taxes		(6.4)		23.4		-		-		17.0
Net income		52.4		53.0		29.6		(80.2)		54.8
Less:  Net income attributable to
noncontrolling interests and
redeemable noncontrolling interests		-		-		(2.4)		-		(2.4)
Net income attributable to LifePoint
Health, Inc.	$	52.4	$	53.0	$	27.2	$	(80.2)	$	52.4

20

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Income
For the Three Months Ended June 30, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Revenues	$	-	$	906.1	$	688.7	$	-	$	1,594.8
Salaries and benefits		5.3		430.8		325.9		-		762.0
Supplies		-		144.0		119.2		-		263.2
Other operating expenses, net		(2.0)		224.1		155.3		-		377.4
Equity in earnings of affiliates		(77.4)		-		-		77.4		-
Depreciation and amortization		-		54.7		34.0		-		88.7
Interest expense, net		31.6		1.4		4.6		-		37.6
Other non-operating loss (gain), net		-		3.4		(7.9)		-		(4.5)
Management (income) fees		-		(19.7)		19.7		-		-
		(42.5)		838.7		650.8		77.4		1,524.4
Income before income taxes		42.5		67.4		37.9		(77.4)		70.4
Provision for income taxes		-		24.4		-		-		24.4
Net income		42.5		43.0		37.9		(77.4)		46.0
Less:  Net income attributable to
noncontrolling interests and
redeemable noncontrolling interests		-		-		(3.5)		-		(3.5)
Net income attributable to LifePoint
Health, Inc.	$	42.5	$	43.0	$	34.4	$	(77.4)	$	42.5

21

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Income
For the Six Months Ended June 30, 2018

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Revenues	$	-	$	1,856.5	$	1,316.1	$	-	$	3,172.6
Salaries and benefits		14.7		883.6		604.4		-		1,502.7
Supplies		-		289.8		232.2		-		522.0
Other operating expenses, net		(1.6)		465.5		308.5		-		772.4
Equity in earnings of affiliates		(110.7)		-		-		110.7		-
Depreciation and amortization		-		104.1		58.9		-		163.0
Interest expense, net		58.0		3.3		12.7		-		74.0
Other non-operating losses (gains), net		-		70.1		(0.6)		-		69.5
Management (income) fees		-		(36.1)		36.1		-		-
		(39.6)		1,780.3		1,252.2		110.7		3,103.6
Income before income taxes		39.6		76.2		63.9		(110.7)		69.0
(Benefit) provision for income taxes		(4.0)		23.5		-		-		19.5
Net income		43.6		52.7		63.9		(110.7)		49.5
Less:  Net income attributable to
noncontrolling interests and
redeemable noncontrolling interests		-		-		(5.9)		-		(5.9)
Net income attributable to LifePoint
Health, Inc.	$	43.6	$	52.7	$	58.0	$	(110.7)	$	43.6

22

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Income
For the Six Months Ended June 30, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Revenues	$	-	$	1,833.2	$	1,391.8	$	-	$	3,225.0
Salaries and benefits		11.9		880.6		666.4		-		1,558.9
Supplies		-		287.5		243.9		-		531.4
Other operating expenses, net		(2.0)		441.1		307.8		-		746.9
Equity in earnings of affiliates		(179.4)		-		-		179.4		-
Depreciation and amortization		-		109.4		67.4		-		176.8
Interest expense, net		63.1		2.6		9.3		-		75.0
Other non-operating losses (gains), net		-		2.9		(33.3)		-		(30.4)
Management (income) fees		-		(38.6)		38.6		-		-
		(106.4)		1,685.5		1,300.1		179.4		3,058.6
Income before income taxes		106.4		147.7		91.7		(179.4)		166.4
Provision for income taxes		4.0		52.4		-		-		56.4
Net income		102.4		95.3		91.7		(179.4)		110.0
Less:  Net income attributable to
noncontrolling interests and
redeemable noncontrolling interests		-		-		(7.6)		-		(7.6)
Net income attributable to LifePoint
Health, Inc.	$	102.4	$	95.3	$	84.1	$	(179.4)	$	102.4

23

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

LIFEPOINT HEALTH, INC.
Condensed Consolidating Balance Sheets
June 30, 2018

(In millions)  

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	49.8	$	94.0	$	-	$	143.8
Accounts receivable		-		477.5		325.2		-		802.7
Inventories		-		93.3		59.6		-		152.9
Prepaid expenses		0.2		52.5		23.8		-		76.5
Other current assets		-		77.9		23.4		-		101.3
		0.2		751.0		526.0		-		1,277.2
Property and equipment:
Land		-		96.9		84.4		-		181.3
Buildings and improvements		-		1,754.8		802.7		-		2,557.5
Equipment		-		1,697.9		651.4		-		2,349.3
Construction in progress		-		98.2		243.4		-		341.6
		-		3,647.8		1,781.9		-		5,429.7
Accumulated depreciation		-		(1,888.3)		(537.7)		-		(2,426.0)
		-		1,759.5		1,244.2		-		3,003.7
Intangible assets, net		-		35.2		43.0		-		78.2
Investments in subsidiaries		2,854.9		-		-		(2,854.9)		-
Due from subsidiaries		2,192.0		-		-		(2,192.0)		-
Other long-term assets		14.5		58.7		50.0		-		123.2
Goodwill		-		1,421.7		312.1		-		1,733.8
Total assets	$	5,061.6	$	4,026.1	$	2,175.3	$	(5,046.9)	$	6,216.1
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	-	$	114.7	$	71.9	$	-	$	186.6
Accrued salaries		-		122.6		81.3		-		203.9
Other current liabilities		18.9		187.5		71.0		-		277.4
Current maturities of long-term debt		17.5		1.0		4.1		-		22.6
		36.4		425.8		228.3		-		690.5
Long-term debt, net		2,767.7		44.7		93.4		-		2,905.8
Due to Parent		-		1,359.7		832.3		(2,192.0)		-
Deferred income taxes		10.2		-		-		-		10.2
Long-term portion of reserves for self-insurance claims		-		85.6		55.4		-		141.0
Other long-term liabilities		-		50.2		35.7		-		85.9
Total liabilities		2,814.3		1,966.0		1,245.1		(2,192.0)		3,833.4
Redeemable noncontrolling interests		-		-		93.1		-		93.1
Total LifePoint Health, Inc. stockholders' equity		2,247.3		2,060.1		794.8		(2,854.9)		2,247.3
Noncontrolling interests		-		-		42.3		-		42.3
Total equity		2,247.3		2,060.1		837.1		(2,854.9)		2,289.6
Total liabilities and equity	$	5,061.6	$	4,026.1	$	2,175.3	$	(5,046.9)	$	6,216.1

24

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

LIFEPOINT HEALTH, INC.
Condensed Consolidating Balance Sheets
December 31, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	21.9	$	90.1	$	-	$	112.0
Accounts receivable		-		499.3		323.1		-		822.4
Inventories		-		94.2		58.9		-		153.1
Prepaid expenses		0.1		45.4		21.7		-		67.2
Other current assets		7.6		46.5		56.4		-		110.5
		7.7		707.3		550.2		-		1,265.2
Property and equipment:
Land		-		99.0		83.4		-		182.4
Buildings and improvements		-		1,826.5		738.2		-		2,564.7
Equipment		-		1,721.4		619.0		-		2,340.4
Construction in progress		-		89.0		264.8		-		353.8
		-		3,735.9		1,705.4		-		5,441.3
Accumulated depreciation		-		(1,868.2)		(482.8)		-		(2,351.0)
		-		1,867.7		1,222.6		-		3,090.3
Intangible assets, net		-		35.8		40.5		-		76.3
Investments in subsidiaries		2,756.5		-		-		(2,756.5)		-
Due from subsidiaries		2,262.9		-		-		(2,262.9)		-
Other long-term assets		15.6		53.5		47.7		-		116.8
Goodwill		-		1,425.7		312.1		-		1,737.8
Total assets	$	5,042.7	$	4,090.0	$	2,173.1	$	(5,019.4)	$	6,286.4
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	-	$	131.1	$	79.2	$	-	$	210.3
Accrued salaries		-		135.1		81.2		-		216.3
Other current liabilities		12.7		200.1		83.2		-		296.0
Current maturities of long-term debt		17.5		0.8		4.0		-		22.3
		30.2		467.1		247.6		-		744.9
Long-term debt, net		2,737.7		44.3		95.4		-		2,877.4
Due to Parent		-		1,415.9		847.0		(2,262.9)		-
Deferred income taxes		32.3		-		-		-		32.3
Long-term portion of reserves for self-insurance claims		-		83.0		57.9		-		140.9
Other long-term liabilities		-		45.6		34.5		-		80.1
Total liabilities		2,800.2		2,055.9		1,282.4		(2,262.9)		3,875.6
Redeemable noncontrolling interests		-		-		125.0		-		125.0
Total LifePoint Health, Inc. stockholders' equity		2,242.5		2,034.1		722.4		(2,756.5)		2,242.5
Noncontrolling interests		-		-		43.3		-		43.3
Total equity		2,242.5		2,034.1		765.7		(2,756.5)		2,285.8
Total liabilities and equity	$	5,042.7	$	4,090.0	$	2,173.1	$	(5,019.4)	$	6,286.4

25

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Cash Flows
For the Three Months Ended June 30, 2018

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	52.4	$	53.0	$	29.6	$	(80.2)	$	54.8
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Equity in earnings of affiliates		(80.2)		-		-		80.2		-
Stock-based compensation		6.5		-		-		-		6.5
Depreciation and amortization		-		51.5		29.9		-		81.4
Other non-cash amortization		1.2		1.1		0.4		-		2.7
Other non-operating gain, net		-		-		(3.2)		-		(3.2)
Deferred income taxes		3.4		-		-		-		3.4
Reserve for self-insurance claims, net of payments		-		1.5		(1.0)		-		0.5
Increase (decrease) in cash from operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable		-		9.0		17.6		-		26.6
Inventories, prepaid expenses and other current assets		(0.2)		(9.2)		29.6		-		20.2
Accounts payable, accrued salaries and other current liabilities		(29.0)		(9.6)		(12.1)		-		(50.7)
Income taxes payable/receivable		(12.7)		-		-		-		(12.7)
Other		(0.4)		(0.1)		5.8		-		5.3
Net cash (used in) provided by operating activities		(59.0)		97.2		96.6		-		134.8
Cash flows from investing activities:
Purchases of property and equipment		-		(33.4)		(48.0)		-		(81.4)
Other		(0.7)		(0.1)		3.5		-		2.7
Net cash used in investing activities		(0.7)		(33.5)		(44.5)		-		(78.7)
Cash flows from financing activities:
Proceeds from borrowings		75.0		-		-		-		75.0
Payments of borrowings		(64.4)		-		-		-		(64.4)
Repurchases of common stock		(10.1)		-		-		-		(10.1)
Redemption of noncontrolling interest and redeemable
noncontrolling interests, net of sales		-		-		(36.9)		-		(36.9)
Distributions to noncontrolling interests and
redeemable noncontrolling interests		-		-		(15.1)		-		(15.1)
Proceeds from exercise of stock options		0.4		-		-		-		0.4
Change in intercompany balances with affiliates, net		58.8		(64.7)		5.9		-		-
Other		-		0.2		(1.5)		-		(1.3)
Net cash provided by (used in) financing activities		59.7		(64.5)		(47.6)		-		(52.4)
Change in cash and cash equivalents		-		(0.8)		4.5		-		3.7
Cash and cash equivalents at beginning of period		-		50.6		89.5		-		140.1
Cash and cash equivalents at end of period	$	-	$	49.8	$	94.0	$	-	$	143.8

26

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Cash Flows
For the Three Months Ended June 30, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	42.5	$	43.0	$	37.9	$	(77.4)	$	46.0
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Equity in earnings of affiliates		(77.4)		-		-		77.4		-
Stock-based compensation		5.3		-		-		-		5.3
Depreciation and amortization		-		54.7		34.0		-		88.7
Other non-cash amortization		1.2		1.4		0.5		-		3.1
Other non-operating loss (gain), net		-		3.4		(7.9)		-		(4.5)
Deferred income taxes		0.1		-		-		-		0.1
Reserve for self-insurance claims, net of payments		-		(2.5)		(2.6)		-		(5.1)
Increase (decrease) in cash from operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable		-		11.4		9.6		-		21.0
Inventories, prepaid expenses and other current assets		(0.1)		(9.5)		29.9		-		20.3
Accounts payable, accrued salaries and other current liabilities		(28.4)		23.2		(27.5)		-		(32.7)
Income taxes payable/receivable		(30.5)		-		-		-		(30.5)
Other		(0.1)		2.9		(3.9)		-		(1.1)
Net cash (used in) provided by operating activities		(87.4)		128.0		70.0		-		110.6
Cash flows from investing activities:
Purchases of property and equipment		-		(30.8)		(58.4)		-		(89.2)
Proceeds from sale of businesses		-		2.1		-		-		2.1
Other		0.3		(0.3)		0.8		-		0.8
Net cash provided by (used in) investing activities		0.3		(29.0)		(57.6)		-		(86.3)
Cash flows from financing activities:
Proceeds from borrowings		60.0		-		-		-		60.0
Payments of borrowings		(64.4)		-		-		-		(64.4)
Repurchases of common stock		(20.5)		-		-		-		(20.5)
Redemption of noncontrolling interest and redeemable
noncontrolling interests, net of sales		-		-		(0.2)		-		(0.2)
Distributions to noncontrolling interests and
redeemable noncontrolling interests		-		-		(3.0)		-		(3.0)
Proceeds from exercise of stock options		5.9		-		-		-		5.9
Change in intercompany balances with affiliates, net		106.4		(89.1)		(17.3)		-		-
Other		(0.3)		(2.3)		5.6		-		3.0
Net cash provided by (used in) in financing activities		87.1		(91.4)		(14.9)		-		(19.2)
Change in cash and cash equivalents		-		7.6		(2.5)		-		5.1
Cash and cash equivalents at beginning of period		-		31.6		94.2		-		125.8
Cash and cash equivalents at end of period	$	-	$	39.2	$	91.7	$	-	$	130.9

27

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Cash Flows
For the Six Months Ended June 30, 2018

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	43.6	$	52.7	$	63.9	$	(110.7)	$	49.5
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Equity in earnings of affiliates		(110.7)		-		-		110.7		-
Stock-based compensation		14.7		-		-		-		14.7
Depreciation and amortization		-		104.1		58.9		-		163.0
Other non-cash amortization		2.4		2.2		0.7		-		5.3
Other non-operating losses (gains), net		-		70.1		(0.6)		-		69.5
Deferred income taxes		(22.1)		-		-		-		(22.1)
Reserve for self-insurance claims, net of payments		-		3.8		(5.4)		-		(1.6)
Increase (decrease) in cash from operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable		-		(5.2)		12.5		-		7.3
Inventories, prepaid expenses and other current assets		(0.1)		1.9		12.5		-		14.3
Accounts payable, accrued salaries and other current liabilities		0.2		(64.5)		(17.7)		-		(82.0)
Income taxes payable/receivable		13.6		-		-		-		13.6
Other		(1.0)		2.7		2.2		-		3.9
Net cash (used in) provided by operating activities		(59.4)		167.8		127.0		-		235.4
Cash flows from investing activities:
Purchases of property and equipment		-		(54.7)		(82.9)		-		(137.6)
Proceeds from sale of businesses		-		1.5		-		-		1.5
Other		(1.4)		(3.1)		0.5		-		(4.0)
Net cash used in investing activities		(1.4)		(56.3)		(82.4)		-		(140.1)
Cash flows from financing activities:
Proceeds from borrowings		125.0		-		-		-		125.0
Payments of borrowings		(93.8)		-		-		-		(93.8)
Repurchases of common stock		(42.9)		-		-		-		(42.9)
Redemption of noncontrolling interest and redeemable
noncontrolling interests, net of sales		-		-		(34.7)		-		(34.7)
Distributions to noncontrolling interests and
redeemable noncontrolling interests		-		-		(16.3)		-		(16.3)
Proceeds from exercise of stock options		1.7		-		-		-		1.7
Change in intercompany balances with affiliates, net		70.8		(83.0)		12.2		-		-
Other		-		(0.6)		(1.9)		-		(2.5)
Net cash provided by (used in) financing activities		60.8		(83.6)		(40.7)		-		(63.5)
Change in cash and cash equivalents		-		27.9		3.9		-		31.8
Cash and cash equivalents at beginning of period		-		21.9		90.1		-		112.0
Cash and cash equivalents at end of period	$	-	$	49.8	$	94.0	$	-	$	143.8

28

LIFEPOINT HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Unaudited

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Cash Flows

For the Six Months Ended June 30, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	102.4	$	95.3	$	91.7	$	(179.4)	$	110.0
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Equity in earnings of affiliates		(179.4)		-		-		179.4		-
Stock-based compensation		11.9		-		-		-		11.9
Depreciation and amortization		-		109.4		67.4		-		176.8
Other non-cash amortization		2.4		3.2		0.8		-		6.4
Other non-operating losses (gains), net		-		2.9		(33.3)		-		(30.4)
Deferred income taxes		(1.0)		-		-		-		(1.0)
Reserve for self-insurance claims, net of payments		-		(40.9)		4.1		-		(36.8)
Increase (decrease) in cash from operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable		-		(3.3)		14.8		-		11.5
Inventories, prepaid expenses and other current assets		(0.1)		1.0		19.5		-		20.4
Accounts payable, accrued salaries and other current liabilities		0.7		(10.7)		(25.2)		-		(35.2)
Income taxes payable/receivable		(22.2)		-		-		-		(22.2)
Other		-		(0.1)		(9.0)		-		(9.1)
Net cash (used in) provided by operating activities		(85.3)		156.8		130.8		-		202.3
Cash flows from investing activities:
Purchases of property and equipment		-		(58.8)		(98.9)		-		(157.7)
Proceeds from sale of businesses		-		14.9		-		-		14.9
Other		(0.2)		(0.6)		(1.6)		-		(2.4)
Net cash used in investing activities		(0.2)		(44.5)		(100.5)		-		(145.2)
Cash flows from financing activities:
Proceeds from borrowings		140.0		-		-		-		140.0
Payments of borrowings		(148.8)		-		-		-		(148.8)
Repurchases of common stock		(26.4)		-		-		-		(26.4)
Redemption of noncontrolling interest and redeemable
noncontrolling interests, net of sales		-		-		(0.2)		-		(0.2)
Distributions to noncontrolling interests and
redeemable noncontrolling interests		-		-		(4.8)		-		(4.8)
Proceeds from exercise of stock options		15.3		-		-		-		15.3
Change in intercompany balances with affiliates, net		105.8		(80.0)		(25.8)		-		-
Other		(0.4)		(1.6)		4.6		-		2.6
Net cash provided by (used in) financing activities		85.5		(81.6)		(26.2)		-		(22.3)
Change in cash and cash equivalents		-		30.7		4.1		-		34.8
Cash and cash equivalents at beginning of period		-		8.5		87.6		-		96.1
Cash and cash equivalents at end of period	$	-	$	39.2	$	91.7	$	-	$	130.9

29

Note 12.  Subsequent Event

On July 22, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with RegionalCare Hospital Partners Holdings, Inc. (D/B/A RCCH HealthCare Partners), a Delaware corporation (“RCCH”), and Legend Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of RCCH (“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a subsidiary of RCCH on the terms and conditions set forth in the Merger Agreement. RCCH is owned by certain funds managed by affiliates of Apollo Global Management, LLC.   At the effective time of the Merger, each outstanding share of the Company’s common stock (other than common stock held directly by RCCH or Merger Sub, common stock held by the Company as treasury stock, common stock held by any subsidiary of either the Company or RCCH (other than Merger Sub) and common stock owned by holders who have properly exercised appraisal rights under Delaware law) will be converted into the right to receive $65.00 in cash, without interest.   The consummation of the proposed Merger is subject to the satisfaction or waiver of specified closing conditions, including (i) the affirmative vote in favor of the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of the Company’s common stock entitled to vote thereon, (ii) receipt of certain regulatory approvals, including the expiration or early termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the absence of any statute, regulation, ruling or injunction of any governmental entity or any other order prohibiting or enjoining consummation of the Merger and (iv) other customary closing conditions.  Additional information about the proposed Merger is set forth in the Company’s Current Report on Form 8-K filed with the SEC on July 23, 2018 and the exhibits thereto, including the Merger Agreement.

30

Item 2.  Management’s Discussion and Analysis of Financial Condition andResults of Operations.

We recommend that you read this discussion together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report, as well as our Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Annual Report on Form 10-K”). Unless otherwise indicated, all relevant financial and statistical information included herein relates to our consolidated operations. Additionally, unless the context indicates otherwise, LifePoint Health, Inc. and its subsidiaries are referred to in this section as “we,” “our,” or “us.”

Forward-Looking Statements

We make forward-looking statements in this report, other reports and in statements we file with the Securities and Exchange Commission (“SEC”) and/or release to the public. In addition, our senior management makes forward-looking statements orally to analysts, investors, the media and others. Broadly speaking, forward-looking statements include:projections of our revenues, net income, earnings per share, capital expenditures, cash flows, debt repayments, interest rates, operating statistics and data or other financial items; statements relating to our proposed merger with Regional Care Hospital Partners Holdings, Inc. (D/B/A RCCH HealthCare Partners);efforts to reduce the cost of providing healthcare while increasing quality; descriptions of plans or objectives of our management for future operations, services or growth plans including acquisitions, divestitures, business strategies, core strategies and other initiatives, including Duke LifePoint Healthcare; interpretations of Medicare and Medicaid laws and regulations and their effect on our business; and descriptions of assumptions underlying or relating to any of the foregoing.

In this report, for example, we make forward-looking statements, including statements discussing our expectations about: the possibility that the anticipated benefits from the proposed merger will not be realized, or will not be realized within the expected time periods; the occurrence of any event, change or other circumstances that could give rise to termination of the proposed merger agreement; the failure of the Company’s stockholders to adopt the merger agreement; operating costs, loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, business partners or suppliers) may be greater than expected following the announcement of the proposed merger; the retention of certain key employees at the Company; risks associated with the disruption of management’s attention from ongoing business operations due to the proposed merger; the inability to obtain necessary regulatory approvals of the proposed merger or the receipt of such approvals subject to conditions that are not anticipated; the risk that a condition to closing the merger may not be satisfied on a timely basis or at all; the risk that the proposed merger fails to close for any other reason; the outcome of any legal proceedings related to the proposed merger; the parties’ ability to meet expectations regarding the timing and completion of the proposed merger; the impact of the proposed merger on the Company’s credit rating;future financial performance and condition; future liquidity and capital resources; future cash flows; existing debt; changes in depreciation and amortization expenses; our business strategy and operating philosophy; effects of competition in a hospital’s market; costs of providing care to our patients; our compliance with new and existing laws and regulations as well as costs and benefits associated with compliance; the impact of national healthcare reform, including efforts to modify, repeal and/or replace the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”); income from electronic health record (“EHR”) incentive programs; anticipated capital expenditures, including routine projects, investments in information systems and capital projects related to previous acquisitions and the expectation that capital commitments could be a component of future acquisitions; timeframes for completion of capital projects; implementation of supply chain management and revenue cycle functions; accounting estimates and the impact of accounting methodologies; industry and general economic trends; consolidation of commercial insurance companies and patient shifts to lower cost healthcare plans which generally provide lower reimbursement; participation in the healthcare exchanges and the impact of increasing enrollment by patients in insurance plans with narrow networks, tiered networks, high deductibles or high co-payments; reimbursement changes, including policy considerations and changes resulting from state budgetary restrictions; patient volumes and related revenues; claims and legal actions relating to professional liabilities; governmental investigations and voluntary self-disclosures; and physician recruiting, employment and retention.

31

Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements often include words such as “can,” “could,” “may,” “should,” “believe,” “will,” “would,” “expect,” “project,” “estimate,” “seek,” “anticipate,” “intend,” “target,” “continue,” “predict” or similar expressions. You should not unduly rely on forward-looking statements, which give our expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made.  We operate in a continually changing business environment, and new risk factors emerge from time to time.  We cannot predict such new risk factors nor can we assess the impact, if any, of such new risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those expressed or implied by any forward-looking statement.  We do not undertake any obligation to update our forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.

There are several factors, some beyond our control that could cause results to differ significantly from our expectations. Some of these factors, as well as other factors such as market, operational, liquidity, interest rate and other risks, are described in Part II, Item 1A.  Risk Factors in this Report and Part I, Item 1A. Risk Factors and Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk of the 2017 Annual Report on Form 10-K and in other reports that we file with the SEC. Any factor described in this report or in our other filings, including in the 2017 Annual Report on Form 10-K could by itself, or together with one or more factors, materially and adversely affect our business, results of operations and/or financial condition. There may be factors not described in this report or in our other filings that could also cause results to differ from our expectations.

Overview

We own and operate community hospitals, regional health systems, physician practices, outpatient centers, and post-acute facilities.  At June 30, 2018, on a consolidated basis, we operated 71 hospital campuses in 22 states throughout the United States (“U.S.”), having a total of 9,322 licensed beds.  We generate revenues primarily through patient services offered at our facilities.  We generated revenues of $1,569.8 million and $1,594.8 million during the three months ended June 30, 2018 and 2017, respectively, and $3,172.6 million and $3,225.0 million during the six months ended June 30, 2018 and 2017, respectively.  During the three months ended June 30, 2018 and 2017, respectively, we derived 50.8% and 51.7% of our revenues, collectively, from the Medicare and Medicaid programs. During the six months ended June 30, 2018 and 2017, respectively, we derived 51.2% and 52.6% of our revenues, collectively, from the Medicare and Medicaid programs. Payments made to our facilities pursuant to the Medicare and Medicaid programs for services rendered rarely exceed our costs for such services.  As a result, we rely largely on payments made by private or commercial payers, together with certain limited services provided to Medicare recipients, to generate an operating profit.  The healthcare industry continues to endure a period where the costs of providing care are rising faster than reimbursement rates from government or private commercial payers.  This places a premium on efficient operation, the ability to reduce or control costs and the need to leverage the benefits of our organization across all of our facilities.

Proposed Merger

On July 22, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with RegionalCare Hospital Partners Holdings, Inc. (D/B/A RCCH HealthCare Partners), a Delaware corporation (“RCCH”), and Legend Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of RCCH (“Merger Sub”), pursuant to which Merger Sub will merge with and into LifePoint (the “Merger”), with LifePoint surviving the Merger as a subsidiary of RCCH on the terms and conditions set forth in the Merger Agreement. RCCH is owned by certain funds managed by affiliates of Apollo Global Management, LLC.   At the effective time of the Merger, each outstanding share of our common stock (other than common stock held directly by RCCH or Merger Sub, common stock held by us as treasury stock, common stock held by any subsidiary of either LifePoint or RCCH (other than Merger Sub) and common stock owned by holders who have properly exercised appraisal rights under Delaware law) will be converted into the right to receive $65.00 in cash, without interest.   The consummation of the proposed Merger is subject to the satisfaction or waiver of specified closing conditions, including (i) the affirmative vote in favor of the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of our common stock entitled to vote thereon, (ii) receipt of certain regulatory approvals, including the expiration or early termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the absence of any statute, regulation, ruling or injunction of any governmental entity or any other order prohibiting or enjoining consummation of the Merger and (iv) other customary closing conditions.  For more information about the proposed Merger, see the description of the Merger included in our Current Report on Form 8-K filed with the SEC on July 23, 2018 and the exhibits thereto, including the Merger Agreement.

32

Developments, Trends and Operating Environment

Louisiana Market Divestitures

In March 2018, we entered into definitive agreements to sell the assets of Mercy Regional Medical Center (“Mercy”) located in Ville Platte, Louisiana, Acadian Medical Center (“Acadian”), which is a campus of Mercy located in Eunice, Louisiana, and Minden Medical Center (“Minden”) located in Minden, Louisiana.  We anticipate these sales will be completed during the third quarter of 2018. 

In-Home Healthcare Partnership

Effective January 1, 2017, we entered into a joint venture agreement with a wholly-owned subsidiary of LHC Group, Inc. (“LHC”) to form In-Home Healthcare Partnership (“IHHP”), the purpose of which is to own and operate our home health agencies and hospices and certain of LHC’s home health agencies and hospices served by our hospitals, leveraging our combined expertise to enhance home health and hospice services in the communities served by our hospitals.  During the first quarter of 2018, we completed the fourth and final phase of the transfer of the ownership and management of our home health agencies and hospices to IHHP.

Health Care Reform Efforts

The Affordable Care Act, which became federal law in 2010, dramatically altered the U.S. healthcare system and was intended to decrease the number of uninsured Americans and reduce the overall cost of healthcare by, among other things, requiring most Americans to obtain health insurance (the “individual mandate”), providing additional funding for Medicaid in states that choose to expand their programs, reducing Medicaid disproportionate share hospital (“DSH”) payments to providers, expanding the Medicare program’s use of value-based purchasing programs, tying hospital payments to the satisfaction of certain quality criteria, bundling payments to hospitals and other providers, and instituting certain private health insurance reforms.  The Affordable Care Act also includes certain reductions in Medicare spending, such as negative adjustments to the inpatient prospective payment system and outpatient prospective payment system market basket updates, the revision of annual inflation updates and other cost-containment measures, including planned payment reductions.  Since 2010, we have expended substantial cost and effort to prepare for and comply with the Affordable Care Act, which has been implemented on a rolling basis.

On January 20, 2017, President Trump issued an executive order that, among other things, stated the intention of his administration to repeal the Affordable Care Act and, pending that repeal, instructed the executive branch of the federal government to defer or delay the implementation of any provision or requirement of the Affordable Care Act that would impose a fiscal burden on any state or a cost, fee, tax, or penalty on any individual, family, health care provider, or health insurer.

On October 12, 2017, President Trump issued an additional executive order related to the Affordable Care Act that is intended to promote choice and competition in the health insurance marketplace. Among other things, the executive order requires the Secretaries of the Department of Health and Human Services (“HHS”) and the Departments of Labor and the Treasury to consider proposing regulations or revising existing guidance in order to expand access to health insurance coverage by allowing more employers to form association health plans (“AHPs”) that would be allowed to provide coverage across state lines, increasing the availability of short-term, limited duration health insurance (“STLDI”) plans, which are generally not subject to the requirements of the Affordable Care Act, and increasing the availability and permitted use of health reimbursement arrangements.  As a result of the executive order, the Department of Labor issued proposed regulations that are intended to encourage the formation of AHPs and HHS and the Departments of Labor and the Treasury jointly issued regulations that are intended to increase the maximum duration of and access to STLDI plans.

33

In addition to the executive orders, a number of bills have been introduced in Congress that would repeal the Affordable Care Act and would replace it with varying health coverage plans, including plans that would allow insurers to sell health insurance across state lines, allow the use of health savings accounts (“HSAs”) without a high-deductible plan, or give states the option to either keep the coverage framework created by the Affordable Care Act (e.g., expanded Medicaid, individual subsidies, and insurance exchanges) or utilize the increased federal funding that was intended to be provided by the federal government under the Affordable Care Act to create HSAs for low-income individuals and allow such individuals to use their HSAs to purchase health insurance. None of those bills have been adopted, and we cannot predict whether the Affordable Care Act will be repealed, replaced, or materially modified by Congress. In addition, if the Affordable Care Act is repealed, replaced, or materially modified, we cannot predict what the replacement plan or modifications would be, when any such replacement plan or modifications would become effective, or whether any of the existing provisions of the Affordable Care Act would remain in place.

On December 22, 2017, President Trump signed tax reform legislation into law. In addition to overhauling the federal tax system, the legislation also repeals the penalties associated with the individual mandate, effective as of January 1, 2019. The Congressional Budget Office (“CBO”) has estimated that the repeal of the penalties associated with the individual mandate would result in three million fewer people having health insurance in 2019, 8.5 million fewer people having health insurance in 2027 and for premiums for benchmark plans to increase by an average of about 7% per year between 2019 and 2028. The CBO has, however, also stated that the non-group insurance markets would continue to be stable in almost all areas of the country during that period of time. We cannot predict the impact that the repeal of the penalties associated with the individual mandate will have on the number of uninsureds or the cost and availability of health insurance.

In addition to the legislative efforts and administrative actions to repeal, replace, or modify the Affordable Care Act, there have been and will likely continue to be a number of legal challenges to various provisions of the Affordable Care Act.

For example, in 2014, the U.S. House of Representatives (the “House”) filed a lawsuit challenging the use of federal funds to pay insurance companies for cost sharing reductions that are provided to certain individuals who purchase insurance through the Affordable Care Act health insurance marketplace exchange (the “Exchanges”). In May 2016, the United States District Court for the District of Columbia held that the use of federal funds for the payment of cost sharing reductions was unconstitutional because no funds had been appropriated by Congress for that purpose. The District Court’s ruling was appealed, and on October 13, 2017, the Department of Justice (the “DOJ”) announced in court filings related to the appeal that HHS was immediately stopping its cost sharing reduction payments to insurance companies based on the DOJ’s determination that those payments had not been appropriated by Congress.  On December 15, 2017, the parties to the House lawsuit announced that they had reached a conditional settlement agreement that would essentially dismiss the lawsuit in light of the fact that the cost sharing reductions were no longer being made and the U.S. Court of Appeals for the District of Columbia approved the settlement on May 16, 2018. On February 26, 2018, 20 states filed suit in the U.S. District Court for the Northern District of Texas alleging that the Affordable Care Act is unconstitutional in light of the repeal of the penalties associated with the individual mandate. Sixteen states and the District of Columbia have been granted the right to intervene and defend the Affordable Care Act in the lawsuit. We cannot predict the outcome of the new litigation that has been filed relating to the constitutionality of the Affordable Care Act, the impact that the cessation of HHS’ cost sharing reduction and rate adjustment payments will have on the premiums that are charged by insurers or the number of insurers who offer health insurance coverage through the Exchanges, or whether the cost sharing reduction payments will be authorized by Congress.

The net effect of the Affordable Care Act, as currently adopted, on our business is subject to numerous variables, including the law’s complexity, lack of complete implementing regulations and interpretive guidance, and the sporadic implementation of the numerous programs designed to improve access and quality.  Additional variables related to the Affordable Care Act impacting our business will be how, if at all, Congress repeals, replaces, or otherwise modifies the Affordable Care Act and how states, providers, insurance companies, employers, and other market participants respond during this period of uncertainty.  As a result, we are unable to predict the effect on our business, financial condition or results of operations, the availability of adequate insurance coverage for patients seeking health care at our facilities, the reductions in government healthcare reimbursement spending, and numerous other provisions potentially impacted by the repeal of the penalties associated with the individual mandate, the cessation of the cost sharing reduction payments, and the possible repeal, replacement or modification of the Affordable Care Act.

34

Competitive and Structural Environment

The environment in which our facilities operate is extremely competitive. Our hospitals face competition from other acute care hospitals, including larger tertiary hospitals located in larger markets and/or affiliated with universities; specialty hospitals that focus on one or a small number of very lucrative service lines but that are not required to operate emergency departments; free-standing emergency departments and outpatient surgery, diagnostic cancer care and urgent care centers and physicians on the medical staffs of our hospitals. In many cases, our competitors focus on the service lines that offer the highest margins. By doing so, our competitors can potentially draw the best-paying business out of our hospitals. This, in turn, can reduce the overall operating profit of our hospitals as we are often obligated to offer service lines that operate at a loss or that have much lower profit margins. We continue to see the shift of increasingly complex procedures from the inpatient to the outpatient setting and have also seen growth in the general shift of lower acuity procedures to physician offices and other non-hospital outpatient settings. These trends have contributed to decreases in admissions, surgical volumes and emergency room visits and have, to some extent, offset our efforts to improve equivalent admission rates at many of our hospitals.

Our hospitals also face extreme competition in their efforts to recruit and retain physicians on their medical staffs. It is widely recognized that the U.S. has a shortage of physicians in certain practice areas, including primary care physicians and specialists such as cardiologists, oncologists, urologists and orthopedists, in various areas of the country. This fact, and our ability to overcome these shortages, is directly relevant to our growth strategies because cardiologists, oncologists, urologists and orthopedists are often the physicians in highest demand in communities where our hospitals are located.  Larger tertiary medical centers are acquiring physician practices and employing physicians in some of our communities.  While physicians in these practices may continue to be members of the medical staffs of our hospitals, they may be less likely to refer patients to our hospitals over time.

We believe other key factors in our competition for patients is the quality of our patient care and the perception of that quality in the communities where our facilities are located, which may be influenced by, among other things, the technology, service lines and capital improvements made at our facilities and by the skills and experience of our non-physician employees involved in patient care. 

In addition to competitive concerns, many of our communities are experiencing slow growth, and in some cases, population losses.  We believe this trend has occurred mainly as a result of recent challenging economic conditions because the economies in the non-urban communities in which our facilities primarily operate are often dependent on a small number of larger employers, especially manufacturing or other facilities.  This causes the economies of our communities to be more sensitive to economic downturns and slower to rebound when the overall U.S. economy improves.  In addition, other economic factors, including, potentially, self-rationing of healthcare services, have made it more difficult to increase the number of patients who seek care at many of our facilities.

Business Strategy

In order to achieve growth in patient volumes, revenues and profitability given the competitive and structural environment, we continue to focus our business strategy on the following:

· Measurement and improvement of quality of patient care and perceptions of such quality in communities where our facilities are located;

· Targeted recruiting of primary care physicians and physicians in key specialties;

· Retention of physicians and efforts to improve physician satisfaction, including employing a greater number of primary care physicians as well as physicians in certain specialties;

· Retention and, where needed, recruitment of non-physician employees involved in patient care and efforts to improve employee satisfaction;

· Targeted investments in new technologies, new service lines and capital improvements at our facilities;

· Improvements in management of expenses and revenue cycle;

· Negotiation of improved reimbursement rates with non-governmental payers;

· Strategic growth through acquisition and integration of hospitals and other healthcare facilities where valuations are attractive and we can identify opportunities for improved financial performance through our management or ownership; and

· Developing strategic partnerships with other healthcare providers to achieve growth in new regions.

35

As part of our ongoing efforts to further manage costs and improve the results of our revenue cycle, we have partnered with a third party to provide certain nonclinical business functions, including payroll processing, supply chain management and revenue cycle functions.  We believe this model of sharing centralized resources to support common business functions across multi-facility enterprises provides us efficiencies and is the most cost effective approach to managing these nonclinical business functions.

Regulatory Environment

Our business and our facilities are highly regulated, and the penalties for noncompliance can be severe. We are required to comply with extensive, complicated and overlapping government laws and regulations at the federal, state and local levels. These laws and regulations govern every aspect of how our hospitals conduct their operations, from what service lines must be offered in order to be licensed as an acute care hospital, to whether our hospitals may employ physicians, and to how (and whether) our hospitals may receive payments pursuant to the Medicare and Medicaid programs. The failure to comply with these laws and regulations can result in severe penalties including criminal penalties, civil sanctions, the loss of our ability to receive reimbursements through the Medicare and Medicaid programs or the refund of such payments we previously received.

Not only are our facilities heavily regulated, but the rules, regulations and laws to which they are subject often change, with little or no notice, and are often interpreted and applied differently by various regulatory agencies with authority to enforce such requirements. Each change or conflicting interpretation may require our facilities to make changes in space usage, equipment, personnel or services, and may also require that standard operating policies and procedures be re-written and re-implemented. The cost of complying with such laws and regulations is a significant component of our overall expenses. Further, this expense has grown in recent periods because of new regulatory requirements and the severity of the penalties associated with non-compliance.  Management anticipates that compliance expenses will continue to grow in the foreseeable future.  The healthcare industry has seen a number of ongoing investigations related to patient referrals, physician recruiting and employment practices, cost reporting and billing practices, medical necessity of inpatient admissions, physician office leasing, 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 Inspector General (“OIG”), the DOJand other governmental fraud and abuse programs.

The Affordable Care Act imposed an affirmative obligation on healthcare providers to report and refund any overpayments received. “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 are deemed to be fraudulent and become violations of the False Claims Act if not reported and refunded within the later of 60 days of identification or the date any corresponding cost report is due (if applicable). 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 federal physician self-referral law (Stark law)); and (3) self-disclosing to the Centers for Medicare and Medicaid Services (“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.

36

Revenue Sources

Our facilities generate revenues by providing healthcare services to our patients. Depending upon the patient’s medical insurance coverage, we are paid for these services by governmental Medicare and Medicaid programs, commercial insurance, including managed care organizations, and directly by the patient. The amounts we are paid for providing healthcare services to our patients vary depending upon the payer.  Governmental payers generally pay significantly less than the hospital’s customary charges for the services provided. Insured patients are generally not responsible for any difference between customary hospital charges and the amounts received from commercial insurance payers. However, insured patients are responsible for payments not covered by insurance, such as exclusions, deductibles and co-payments.

Medicare and Medicaid Reimbursement

Revenues from governmental payers, such as Medicare and Medicaid, are controlled by complex rules and regulations that stipulate the amount a hospital is paid for providing healthcare services. We must comply with these rules and regulations to continue to be eligible to participate in the Medicare and Medicaid programs. These rules and regulations are subject to frequent changes as a result of legislative and administrative action and annual payment adjustments on both the federal and the state levels.

In addition, Medicare payment methodologies have been, and are expected to continue to be, revised significantly based on cost containment and policy considerations.  While CMS has already implemented a number of the Medicare reimbursement reductions required by the Affordable Care Act, additional reductions will become effective in the future and some of the reductions that have already been imposed by CMS will be increased in accordance with the terms of the Affordable Care Act.  Additionally, the Middle Class Tax Relief and Job Creation Act of 2012 and the American Taxpayer Relief Act of 2012 (“ATRA”) require further reductions in Medicare payments, and the Budget Control Act of 2011 (“BCA”) imposed a 2% reduction in Medicare spending effective as of April 1, 2013.  The Bipartisan Budget Act of 2015 (“BBA”) extended the 2% reduction in Medicare spending through federal fiscal year (“FFY”) 2025, and the Bipartisan Budget Act of 2018 (the “2018 Act”), which provides approximately $300 billion in discretionary spending sequestration relief for FFYs 2018 and 2019, further extends the 2% reduction in Medicare spending through FFY 2027.  Additionally, effective January 1, 2017, the BBA reduced Medicare payments to off-campus hospital outpatient departments that were not billing the Medicare program for covered outpatient services prior to November 2, 2015, which limits our ability to expand the scope and profitability of outpatient services we offer at off-campus locations.

On April 16, 2015, Medicare Access and the CHIP Reauthorization Act of 2015 (“MACRA”) was enacted.  Among other things, MACRA extended the Medicare dependent hospital program, which provides enhanced payment support for rural hospitals that have no more than 100 beds and at least 60% of their inpatient days or discharges covered by Medicare, and the Medicare low volume hospital program, which provides additional Medicare reimbursement for general acute care hospitals that are located a certain distance from another general acute care hospital and have less than a certain number of Medicare discharges each fiscal year, through September 30, 2017.   The 2018 Act, which was enacted on February 9, 2018, further extends both of these programs through FFY 2022.

On December 14, 2017, as part of the Medicare hospital outpatient prospective payment system (“OPPS”) final rule for calendar year (“CY”) 2018, CMS finalized a change to the payment rate for certain Medicare Part B drugs purchased by hospitals through the 340B Drug Pricing Program (the “340B Program”).  The 340B Program allows certain non-profit and governmental hospitals and other healthcare providers to obtain substantial discounts on covered outpatient drugs (prescription drugs and biologics other than vaccines) from drug manufacturers. Under the final rule, CMS will pay for separately reimbursable, non-pass through drugs and biologicals (other than vaccines) purchased through the 340B Program at the average sales price (“ASP”) minus 22.5% rather than ASP plus 6%.  CMS has estimated that this change will reduce Medicare payments for drugs and biologicals by $1.6 billion in CY 2018.  To maintain budget neutrality, CMS is implementing an offsetting increase in the conversion factor for non-drug items and services for all hospitals, including those not eligible to participate in the 340B program, across the OPPS.  CMS has indicated that it may revisit this policy change for CY 2019, and litigation has been filed challenging the authority of CMS to make the announced 340B Program payment rate changes effective.  We cannot predict whether CMS will make any additional changes to the methodology that it uses to pay for Medicare Part B drugs purchased by hospitals through the 340B Program or whether the litigation that has been filed against the 340B Program payment changes that CMS has implemented for CY 2018 will be successful.

37

On April 24, 2018, CMS issued its hospital inpatient prospective payment system (“IPPS”) proposed rule for FFY 2019 (the “Proposed Rule”), which begins on October 1, 2018.  Among other things, the Proposed Rule provides an operating payment rate increase of approximately 1.75% for hospitals that successfully report quality measures for the Hospital Inpatient Quality Reporting (“IQR”) Program and are meaningful EHR users.  The rate increase is based on a proposed hospital market basket increase of 2.8%, which is reduced by (i) a multi-factor productivity adjustment of 0.8% and (ii) a 0.75% reduction required by the Affordable Care Act and increased by (iii) 0.5% as required by MACRA in connection with the restoration of the documentation and coding adjustments that CMS was required to make by ATRA in order to fully recoup the documentation and coding overpayments that Congress believed occurred from FFY 2008 through 2013 solely as the result of the transition to the Medicare severity diagnosis related group system.  Hospitals that do not successfully report quality data under the IQR Program will be subject to a 25% reduction of the hospital market basket increase prior to the application of any applicable statutory adjustments.  Hospitals that are not meaningful EHR users are also subject to an additional 75% reduction of the hospital market basket increase.

In addition to establishing the payment rate update, the Proposed Rule also makes a number of other changes to the Medicare program’s IPPS.  Among other things, the Proposed Rule would overhaul the Medicare and Medicaid Electronic Health Record Incentive Programs in order to better achieve program goals, such as interoperability and facilitation of electronic exchange of health information between providers and patients, require hospitals to make public a list of their standard changes via the internet, eliminate 19 reporting measures, remove duplicate requests for another 21 reporting measures and adopt one new claims-based readmissions measure for the hospital quality programs, and implement a variety of charges that are intended to reduce reporting and documentation burdens on hospitals.  In addition, under the proposed rule, CMS would distribute approximately $8.25 billion in uncompensated care payments to hospitals in FFY 2019, which would be an increase of approximately $1.5 billion from the FFY 2018 amount.  Overall, CMS estimates that under the proposed rule, total Medicare spending on inpatient hospital services, including capital, will increase by approximately $4 billion in FFY 2019.

On July 25, 2018, CMS published its OPPS proposed rule for CY 2019, which begins on January 1, 2019. Among other things, the proposed rule provides for a payment rate increase of 1.25% for hospitals that meet the reporting requirements of the Medicare Hospital Outpatient Quality Reporting (“OQR”) Program and a payment rate decrease of 0.75% for hospitals that do not. The proposed rate increase is based on a proposed hospital market basket increase of 2.8%, which is reduced by a multi-factor productivity adjustment of 0.8% and an additional 0.75% reduction required by the Affordable Care Act. In addition to updating the OPPS payment rate, the proposed rule would also, among other things, reduce payments for clinic visit services that are provided at off-campus hospital provider-based departments (“PBDs”) and pay PBDs that had previously been excepted from the site neutral payment reductions of the BBA under the Medicare physician fee schedule (“PFS”) for items and services that are within any clinical families of services that the PBD did not provide between the baseline period of November 1, 2014, through November 1, 2015. CMS has estimated that the changes set forth in the OPPS proposed rule for CY 2019 would decrease payments to hospitals by 0.1%.

Medicaid programs are funded by both state governments and federal matching funds to provide healthcare benefits to certain low income individuals and groups. In recent years, we have benefited from the expansion of Medicaid under the Affordable Care Act, and effective as of January 1, 2019, Virginia, an additional state in which we operate, will expand its Medicaid program.  However, a number of states have adopted or are considering legislation designed to reduce their Medicaid expenditures, including enrolling Medicaid recipients in managed care programs, and imposing additional taxes on hospitals to help finance such states’ Medicaid systems.  CMS has also recently approved demonstration waivers for the Arkansas, Indiana, Kentucky and New Hampshire Medicaid programs that, among other things, impose work and community engagement requirements and income-based premiums on certain adult Medicaid beneficiaries, and at least seven other states, including some in which we have facilities, have similar waiver requests pending.   Litigation has been filed against the waiver that has been granted by CMS to the Kentucky Medicaid program, and on June 29, 2018, the U.S. District Court for the District of Columbia vacated the waiver and remanded it to CMS for additional consideration.  As a result, the Kentucky Medicaid program’s work requirements did not become effective on July 1, 2018.  CMS has indicated that it intends to open a new public comment period for the Kentucky Medicaid program’s work requirements in response to the Court’s ruling.  We cannot predict the outcome of the new public comment period, whether CMS will appeal the Court’s ruling, the outcome of any such appeal or whether any lawsuits will be filed against any other Medicaid demonstration waivers that have been granted by CMS.

38

Furthermore, on April 10, 2018, President Trump signed an executive order that, among other things, states that it is the policy of the federal government to reform the welfare system of the United States so that it empowers welfare recipients and improves employment outcomes and economic independence by strengthening existing work requirements for work-capable people and introducing new work requirements where legally permissible. Also, as part of the movement to repeal, replace or modify the Affordable Care Act and as a means to reduce the federal budget deficit, there are renewed congressional efforts to move Medicaid from an open-ended program with coverage and benefits set by the federal government to one in which states receive a fixed amount of federal funds, either through block grants or per capita caps, and have more flexibility to determine benefits, eligibility or provider payments. If those changes are implemented, we cannot predict whether the amount of fixed federal funding to the states will be based on current payment amounts, or if it will be based on lower payment amounts, which would negatively impact those states that expanded their Medicaid programs in response to the Affordable Care Act.  Such efforts to reduce federal funding of the Medicaid program, as well as those that would reduce the amount of federal Medicaid matching funding available to states by curtailing the use of provider taxes, could have a negative impact on state Medicaid budgets resulting in less coverage for eligible individuals.

Given the reduced federal financing of expanded Medicaid programs that took effect in 2017, and in light of the possible repeal, replacement or modification of the Affordable Care Act, we are unable to predict how many, if any, additional states in which we operate will expand their Medicaid programs or how many, if any, of the states in which we operate that have expanded their Medicaid programs will keep their expansions in place in the future.

Furthermore, pursuant to the Affordable Care Act, as amended by the Pathway for SGR Reform Act of 2013,  Protecting Access to Medicare Act of 2014 (“PAMA”), MACRA and the 2018 Act, funding for Medicaid DSH programs is to be significantly reduced beginning in FFY 2020.  Because many of the states in which we operate have not expanded Medicaid programs as intended under the Affordable Care Act, the reduction in Medicaid DSH payments may take place without a coupled increase in the Medicaid eligible population, thus increasing the net amount of uncompensated care we provide.

Proposed Budget

On February 12, 2018, President Trump released his proposed budget for FFY 2019 (the “Proposed Budget”). While the Proposed Budget does not contain any direct cuts to the Medicare program, it does contain a number of proposals that would reduce Medicare expenditures by approximately $494 billion over the next 10 years.  Among other things, the Proposed Budget would reduce Medicare coverage of bad debts, modify Medicare payments to hospitals for uncompensated care, reduce reimbursement for services provided at all hospital off-campus departments to the PFS rate, convert federal funding for the Medicaid program to block grants or amounts that are subject to a per capita cap, and extend Medicaid DSH reductions through FFY 2028. We cannot predict whether the Proposed Budget will be implemented in whole or in part or whether Congress will take other legislative action to reduce spending on the Medicare and Medicaid programs. Additionally, future efforts to reduce the federal deficit may result in additional revisions to and payment reductions for the amounts we receive for our services.

Physician Services

We employ an increasing number of physicians in our hospital markets.  Medicare pays us for services provided by our employed physicians under the Medicare PFS system.  Under the PFS, CMS has assigned a national relative value unit (“RVU”) to most medical services and procedures that reflects the various resources required by a physician to provide the services relative to all other services.  Historically, the conversion factor that is used to determine physician payments for each RVU had been updated by the sustainable growth rate (“SGR”) that is intended to account for inflation and targeted growth in Medicare expenditures. The SGR has generally resulted in significant reductions to payments made under the PFS and Congress has passed multiple legislative acts delaying application of the SGR to the PFS.

39

On April 16, 2015, MACRA was enacted into law, which replaced the SGR formula with new systems for establishing the annual updates to payments made under the PFS. Under MACRA, the PFS payment rates that were in effect when MACRA was enacted were extended through June 30, 2015, and then increased by 0.5% for the remainder of CY 2015, and increased by an additional 0.5% per year for CYs 2016, 2017 and 2018 and will be increased by 0.5% per year for CY 2019. PFS payment rates would then remain at their CY 2019 levels through CY 2025. Beginning in CY 2019, amounts paid to individual physicians would be subject to adjustment for achieving certain value and quality incentives set forth in MACRA.

On July 12, 2018, CMS issued a proposed rule to update the payment rates, payment policies, and quality provisions applicable to services provided under the PFS on or after January 1, 2019. Among other things, the proposed rule would revise the coding and payment policies for evaluation and management (E/M) visits by giving physicians and other practitioners increased flexibility in documenting E/M visits and creating a new, single blended payment rate for office/outpatient E/M level 2 through 5 visits, would pay physicians for brief communication technology based services (such as virtual check-ins) and remote evaluation of recorded video and/or images submitted by a patient, would maintain payment rates for non-excepted off-campus provider-based departments paid under the PFS at 40% of the amount that those services would have been paid for under the Medicare program’s hospital outpatient prospective payment system, would revise the physician supervision requirements for diagnostic tests performed by radiologist assistants, and solicited comments on the creation of a bundled episode of care for management and counseling treatment for substance abuse disorders and the imposition of additional price transparency requirements on providers. In addition, the proposed rule would also make changes to MACRA’s quality payment program, which took effect in 2017, including expanding the types of clinicians eligible to participate in the Merit-Based Incentive Payment System (“MIPS”) to include clinical psychologists, clinical social workers, physical therapists, and occupational therapists, increasing the weight of the MIPS cost category and reducing the weight of the MIPS quality category in 2019, eliminating 34 quality reporting measures that have been determined to be ineffective and replacing them with 10 new quality measures, aligning the MIPS promoting electronic health record (“EHR") interoperability performance category with the standard that have been proposed for hospitals, and requiring MIPS eligible providers to use 2015 edition certified EHRs. We cannot predict whether the PFS proposed rule for CY 2019 will be adopted in its current form or the impact that the PFS proposed rule for CY 2019 would have on the Company if it is adopted.

HMOs, PPOs, and Other Private Insurers

In addition to government programs, our facilities are reimbursed by differing types of private payers, including health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”) and other private insurers.  Revenues from HMOs, PPOs, and other private insurers are subject to contracts and other arrangements that require us to discount the amounts we customarily charge for healthcare services or accept fixed, pre-determined fees for our services. These discounted arrangements often limit our ability to increase charges or revenues in response to increasing costs. We actively negotiate with these payers in an effort to maintain or increase the pricing of our healthcare services; however, we have no control over patients switching their healthcare coverage to a payer with which we have negotiated less favorable reimbursement rates.  In recent years, an increasing number of our patients have moved to lower cost healthcare coverage plans, and such plans generally provide lower reimbursement rates and require patients to pay an increased portion of the costs of care through deductibles, co-payments or exclusions.  Additionally, plans purchased through the Exchanges are increasingly using narrow and tiered networks that limit beneficiary provider choices.  If we provide services when we are not a participating provider in the network, it can result in higher patient responsibility amounts that a patient may not have the ability to pay or may choose not to pay.  We expect these trends to continue in the coming years.

Self-Pay Patients

Self-pay revenues are derived from patients who do not have any form of healthcare coverage as well as from patients with third party healthcare coverage related to the patient responsibility portion, including deductibles and co-payments.  Amounts reported as self-pay revenues are reflected at the net amount we expect to collect.  Our ability to collect self-pay revenues is dependent on a combination of broad economic factors, including unemployment levels in our markets as well shifts in the numbers of individuals and employers who purchase insurance plans with high deductibles and high co-payments.    

40

Results of Operations

Certain Definitions

The following definitions apply throughout the remaining portion of Management’s Discussion and Analysis of Financial Condition and Results ofOperations:

Adjusted EBITDA.  Earnings before depreciation and amortization; interest expense, net; other non-operating (gains) losses, net; provision for income taxes; and net income attributable to noncontrolling interests and redeemable noncontrolling interests (when applicable for the periods presented).

Admissions.  The total number of patients admitted to our hospitals. Used by management and investors as a general measure of inpatient volume.

bps.Basis points.

Consolidated.Consolidated information includes the results ofour same-hospital operations and the results of Rockdale Medical Center (“Rockdale”) located in Conyers, Georgia, which was sold effective October 1, 2017.

Effective tax rate.  Provision for income taxes as a percentage of income before income taxes less net income attributable to noncontrolling interests and redeemable noncontrolling interests.

Emergency room visits.  The total number of hospital-based emergency room visits.

Equivalent admissions.  Management and investors use equivalent admissions as a general measure of combined inpatient and outpatient volume. We compute equivalent admissions by multiplying admissions (inpatient volume) by the Outpatient factor. The equivalent admissions computation “equates” outpatient revenue to the volume measure (admissions) used to measure inpatient volume resulting in a general measure of combined inpatient and outpatient volume. 

Medicare case mix index.  Refers to the acuity or severity of illness of an average Medicare patient at our hospitals.

N/A.  Not applicable.

Net revenue days outstanding.  We compute net revenue days outstanding by dividing our accounts receivable by our revenue per day. Our revenue per day is calculated by dividing our quarterly healthcare services revenues by the number of calendar days in the quarter.

Outpatient factor.  The sum of gross inpatient revenue and gross outpatient revenue divided by gross inpatient revenue.

Outpatient surgeries.  Surgeries that do not require admission to our hospitals.

Same-hospital.  Same-hospital information includes the results of our health support center and the same 71 hospital campuses operated during both the three and six months ended June 30, 2018 and 2017. Same-hospital information excludes our hospitals that have previously been disposed.

41

For the Three Months Ended June 30, 2018 and 2017

Operating Results Summary

The following table summarizesthe results of operations for the three months endedJune 30, 2018 and 2017 (dollars in millions):

	Three Months Ended June 30,
	2018				2017
			% of				% of
	Amount		Revenues		Amount		Revenues
Revenues	$	1,569.8	100.0	%	$	1,594.8	100.0	%
Salaries and benefits		740.2	47.2			762.0	47.8
Supplies		256.0	16.3			263.2	16.5
Other operating expenses, net		386.6	24.6			377.4	23.6
Depreciation and amortization		81.4	5.1			88.7	5.6
Interest expense, net		37.0	2.4			37.6	2.4
Other non-operating gains, net		(3.2)	(0.2)			(4.5)	(0.3)
		1,498.0	95.4			1,524.4	95.6
Income before income taxes		71.8	4.6			70.4	4.4
Provision for income taxes		17.0	1.1			24.4	1.5
Net income		54.8	3.5			46.0	2.9
Less: Net income attributable to noncontrolling interests
and redeemable noncontrolling interests		(2.4)	(0.2)			(3.5)	(0.2)
Net income attributable to LifePoint Health, Inc.	$	52.4	3.3	%	$	42.5	2.7	%

Revenues

The following table shows our key revenue and volume metrics for the three months endedJune 30, 2018 and 2017:

	Three Months Ended June 30,				Increase		% Increase
	2018		2017		(Decrease)		(Decrease)
Consolidated:
Number of hospital campuses		71		72		(1)	(1.4)	%
Revenues (in millions)	$	1,569.8	$	1,594.8	$	(25.0)	(1.6)	%
Admissions		63,714		65,956		(2,242)	(3.4)	%
Equivalent admissions		174,146		177,812		(3,666)	(2.1)	%
Revenues per equivalent admission	$	9,014	$	8,969	$	45	0.5	%
Medicare case mix index		1.53		1.50		0.03	2.0	%
Average length of stay (days)		4.8		4.9		(0.1)	(2.0)	%
Inpatient surgeries		17,009		17,815		(806)	(4.5)	%
Outpatient surgeries		69,100		69,482		(382)	(0.5)	%
Total surgeries		86,109		87,297		(1,188)	(1.4)	%
Emergency room visits		382,856		412,718		(29,862)	(7.2)	%
Outpatient factor		2.74		2.70		0.04	1.5	%
Net revenue days outstanding (days)		47.6		51.9		(4.3)	(8.3)	%
Same-hospital:
Number of hospital campuses		71		71		-	-	%
Revenues (in millions)	$	1,571.0	$	1,561.9	$	9.1	0.6	%
Admissions		63,714		63,914		(200)	(0.3)	%
Equivalent admissions		174,146		173,272		874	0.5	%
Revenues per equivalent admission	$	9,021	$	9,015	$	6	0.1	%
Medicare case mix index		1.53		1.50		0.03	2.0	%
Average length of stay (days)		4.8		5.0		(0.2)	(4.0)	%
Inpatient surgeries		17,009		17,219		(210)	(1.2)	%
Outpatient surgeries		69,100		68,060		1,040	1.5	%
Total surgeries		86,109		85,279		830	1.0	%
Emergency room visits		382,856		399,111		(16,255)	(4.1)	%
Outpatient factor		2.74		2.71		0.03	1.1	%
Net revenue days outstanding (days)		47.4		51.9		(4.5)	(8.7)	%

42

For the three months ended June 30, 2018, our consolidated revenues decreased $25.0 million, or 1.6%, to $1,569.8 million compared to $1,594.8 million for the same period last year, primarily as a result of the sale of Rockdale, while our same-hospital revenues increased $9.1 million, or 0.6%.The increase in our same-hospital revenues consisted of a 0.5% increase in our same-hospital equivalent admissions and a 0.1% increase in our same-hospital revenues per equivalent admission for the three months ended June 30, 2018 compared to the same period last year.  Our same-hospital equivalent admissions were positively impacted by an increase in outpatient surgical volumesduring the three months ended June 30, 2018 compared to the same period last year, partially offset by decreases in admissions and emergency room visits. Our same-hospital revenues per equivalent admission were positively impacted by higher contracted rates from HMOs, PPOs and other private insurers and an increase in the overall acuity of the services provided during the three months ended June 30, 2018 compared to the same period last year. These increases were partially offset by reductions in certain Medicaid supplemental payment programs and the impact of the prior year transfers of our home health and hospice service lines to IHHP.When adjusted to exclude the impact of the prior year transfers of our home health and hospice service lines to IHHP, our same-hospital revenues increased $13.3 million, or 0.8% for the three months ended June 30, 2018 compared to the same period last year. 

Our consolidated revenues by source and approximate percentages of revenues were as follows for the three months endedJune 30, 2018 and 2017(dollars in millions):

	Three Months Ended June 30,
	2018				2017
			% of				% of
	Amount		Revenues		Amount		Revenues
Medicare	$	577.3	36.8	%	$	594.8	37.3	%
Medicaid		219.7	14.0			229.9	14.4
HMOs, PPOs and other private insurers		736.5	46.9			736.1	46.1
Self-pay		6.6	0.4			6.0	0.4
Other		26.3	1.7			23.6	1.5
Revenue from contracts with customers		1,566.4	99.8			1,590.4	99.7
Rental income		3.4	0.2			4.4	0.3
Revenues	$	1,569.8	100.0	%	$	1,594.8	100.0	%

Expenses

Salaries and Benefits

The following table summarizes our salaries and benefits, man-hours per equivalent admission and salaries and benefits per equivalent admission for the three months endedJune 30, 2018 and 2017:

	Three Months Ended June 30,
			% of				% of
	2018		Revenues		2017		Revenues		Decrease		% Decrease
Salaries and benefits (dollars in millions)	$	740.2	47.2	%	$	762.0	47.8	%	$	(21.8)	(2.8)	%
Man-hours per equivalent admission		108	N/A			112	N/A			(4)	(3.6)	%
Salaries and benefits per equivalent
admission	$	4,250	N/A		$	4,285	N/A		$	(35)	(0.8)	%

For the three months ended June 30, 2018, our salaries and benefits expense decreasedto $740.2 million, or 2.8%, compared to $762.0 million for the same period last year.  This decrease was primarily driven by the sale of Rockdale, in addition to labor costs associated with home health and hospice service lines transferred to IHHP.  Additionally, our salaries and benefits decreased as a result of an outsourcing initiative for certain hospital-based departments, in addition to productivity improvements at certain of our facilities and our health support center.

43

Supplies

The following table summarizes our supplies and supplies per equivalent admission for the three months endedJune 30, 2018 and 2017:

	Three Months Ended June 30,
			% of				% of
	2018		Revenues		2017		Revenues		Decrease		% Decrease
Supplies (dollars in millions)	$	256.0	16.3	%	$	263.2	16.5	%	$	(7.2)	(2.7)	%
Supplies per equivalent admission	$	1,470	N/A		$	1,480	N/A		$	(10)	(0.7)	%

For the three months ended June 30, 2018, our supplies expense decreased to  $256.0 million, or 2.7%, compared to $263.2 million for the same period last year,primarily as a result of the sale of Rockdale, in addition to the positive impact of actively managing the utilization of physician preference items.

Other Operating Expenses, Net

The following table summarizes our other operating expenses for the three months endedJune 30, 2018 and 2017 (dollars in millions):

	Three Months Ended June 30,
			% of				% of		Increase		% Increase
	2018		Revenues		2017		Revenues		(Decrease)		(Decrease)
Contract services	$	122.3	7.8	%	$	116.8	7.3	%	$	5.5	4.7	%
Professional fees		75.7	4.8			71.3	4.5			4.4	6.1	%
Non-income taxes		44.9	2.9			47.2	3.0			(2.3)	(5.0)	%
Repairs and maintenance		45.4	2.9			47.4	3.0			(2.0)	(4.3)	%
Utilities		27.3	1.7			27.9	1.7			(0.6)	(1.7)	%
Rents and leases		16.9	1.1			17.3	1.1			(0.4)	(3.4)	%
Insurance		13.8	0.9			11.9	0.7			1.9	16.2	%
Investment income		(5.7)	(0.4)			(6.8)	(0.4)			1.1	(15.7)	%
EHR incentive income		-	-			(4.3)	(0.3)			4.3	(100.0)	%
Other		46.0	2.9			48.7	3.0			(2.7)	(5.2)	%
	$	386.6	24.6	%	$	377.4	23.6	%	$	9.2	2.4	%

For the three months ended June 30, 2018, our net other operating expenses increased to $386.6 million, or 2.4%, compared to $377.4 million for the same period last year,primarily as a result of increases in contract services, professional fees and insurance expenses and a decrease in EHR incentive income.  Our contract services expenses increased primarily due to the outsourcing of certain hospital-based departments in certain of our markets that were historically insourced and included in our salaries and benefits expenses.Additionally, we recognized increased expenses for physician professional services as well as higher expenses associated with our professional liability programs, including medical malpractice and workers compensation programs, during the three months ended June 30, 2018 compared to the same period last year.Lastly, our EHR incentive incomedeclined from $4.3 million in the prior year to zero as our incentive payments under this program substantially concluded in 2017.

Depreciation and Amortization

For the three months endedJune 30, 2018, our depreciation and amortization expense decreasedby $7.3 million, or 8.3%  to $81.4 million, or 5.1% of revenues, compared to $88.7 million, or 5.6% of revenues, for the same period last year. Our depreciation and amortization expense decreased primarily as a result of impairment losses recognized in the fourth quarter of 2017 to adjust the carrying amounts of certain long-lived assets at two of our hospitals to their estimated fair values, partially offset by increases in spending related to capital expenditure commitments associated with our hospital acquisitions.We anticipate that our depreciation and amortization expense will increase in future periods as a result.

Interest Expense, Net

Our interest expense decreased slightlyby $0.6 million, or 1.5%, to $37.0 million for the three months ended June 30, 2018, compared to $37.6 million for the same period last year.  For a further discussion of our debt and corresponding interest rates, see “Liquidity and Capital Resources — Debt”included elsewhere in this report.

44

Other Non-Operating Gains, Net

During the three months ended June 30, 2018, we recognized a net gain of $3.2 million, $2.4 million net of income taxes, or $0.06 earnings per diluted share, primarily attributable to the sale of an ancillary rehabilitation facility at one of our hospital campuses.

During the three months ended June 30, 2017, we recognized a net gain of $4.5 million, $2.8 million net of income taxes, or $0.07 earnings per diluted share, in connection with the transfer of home health agencies and hospices to IHHP.

Provision for Income Taxes

Our provision for income taxes was $17.0 million, or 1.1% of revenues, for the three months ended June 30, 2018, compared to $24.4 million, or 1.5% of revenues, for the same period last year. The decrease in our provision for income taxes for the three months ended June 30, 2018 was primarily attributable to a decrease in our effective tax rate to 24.5% for the three months ended June 30, 2018, compared to 36.4% for the same period last year. The decrease in our effective tax rate was primarily related to the Tax Cuts and Jobs Act (the “Tax Act”), which was enacted on December 22, 2017and lowered the Federal corporate income tax rate from 35% to 21% and eliminated certain deductions, for tax years beginning after December 31, 2017.

Supplemental Non-GAAP Information

We use adjusted EBITDA to evaluate our operating performance and as a measure of performance for incentive compensation purposes. Additionally, our credit facilities use adjusted EBITDA, subject to further permitted adjustments, for certain financial covenants. We believe adjusted EBITDA is a measure of performance used by some investors, equity analysts, rating agencies and lenders to make informed decisions as to, among other things, our ability to incur and service debt and make capital expenditures. In addition, multiples of current or projected adjusted EBITDA are used by some investors and equity analysts to estimate current or prospective enterprise value. Adjusted EBITDA should not be considered a measure of financial performance under U.S. generally accepted accounting principles (“GAAP”), and the items excluded from adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the condensed consolidated financial statements as an indicator of financial performance. Because adjusted EBITDA is not a measurement determined in accordance with GAAP and is susceptible to varying calculations, adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies. Refer to “Certain Definitions” above for a description of how we define adjusted EBITDA.

The following table sets forth adjusted EBITDA for the three months ended June 30, 2018 and 2017and reconciles adjusted EBITDA to net income, the most comparable GAAP measure (dollars in millions):

	Three Months Ended June 30,
	2018				2017
			% of				% of
	Amount		Revenues		Amount		Revenues
Net income	$	54.8	3.5	%	$	46.0	2.9	%
Less:  Net income attributable to noncontrolling interests
and redeemable noncontrolling interests		(2.4)	(0.2)			(3.5)	(0.2)
Net income attributable to LifePoint Health, Inc.		52.4	3.3			42.5	2.7
Adjust:   Depreciation and amortization		81.4	5.1			88.7	5.6
Interest expense, net		37.0	2.4			37.6	2.4
Other non-operating gains, net		(3.2)	(0.2)			(4.5)	(0.3)
Provision for income taxes		17.0	1.1			24.4	1.5
Net income attributable to noncontrolling interests
and redeemable noncontrolling interests		2.4	0.2			3.5	0.2
Adjusted EBITDA	$	187.0	11.9	%	$	192.2	12.1	%

45

For the Six Months Ended June 30, 2018 and 2017

Operating Results Summary

The following table summarizesthe results of operations for the six months endedJune 30, 2018 and 2017 (dollars in millions):

	Six Months Ended June 30,
	2018				2017
			% of				% of
	Amount		Revenues		Amount		Revenues
Revenues	$	3,172.6	100.0	%	$	3,225.0	100.0	%
Salaries and benefits		1,502.7	47.4			1,558.9	48.3
Supplies		522.0	16.5			531.4	16.5
Other operating expenses, net		772.4	24.3			746.9	23.2
Depreciation and amortization		163.0	5.1			176.8	5.4
Interest expense, net		74.0	2.3			75.0	2.3
Other non-operating losses (gains), net		69.5	2.2			(30.4)	(0.9)
		3,103.6	97.8			3,058.6	94.8
Income before income taxes		69.0	2.2			166.4	5.2
Provision for income taxes		19.5	0.6			56.4	1.8
Net income		49.5	1.6			110.0	3.4
Less: Net income attributable to noncontrolling interests
and redeemable noncontrolling interests		(5.9)	(0.2)			(7.6)	(0.2)
Net income attributable to LifePoint Health, Inc.	$	43.6	1.4	%	$	102.4	3.2	%

Revenues

The following table shows our key revenue and volume metrics for the six months endedJune 30, 2018 and 2017:

		Six Months Ended June 30,				Increase	% Increase
	2018		2017		(Decrease)		(Decrease)
Consolidated:
Number of hospital campuses		71		72		(1)	(1.4)	%
Revenues (in millions)	$	3,172.6	$	3,225.0	$	(52.4)	(1.6)	%
Admissions		130,150		136,016		(5,866)	(4.3)	%
Equivalent admissions		345,418		357,586		(12,168)	(3.4)	%
Revenues per equivalent admission	$	9,185	$	9,019	$	166	1.8	%
Medicare case mix index		1.54		1.50		0.04	2.7	%
Average length of stay (days)		4.9		5.0		(0.1)	(2.0)	%
Inpatient surgeries		34,218		36,147		(1,929)	(5.3)	%
Outpatient surgeries		135,737		138,407		(2,670)	(1.9)	%
Total surgeries		169,955		174,554		(4,599)	(2.6)	%
Emergency room visits		778,483		838,973		(60,490)	(7.2)	%
Outpatient factor		2.65		2.63		0.02	0.8	%
Net revenue days outstanding (days)		47.6		51.9		(4.3)	(8.3)	%
Same-hospital:
Number of hospital campuses		71		71		-	-	%
Revenues (in millions)	$	3,174.1	$	3,158.1	$	16.0	0.5	%
Admissions		130,150		131,848		(1,698)	(1.3)	%
Equivalent admissions		345,418		348,474		(3,056)	(0.9)	%
Revenues per equivalent admission	$	9,189	$	9,063	$	126	1.4	%
Medicare case mix index		1.54		1.50		0.04	2.7	%
Average length of stay (days)		4.9		5.0		(0.1)	(2.0)	%
Inpatient surgeries		34,218		34,969		(751)	(2.1)	%
Outpatient surgeries		135,737		135,457		280	0.2	%
Total surgeries		169,955		170,426		(471)	(0.3)	%
Emergency room visits		778,483		811,336		(32,853)	(4.0)	%
Outpatient factor		2.65		2.64		0.01	0.4	%
Net revenue days outstanding (days)		47.4		51.9		(4.5)	(8.7)	%

46

For the six months ended June 30, 2018, our consolidated revenues decreased $52.4 million, or 1.6%, to $3,172.6 million compared to $3,225.0 million for the same period last year, primarily as a result of the sale of Rockdale, while our same-hospital revenues increased $16.0 million, or 0.5%.  The increase in our same-hospital revenues was comprised of a 1.4% increase in our same-hospital revenues per equivalent admission, partially offset by a 0.9% decrease in our same-hospital equivalent admissionsfor the six months ended June 30, 2018 compared to the same period last year.  Our same-hospital equivalent admissions were negatively impacted by decreases in admissions and emergency room visits.Our same-hospital revenues per equivalent admission were positively impacted by the recognition of one additional quarter of revenue associated with the Medicare dependent and low volume hospital programs, higher contracted rates from HMOs, PPOs and other private insurers, and an increase in the overall acuity of the services provided during the six months ended June 30, 2018 compared to the same period last year.  These increases were partially offset by reductions in certain Medicaid supplemental payment programs and the impact of the prior year transfers of our home health and hospice service lines to IHHP.  When adjusted to exclude the impact of the prior year transfers of our home health and hospice service lines to IHHP, our same-hospital revenues increased $28.6 million, or 0.9% for the six months ended June 30, 2018 compared to the same period last year.

Our consolidated revenues by source and approximate percentages of revenues were as follows for the six months endedJune 30, 2018 and 2017(dollars in millions):

	Six Months Ended June 30,
	2018				2017
			% of				% of
	Amount		Revenues		Amount		Revenues
Medicare	$	1,185.2	37.4	%	$	1,225.2	38.0	%
Medicaid		439.4	13.8			472.7	14.6
HMOs, PPOs and other private insurers		1,475.1	46.5			1,454.4	45.1
Self-pay		12.8	0.4			12.0	0.4
Other		53.3	1.7			51.6	1.6
Revenue from contracts with customers		3,165.8	99.8			3,215.9	99.7
Rental income		6.8	0.2			9.1	0.3
Revenues	$	3,172.6	100.0	%	$	3,225.0	100.0	%

Expenses

Salaries and Benefits

The following table summarizes our salaries and benefits, man-hours per equivalent admission and salaries and benefits per equivalent admission for the six months endedJune 30, 2018 and 2017:

	Six Months Ended June 30,
			% of				% of
	2018		Revenues		2017		Revenues		Decrease		% Decrease
Salaries and benefits (dollars in millions)	$	1,502.7	47.4	%	$	1,558.9	48.3	%	$	(56.2)	(3.6)	%
Man-hours per equivalent admission		109	N/A			113	N/A			(4)	(3.5)	%
Salaries and benefits per equivalent
admission	$	4,350	N/A		$	4,360	N/A		$	(10)	(0.2)	%

For the six months ended June 30, 2018, our salaries and benefits expense decreasedto $1,502.7 million, or 3.6%, compared to $1,558.9 million for the same period last year.  This decrease was primarily driven by the sale of Rockdale, in addition to labor costs associated with home health and hospice service lines transferred to IHHP.  Additionally, our salaries and benefits decreased as a result of an outsourcing initiative for certain hospital-based departments, in addition to productivity improvements at certain of our facilities and our health support center.

47

Supplies

The following table summarizes our supplies and supplies per equivalent admission for the six months endedJune 30, 2018 and 2017:

	Six Months Ended June 30,
			% of				% of		Increase		% Increase
	2018		Revenues		2017		Revenues		(Decrease)		(Decrease)
Supplies (dollars in millions)	$	522.0	16.5	%	$	531.4	16.5	%	$	(9.4)	(1.8)	%
Supplies per equivalent admission	$	1,511	N/A		$	1,486	N/A		$	25	1.7	%

For the six months ended June 30, 2018, our supplies expense decreased to $522.0 million, or 1.8%, compared to $531.4 million for the same period last year,primarily as a result of the sale of Rockdale.  These decreases were partially offset by an increase in our supplies expenses as a result of growth in certain higher acuity service lines as evidenced by a 1.7% increase in our supplies per equivalent admission for the six months ended June 30, 2018 compared to the same period last year.

Other Operating Expenses, Net

The following table summarizes our other operating expenses for the six months endedJune 30, 2018 and 2017 (dollars in millions):

	Six Months Ended June 30,
			% of				% of		Increase		% Increase
	2018		Revenues		2017		Revenues		(Decrease)		(Decrease)
Contract services	$	242.0	7.6	%	$	233.2	7.2	%	$	8.8	3.8	%
Professional fees		147.3	4.6			142.8	4.4			4.5	3.1	%
Non-income taxes		93.6	3.0			94.2	2.9			(0.6)	(0.6)	%
Repairs and maintenance		91.5	2.9			94.5	2.9			(3.0)	(3.2)	%
Utilities		55.0	1.7			56.0	1.7			(1.0)	(1.7)	%
Rents and leases		33.4	1.1			34.6	1.1			(1.2)	(3.7)	%
Insurance		29.2	0.9			21.3	0.7			7.9	37.3	%
Investment income		(12.4)	(0.4)			(19.4)	(0.6)			7.0	(35.9)	%
EHR incentive income		-	-			(7.5)	(0.2)			7.5	(100.0)	%
Other		92.8	2.9			97.2	3.1			(4.4)	(4.4)	%
	$	772.4	24.3	%	$	746.9	23.2	%	$	25.5	3.4	%

For the six months ended June 30, 2018, our net other operating expenses increased to $772.4 million, or 3.4%, compared to $746.9 million for the same period last year,primarily as a result of increases in contract services, professional fees and insurance expenses and decreases in investment income and EHR incentive income.  Our contract services expenses increased primarily due to the outsourcing of certain hospital-based departments in certain of our markets that were historically insourced and included in our salaries and benefits expenses.Additionally, we recognized increased expenses for physician professional services as well as higher expenses associated with our professional liability programs, including medical malpractice and workers compensation programs, during the six months ended June 30, 2018 compared to the same period last year.Furthermore, our investment income was higher during the prior year as a result of the positive performance of certain non-consolidated businesses.Lastly, our EHR incentive incomedeclined from $7.5 million in the prior year to zero as our incentive payments under this program substantially concluded in 2017.

Depreciation and Amortization

For the six months endedJune 30, 2018, our depreciation and amortization expense decreasedby $13.8 million, or 7.8%  to $163.0 million, or 5.1% of revenues, compared to $176.8 million, or 5.4% of revenues, for the same period last year. Our depreciation and amortization expense decreased primarily as a result of impairment losses recognized in the fourth quarter of 2017 to adjust the carrying amounts of certain long-lived assets at two of our hospitals to their estimated fair values, partially offset by increases in spending related to capital expenditure commitments associated with our hospital acquisitions.We anticipate that our depreciation and amortization expense will increase in future periods as a result.

48

Interest Expense, Net

Our interest expense decreased slightlyby $1.0 million, or 1.3%, to $74.0 million for the six months ended June 30, 2018, compared to $75.0 million for the same period last year.  For a further discussion of our debt and corresponding interest rates, see “Liquidity and Capital Resources — Debt”included elsewhere in this report.

Other Non-Operating Losses (Gains), Net

As more fully discussed in Note 5 to our accompanying unaudited condensed consolidated financial statements included elsewhere in this report, we recognized impairment losses in the aggregate of $74.3 million, $58.2 million net of income taxes, or $1.47 loss per diluted share, during the six months ended June 30, 2018, primarily in connection with our entry into definitive agreements to sell the assets of Mercy, Acadian, and Minden.  The impairment losses include the write-down of property, equipment, allocated goodwill and certain other assets to their estimated fair values.

Additionally, during the six months ended June 30, 2018, we recognized net gainsin the aggregate of approximately $4.8 million, $3.6 million net of income taxes, or$0.09 earnings per diluted share,in connection with the sale of an ancillary rehabilitation facilityat one of our hospital campuses and the transfer of one home health agency to IHHP in a fourth and final phase of the process. 

During the six months ended June 30, 2017, we recognized net gains in the aggregate of approximately $30.4 million, $19.0 million net of income taxes, or $0.46 earnings per diluted share, in connection with the settlement of a contingent liability previously established in connection with a prior hospital acquisitionand the transfer of home health agencies and hospices to IHHP.

Provision for Income Taxes

Our provision for income taxes was $19.5 million, or 0.6% of revenues, for the six months ended June 30, 2018, compared to $56.4 million, or 1.8% of revenues, for the same period last year.  The decrease in our provision for income taxes for the six months ended June 30, 2018 was primarily attributable to a decrease in our income before income taxes for the six months ended June 30, 2018 compared to the same period last year. The decrease in our income before income taxes was primarily a result of the net non-operating losses recognized during the sixmonths ended June 30, 2018, compared to the net non-operating gains recognized during the same period last year.  Additionally, the Tax Act, which was enacted on December 22, 2017, lowered the Federal corporate income tax rate from 35% to 21% and eliminated certain deductions, for tax years beginning after December 31, 2017.

Supplemental Non-GAAP Information

We use adjusted EBITDA to evaluate our operating performance and as a measure of performance for incentive compensation purposes. Additionally, our credit facilities use adjusted EBITDA, subject to further permitted adjustments, for certain financial covenants. We believe adjusted EBITDA is a measure of performance used by some investors, equity analysts, rating agencies and lenders to make informed decisions as to, among other things, our ability to incur and service debt and make capital expenditures. In addition, multiples of current or projected adjusted EBITDA are used by some investors and equity analysts to estimate current or prospective enterprise value. Adjusted EBITDA should not be considered a measure of financial performance under U.S. generally accepted accounting principles (“GAAP”), and the items excluded from adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the condensed consolidated financial statements as an indicator of financial performance. Because adjusted EBITDA is not a measurement determined in accordance with GAAP and is susceptible to varying calculations, adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies. Refer to “Certain Definitions” above for a description of how we define adjusted EBITDA.

49

The following table sets forth adjusted EBITDA for the six months ended June 30, 2018 and 2017and reconciles adjusted EBITDA to net income, the most comparable GAAP measure (dollars in millions):

	Six Months Ended June 30,
	2018				2017
			% of				% of
	Amount		Revenues		Amount		Revenues
Net income	$	49.5	1.6	%	$	110.0	3.4	%
Less: Net income attributable to noncontrolling interests
and redeemable noncontrolling interests		(5.9)	(0.2)			(7.6)	(0.2)
Net income attributable to LifePoint Health, Inc.		43.6	1.4			102.4	3.2
Add:  Depreciation and amortization		163.0	5.1			176.8	5.4
Interest expense, net		74.0	2.3			75.0	2.3
Other non-operating losses (gains), net		69.5	2.2			(30.4)	(0.9)
Provision for income taxes		19.5	0.6			56.4	1.8
Net income attributable to noncontrolling interests
and redeemable noncontrolling interests		5.9	0.2			7.6	0.2
Adjusted EBITDA	$	375.5	11.8	%	$	387.8	12.0	%

Liquidity and Capital Resources

Liquidity

Our primary sources of liquidity are cash flows provided by our operations and our debt borrowings.  Our senior secured credit agreement with, among others, Citibank, N.A., as administrative agent, and the lenders party thereto (the “Senior Credit Agreement”) matures on June 10, 2021. The Senior Credit Agreement provides for a $700.0 million senior secured term loan facility (the “Term Facility”) and a $600.0 million senior secured revolving credit facility (the “Revolving Facility”).  During the six months endedJune 30, 2018, we borrowed $125.0 million under the Revolving Facility for general corporate purposes and subsequently repaid $85.0 million prior to the end of the second quarter of 2018.We believe that our internally generated cash flows and amounts available for borrowing under our Senior Credit Agreement will be adequate to service existing debt, finance internal growth and fund capital expenditures and small to mid-size hospital acquisitions over the next twelve months and into the foreseeable future prior to maturity dates of our outstanding debt. Certain larger hospital acquisitions may, however, require additional financing.

The following table presents summarized cash flow information for the three and six months ended June 30, 2018 and 2017  (dollars in millions):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Net cash provided by operating activities	$	134.8	$	110.6	$	235.4	$	202.3
Less:  Purchases of property and equipment		(81.4)		(89.2)		(137.6)		(157.7)
Free operating cash flow		53.4		21.4		97.8		44.6
Proceeds from sale of businesses		-		2.1		1.5		14.9
Proceeds from borrowings		75.0		60.0		125.0		140.0
Payments of borrowings		(64.4)		(64.4)		(93.8)		(148.8)
Repurchases of common stock		(10.1)		(20.5)		(42.9)		(26.4)
Redemption of noncontrolling interests and redeemable
noncontrolling interests, net of sales		(36.9)		(0.2)		(34.7)		(0.2)
Distributions to noncontrolling interests and
redeemable noncontrolling interests		(15.1)		(3.0)		(16.3)		(4.8)
Proceeds from exercise of stock options		0.4		5.9		1.7		15.3
Other		1.4		3.8		(6.5)		0.2
Net change in cash and cash equivalents	$	3.7	$	5.1	$	31.8	$	34.8

50

The non-GAAP metric of free operating cash flow is an important liquidity measure for us. Our computation of free operating cash flow consists of net cash flows provided by operating activities less cash flows used for the purchase of property and equipment.  We believe that free operating cash flow is useful to investors and management as a measure of the ability of our business to generate cash and to repay and incur additional debt, and make strategic investments.However, free operating cash flow does not fully reflect our ability to deploy generated cash for discretionary spending, as it does not reflect required debt payments or other fixed obligations. Computations of free operating cash flow may differ from company to company. Therefore, free operating cash flow should be used as a complement to, and in conjunction with, our condensed consolidated statements of cash flows presented in our unaudited condensed consolidated financial statements included elsewhere in this report. Refer to the table above for a reconciliation of free operating cash flow to net cash provided by operating activities, the most comparable GAAP measure.

Our cash flows provided by operating activities for the threeand six months ended June 30, 2018compared to the same periods last year were positivelyimpacted by decreases in the amount and differences in the timing of cash payments for self-insurance claims and income taxes, partially offset by increases in the amount and differences in the timing of cash payments for accounts payable and accrued salaries.

Capital Expenditures

We continue to make significant, targeted investments at our hospitals to add new technologies, modernize facilities and expand the services available. These investments should assist in our efforts to attract and retain physicians, to offset outmigration of patients and to make our hospitals more desirable to our employees and potential patients.

The following table reflects our capital expenditures for the three and six months ended June 30, 2018 and 2017 (dollars in millions):

	Three Months Ended June 30,										Six Months Ended June 30,
	2018					2017					2018					2017
	Amount			% of Revenues		Amount			% of Revenues		Amount			% of Revenues		Amount			% of Revenues
Routine capital	$	23.3		1.5	%	$	18.4		1.2	%	$	34.4		1.1	%	$	32.8		1.0	%
Growth capital		40.9		2.6			59.8		3.7			73.6		2.3			99.1		3.1
Information systems		17.2		1.1			11.0		0.7			29.6		0.9			25.8		0.8
	$	81.4		5.2	%	$	89.2		5.6	%	$	137.6		4.3	%	$	157.7		4.9	%
Depreciation expense	$	80.9				$	88.1				$	162.1				$	175.7
Ratio of capital expenditures to
depreciation expense		100.6	%				101.2	%				84.9	%				89.8	%

We have a formal and intensive review procedure for the authorization of capital expenditures that exceed an established threshold. One of the most important financial measures of acceptability for a discretionary capital project is whether its projected discounted cash flow return on investment exceeds our projected cost of capital for that project. We expect to continue to invest in information systems, modern technologies, emergency room and operating room expansions, the construction of medical office buildings for physician expansion and the reconfiguration of the flow of patient care.  Additionally, we may from time to time replace existing hospital buildings with new buildings as we evaluate ongoing repair and maintenance costs and other factors that impact the future operations of the existing buildings.

We expect total capital expenditures to continue to be elevated and in a range of $475.0 million and $500.0 million for 2018,  primarily as a result of ongoing capital commitments in connection with several of our acquired facilities.  Refer to “Liquidity and Capital Resources Outlook” for further information regarding our long-term capital expenditure commitments.

51

Debt

An analysis and roll-forward of our long-term debt, including current maturities, during thesix months ended June 30, 2018 is as follows (dollars in millions):

							Amortization of		Reclassification of
	December 31,		Proceeds from		Payments of		Debt Issuance Costs		Revolving Facility		New Capital		June 30,
	2017		Borrowings		Borrowings		and Premium		Debt Issuance Costs		Leases		2018
Senior Credit Agreement:
Term Facility	$	673.8	$	-	$	(8.8)	$	-	$	-	$	-	$	665.0
Revolving Facility		-		125.0		(85.0)		-		-		-		40.0
5.5% Senior Notes		1,100.0		-		-								1,100.0
5.875% Senior Notes		500.0		-		-		-		-		-		500.0
5.375% Senior Notes		500.0		-		-		-		-		-		500.0
Unamortized debt issuance
costs and premium		(18.6)		-		-		2.4		(3.6)		-		(19.8)
Capital leases and financing
obligations		144.5		-		(2.4)		-		-		1.1		143.2
	$	2,899.7	$	125.0	$	(96.2)	$	2.4	$	(3.6)	$	1.1	$	2,928.4

We use leverage, or our total debt to total capitalization ratio, to make financing decisions. The following table illustrates our financial statement leverage and the classification of our debt, all of which was senior, as either fixed rate or variable rate at June 30, 2018and December 31, 2017 (dollars in millions):

	June 30,			December 31,
	2018			2017			Increase
Current portion of long-term debt	$	22.6		$	22.3		$	0.3
Long-term debt, net		2,905.8			2,877.4			28.4
Unamortized debt issuance costs and premium		19.8			18.6			1.2
Total debt, excluding unamortized debt issuance costs and premium		2,948.2			2,918.3			29.9
Total LifePoint Health, Inc. stockholders' equity		2,247.3			2,242.5			4.8
Total capitalization	$	5,195.5		$	5,160.8		$	34.7
Total debt to total capitalization		56.7	%		56.5	%		20	bps
Percentage of total debt:
Fixed rate debt		76.1	%		76.9	%
Variable rate debt		23.9			23.1
		100.0	%		100.0	%

52

Capital Resources

Senior Credit Agreement

Terms

The Senior Credit Agreement, which was issued effective June 10, 2016 and matures on June 10, 2021, provides for a $700.0 million Term Facility and a $600.0 million Revolving Facility.  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 repayments 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 secured by collateral consisting of a perfected first priority lien on, and pledge of, all of the capital stock and intercompany notes issued by our subsidiaries and owned by us and each guarantor, subject to certain exceptions.

Letters of Credit and Availability

The Revolving Facility may be utilized for letters of credit and swingline loans up to a maximum of $100.0 million and $50.0 million, respectively.  Issued letters of credit and outstanding swingline loans reduce the amounts available under the Revolving Facility.  As of June 30, 2018, we had $21.9 million in letters of credit outstanding that were primarily related to the self-insured retention level of our general and professional liability insurance and workers’ compensation programs as security for the payment of claims.  During the first half of 2018, we borrowed $125.0 million under the Revolving Facility for general corporate purposes and subsequently repaid $85.0 million prior to the end of the second quarter of 2018.Under the terms of the Senior Credit Agreement, amounts available for borrowing under the Revolving Facility were $538.1million as of June 30, 2018.

The Senior Credit Agreement may, subject to certain conditions and to receipt of commitments from new or existing lenders, be increased up to the sum of (i) $800.0 million and (ii) an amount such that, after giving pro forma effect to such increase and to the use of proceeds therefrom, our secured leverage ratio does not exceed 3.50:1.00; provided that no lender is obligated to participate in any such increase. 

Interest Rates; Leverage Covenant

Interest on the outstanding borrowings under the Senior Credit Agreement is payable at our 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 2.00% for LIBOR loans and from 0.50% to 1.00% for adjusted base rate loans based on our total leverage ratio, calculated in accordance with the Senior Credit Agreement.  As of June 30, 2018, the applicable annual interest rate under the Term Facility was 3.85%, which was based on the 30-day adjusted LIBOR of 2.10% plus the applicable margin.

The Senior Credit Agreement requires us to satisfy a maximum total leverage ratio not to exceed 5.00:1.00 through June 30, 2018 with a step-down to 4.50:1.00 through the remaining term and as calculated on a trailing four quarter basis.  We were in compliance with this covenant as of June 30, 2018.

5.5% Senior Notes

On December 6, 2013 and again on May 12, 2014, we issued in two separate offerings $700.0 million aggregate principal amount and $400.0 million aggregate principal amount, respectively, of 5.5% unsecured senior notes due December 1, 2021 (the “5.5% Senior Notes”).  Collectively, the 5.5% Senior Notes mature on December 1, 2021 and bear interest at the rate of 5.5% per year, payable semi-annually on June 1 and December 1.  The 5.5% Senior Notes are jointly and severally guaranteed on an unsecured senior basis by certain of our existing and future domestic subsidiaries.

5.875% Senior Notes

On December 4, 2015, we issued $500.0 million aggregate principal amount of 5.875% unsecured senior notes due December 1, 2023 (the “5.875% Senior Notes”).  The 5.875% Senior Notes bear interest at the rate of 5.875% per year, payable semi-annually on June 1 and December 1.  The 5.875% Senior Notes are jointly and severally guaranteed on an unsecured senior basis by certain of our existing and future domestic subsidiaries. 

53

5.375% Senior Notes

On May 26, 2016, we issued $500.0 million aggregate principal amount of 5.375% unsecured senior notes due May 1, 2024 (the “5.375% Senior Notes”).  The 5.375% Senior Notes bear interest at the rate of 5.375% per year, payable semi-annually on May 1 and November 1.  The 5.375% Senior Notes are jointly and severally guaranteed on an unsecured senior basis by certain of our existing and future domestic subsidiaries. 

Liquidity and Capital Resources Outlook

We expect total capital expenditures to continue to be elevated and in a range of $475.0 million and $500.0 million for 2018,  primarily as a result of ongoing capital commitments in connection with several of our acquired facilities.  As part of our current acquisition strategy, we expect capital expenditure commitments to be a component of future acquisitions.  At June 30, 2018, we estimated our total remaining capital expenditure commitments, including commitments for routine projects, to be approximately $1,229.2 million, which generally have remaining terms of four to eight years.

At  June 30, 2018, we had uncompleted projects with an estimated additional cost to complete of approximately $359.7 million.The estimated timeframe for completion of these projects generally ranges from less than one year up to three years. We anticipate funding these expenditures through cash provided by operating activities, available cash and borrowings available under the Senior Credit Agreement.

Our business strategy contemplates the selective acquisition of additional hospitals and other healthcare service providers, and we regularly review potential acquisitions. These acquisitions may, however, require additional financing. We regularly evaluate opportunities to sell additional equity or debt securities, obtain credit agreements from lenders or restructure our long-term debt or equity for strategic reasons or to further strengthen our financial position. The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders.

Our primary sources of liquidity are cash flows provided by our operations and our debt borrowings.  We believe that our internally generated cash flows and borrowing available under our current Senior Credit Agreement will be adequate to service existing debt, finance internal growth and fund capital expenditures and small to mid-size hospital acquisitions over the next twelve months and into the foreseeable future prior to maturity dates of our outstanding debt. Certain larger hospital acquisitions may, however, require additional financing.

Contractual Obligations

We have various contractual obligations, which are recorded as liabilities in our accompanying unaudited condensed consolidated financial statements. Other items, such as certain purchase commitments and other executory contracts, are not recognized as liabilities in our accompanying unaudited condensed consolidated financial statements but are required to be disclosed. For example, we are required to make certain minimum lease payments for the use of property under certain of our operating lease agreements.During the three months ended June 30, 2018,  there were no material changes in our contractual obligations as presented in our 2017 Annual Report on Form 10-K.

Off-Balance Sheet Arrangements

As of June 30, 2018, we had $21.9 million in letters of credit outstanding that were primarily related to the self-insured retention level of our general and professional liability insurance and workers’ compensation programs as security for the payment of claims. 

54

Recently Issued Accounting Standards

Refer to Notes  1 and 2 to our accompanying unaudited condensed consolidated financial statements included elsewhere in this report for a discussion of recently issued accounting standards.

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures. We consider an accounting estimate to be critical if:

· it requires assumptions to be made that were uncertain at the time the estimate was made; and

· changes in the estimate or different estimates that could have been made could have a material impact on our consolidated results of operations or financial condition.

Our critical accounting estimates include the following areas:

· Revenue recognition and accounts receivable;

· Goodwill impairment analysis;

· Reserves for self-insurance claims;

· Accounting for stock-based compensation; and

· Accounting for income taxes.

Contingencies

Refer to Note 10 to our accompanying unaudited condensed consolidated financial statements included elsewhere in this report for a discussion of our material financial contingencies, including:

· Legal proceedings and general liability claims;

· Capital expenditure commitments; and

· Acquisitions.

55

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rates

The following discussion relates to our exposure to market risk based on changes in interest rates:

Outstanding Debt

As of June 30, 2018, we had outstanding debt, excluding unamortized debt issuance costs and premium, of $2,948.2million, 23.9%, or $705.0 million, of which was subject to variable rates of interest. If the interest rate on our variable rate long-term debt outstanding as of June 30, 2018was100 basis points higher during the six months ended June 30, 2018, our net income would have decreased by approximately $2.7million, or $0.07 loss per diluted share.

Cash Balances

Certain of our outstanding cash balances are invested overnight with high credit quality financial institutions. We do not hold direct investments in auction rate securities, collateralized debt obligations, structured investment vehicles or mortgage-backed securities. We did not have significant exposure to changing interest rates on invested cash at June 30, 2018. As a result, the interest rate market risk implicit in these investments at June 30, 2018, if any, was low.

Item 4.  Controls and Procedures.

We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us (including our consolidated subsidiaries) in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported on a timely basis.

There has been no change in our internal control over financial reporting during the three months ended June 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

56

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings.

Healthcare facilities 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 addition, healthcare facilities 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 healthcare facilities that submit false claims for payments to, or improperly retain identified overpayments from, governmental payers. Some states have adopted similar state whistleblower and false claims provisions. These qui tam or “whistleblower” actions initiated under the civil False Claims Act may be pending but placed under seal by the court to comply with the False Claims Act’s requirements for filing such suits. As a result, they could be proceeding without the Company’s knowledge. If a provider is found to be liable under the federal False Claims Act, the provider may be required to pay up to three times the actual damages sustained by the government plus mandatory civil monetary penalties of between $11,181to $22,363 for each separate false claim, subject to annual adjustment for inflation.

Although the healthcare industry has seen numerous ongoing investigations related to compliance and billing practices, hospitals, in particular, continue to be a primary enforcement target for the Office of Inspector General (“OIG”),  DOJ and other governmental agencies and fraud and abuse programs. Certain of our individual facilities have received, and from time to time, other facilities may receive, inquiries or subpoenas from Medicare Administrative Contractors, and federal and state agencies. Any proceedings against us may involve potentially substantial amounts as well as the possibility of civil, criminal, or administrative fines, penalties, or other sanctions, which could be material. Settlements of suits involving Medicare and Medicaid issues routinely require both monetary payments as well as corporate integrity agreements. 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.

We do not control and cannot predict with certainty the progress or final outcome of discussions with government agencies, investigations and legal proceedings against us.  Therefore, the final amounts paid to resolve such matters, claims and obligations could be material and could materially differ from amounts currently recorded, if any.  Any such changes in our estimates or any adverse judgments could materially adversely impact our future results of operations and cash flows.

On September 16, 2013, we and two of our affiliated hospitals, Vaughan Regional Medical Center, located in Selma, Alabama, and Raleigh General Hospital, located in Raleigh, West Virginia, made a voluntary self-disclosure to the Civil Division of the DOJ. The voluntary self-disclosures related to concerns regarding the clinical appropriateness of certain interventional cardiology procedures conducted by one physician in each of these hospitals’ cardiac catheterization laboratories.  We cooperated with the government in its investigations of the voluntary self-disclosure and provided additional documentation, as requested. We believe that the government’s investigations are now closed.  Following reviews by independent interventional cardiologists, we notified patients of these two physicians who may have received an unnecessary procedure of such fact.

We and/or Vaughan Regional Medical Center and several of our subsidiaries, as well as Dr. Seydi V. Aksut and certain parties unaffiliated with us, are named defendants in 26 individual lawsuits filed since December 2014 in the Circuit Court of Dallas County, Alabama, alleging that patients at Vaughan Regional Medical Center underwent improper interventional cardiology procedures.  These lawsuits, as they pertain to entities affiliated with us, were settled and dismissed in February 2017.

Two putative class action lawsuits were filed in the Circuit Court of Dallas County, Alabama.  The first putative class action lawsuit, filed in November 2014, sought certification of a class consisting of all Alabama citizens who underwent an invasive cardiology procedure at any Company-owned Alabama hospital and who received notice regarding the medical necessity of that procedure.  We reached an agreement in principle to settle this lawsuit, and on August 14, 2017, the Court entered an order certifying this class for settlement purposes only and granted the parties’ motion for preliminary approval of settlement.  A fairness hearing to determine whether the settlement was fair, reasonable, and adequate, and whether it should be approved by the Court, is was conducted on November 8, 2017, at which time the settlement was approved. The Court’s order approving settlement became final and non-appealable on January 2, 2018.

57

The second putative class action lawsuit, filed in February 2015, sought certification of a class of individuals that underwent an interventional cardiology procedure that was not medically necessary and performed by Dr. Aksut, and asserted, among other claims, claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”).  In March 2015, we removed the second class action to the U.S. District Court in Mobile, Alabama which dismissed with prejudice the RICO claims and refused to exercise jurisdiction over the remaining state law claims, and the lawsuit was remanded for further proceedings.  In July 2017, this lawsuit was settled and dismissed as it pertained to entities affiliated with us.

Additionally, we and two of our subsidiaries, including Raleigh General Hospital, as well as Dr. Kenneth Glaser, were named in 82 individual lawsuits filed in the circuit court of Raleigh County, West Virginia.  Additionally, three patients had notified Raleigh General Hospital of their claims and intent to file a lawsuit.  These lawsuits and claims alleged that patients at Raleigh General Hospital underwent unnecessary interventional cardiology procedures.  In January 2017, all parties to these lawsuits and claims entered into settlement agreements settling all claims against us, our subsidiaries, Raleigh General Hospital and Dr. Glaser.  Following these settlements, two additional lawsuits were filed against the same parties alleging the same claims.  These two lawsuits were settled in March 2017.  In February 2017, we received a notice of a threatened claim with respect to a putative class action lawsuit in the Circuit Court of Raleigh County, West Virginia against us, two of our subsidiaries, Raleigh General Hospital and Dr. Kenneth Glaser, alleging that patients at Raleigh General Hospital underwent medically unnecessary interventional cardiology procedures and seeking to certify a class of such patients.  Thethreatenedclaims seek compensatory and punitive damages, costs, attorneys’ fees and other available damages. 

The settlements described above were accomplished within the amounts previously accrued for loss contingencies for cardiology-related lawsuits. Additional claims with respect to these matters, including claims involving patients to whom we did not send notice, may be asserted against us or our hospitals.Any present or future claims that are ultimately successful could result in us and/or our hospitals being found liable, and such liability could be material.We accrue an estimate for a contingent liability when losses are both probable and reasonably estimable.  We review our accruals each quarter and adjust them to reflect the impact of developments, advice of legal counsel and other information pertaining to a particular matter.

Item 1A. Risk Factors.

There have been no material changes in our risk factors from those disclosed in the 2017 Annual Report on Form 10-K except for the following:

The announcement and pendency of the Merger may adversely affect our business, financial condition and results of operations.

Uncertainty about the effect of the Merger on our employees, patients, local communities, business partners and other parties may have an adverse effect on our business, financial condition and results of operation regardless of whether the Merger is completed. These risks to our business include the following, all of which could be exacerbated by a delay in the completion of the Merger:

· our ability to attract, retain, and motivate current and prospective employees may be adversely impacted;

· the attention of our management and employees may be diverted due to activities related to the Merger;

· we may have difficulty maintaining relationships with business partners and community leaders;

· we may be unable to pursue certain business opportunities or make appropriate changes to our business because the merger agreement requires us to conduct our business in the ordinary course of business and not engage in certain actions without RCCH’s consent; and

· we may be subject to legal proceedings relating to the Merger.

In addition, we have incurred, and will incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the Merger, which are generally payable by us regardless of whether the Merger is consummated.

58

Failure to consummate the Merger within the expected timeframe or at all could have a material adverse impact on our business, financial condition and results of operations.

There can be no assurance that the Merger will be consummated. The consummation of the Merger is subject to the satisfaction or waiver of specified closing conditions, including (i) the affirmative vote in favor of the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of our common stock entitled to vote thereon, (ii) receipt of certain regulatory approvals, including the expiration or early termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the absence of any statute, regulation, ruling or injunction of any governmental entity, or any other order, prohibiting or enjoining consummation of the Merger and (iv) other customary closing conditions. There can be no assurance that these and the other conditions to closing will be satisfied in a timely manner or at all.

The Merger Agreement also provides that the Merger Agreement may be terminated by us or RCCH under certain circumstances, and in certain specified circumstances upon termination of the Merger Agreement we will be required to pay RCCH a termination fee of $80,352,000 (or $40,176,000 under limited circumstances). We will be required to reimburse RCCH for certain expenses up to $20,000,000 in the aggregate in connection with the failure to obtain the approval by our stockholders of the Merger. If we are required to make any of these payments, doing so may materially adversely affect our business, financial condition and results of operations.

There can be no assurance that a remedy will be available to us in the event of a breach of the Merger Agreement by RCCH or its affiliates or that we will wholly or partially recover for any damages incurred by us in connection with the Merger. A failed transaction may result in negative publicity and a negative impression of us among our local communities, business partners or in the investment community or business community generally. Further, any disruptions to our business resulting from the announcement and pendency of the Merger, including any adverse changes in our relationships with our business partners, local communities and employees, could continue or accelerate in the event of a failed transaction. In addition, if the Merger is not completed, and there are no other parties willing and able to acquire the Company at a price comparable to that contemplated by the Merger, on terms acceptable to us, the share price of our common stock will likely decline to the extent that the current market price of our common stock reflects an assumption that the Merger will be completed. Also, we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the Merger, for which we will have received little or no benefit if the Merger is not completed. These fees and costs will generally be payable by us even if the Merger is not completed and may relate to activities that we would not have undertaken other than to complete the Merger.

59

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

Our Board of Directors authorizes, from time to time, plans for the repurchase of outstanding shares of our common stock either in the open market or through privately negotiated transactions, subject to market conditions, regulatory constraints and other customary factors.We repurchased approximately 0.8 million and 0.3 million shares for an aggregate purchase price, including commissions, of $40.0 million and $20.4 million at an average purchase price of $48.35 and $64.32 per share during the six months ended June 30, 2018 and 2017, respectively.As of June 30, 2018, we had remaining authority to repurchase $190.0 million in shares through April 24, 2019 in accordance with a  repurchase plan approved by our Board of Directors on October 24, 2017. We are not obligated to repurchase any specific number of shares under our repurchase plan.  We have designated the shares repurchased in accordance with our repurchase plans as treasury stock.

We redeem shares from employees for minimum statutory tax withholding purposes upon vesting of certain stock awards granted pursuant to our various stockholder approved stock-based compensation plans. We redeemed approximately 0.1million shares vested under these plans during each of the six months ended June 30, 2018 and 2017  for aggregate purchase prices of approximately $2.9 million and $6.0 million, respectively. We have designated these shares as treasury stock.

The following table summarizes our share repurchase activity by month for the three months ended June 30, 2018:

					Approximate Dollar
		Weighted		Total Number of	Value of Shares That
	Total Number	Average		Shares Purchased as	May Yet Be Purchased
	of Shares	Price Paid		Part of a Publicly	Under the Plan
	Purchased	per Share		Announced Plan	(In millions)
April 1, 2018 to April 30, 2018	126,686	$	48.88	126,686	$	193.8
May 1, 2018 to May 31, 2018	75,142	$	50.72	75,142	$	190.0
June 1, 2018 to June 30, 2018 (a)	1,297	$	53.90	-	$	190.0
Total	203,125	$	49.59	201,828	$	190.0

_____________

(a) Represents shares redeemed for tax withholding purposes upon vesting of certain previously granted stock awards under our stockholder-approved Amended and Restated 2013 Long-Term Incentive Plan.

60

Item 6.  Exhibits

Exhibit Number		Description of Exhibits
2.1	-	Agreement and Plan of Merger, dated as of July 22, 2018, by and among LifePoint Health, Inc., RegionalCare Hospital Partners Holdings, Inc. and Legend Merger Sub, Inc. (incorporated by reference from exhibits to the LifePoint Health, Inc. Current Report on Form 8-K filed July 23, 2018, File No. 000-51251).
3.1	-	Amended and Restated Certificate of Incorporation of LifePoint Health, Inc., as amended (incorporated by reference from exhibits to the LifePoint Health, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, File No. 000-51251).
3.2	-	Seventh Amended and Restated By-Laws of LifePoint Health, Inc. (incorporated by reference from exhibits to the LifePoint Health, Inc. Current Report on Form 8-K filed November 3, 2016, File No. 000-51251).
10.1	-	Third Extension to Computer and Data Processing Agreement, dated April 27, 2018, by and between HCA-Information Technology & Services, Inc. and LifePoint Corporate Services, General Partnership (incorporated by reference from exhibits to the Lifepoint Health, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, File No.000-51251).
10.2		Fourth Extension to Computer and Data Processing Agreement, dated May 30, 2018, by and between HCA-Information Technology & Services, Inc. and LifePoint Corporate Services, General Partnership (filed herewith).
10.3		Fifth Extension to Computer and Data Processing Agreement, dated June 28, 2018, by and between HCA-Information Technology & Services, Inc. and LifePoint Corporate Services, General Partnership (filed herewith).
10.4		Amendment to LifePoint Health, Inc. Amended and Restated 2013 Long-Term Incentive Plan (incorporated by reference from Appendix B to the LifePoint Health, Inc. Proxy Statement filed April 25, 2018, File No. 000-51251).*
10.5		Form of LifePoint Health, Inc. 2013 Long-Term Incentive Plan Restricted Stock Unit Agreement (performance-based vesting) (filed herewith).*
10.6		Form of LifePoint Health, Inc. 2013 Long-Term Incentive Plan Restricted Stock Unit Agreement (time-based vesting) (filed herewith).*
31.1	-	Certification of the Chief Executive Officer of LifePoint Health, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	-	Certification of the Chief Financial Officer of LifePoint Health, Inc. pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
32.1	-	Certification of the Chief Executive Officer of LifePoint Health, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	-	Certification of the Chief Financial Officer of LifePoint Health, Inc. pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
101.INS	-	XBRL Instance Document**
101.SCH	-	XBRL Taxonomy Extension Schema Document**
101.CAL	-	XBRL Taxonomy Calculation Linkbase Document**
101.DEF	-	XBRL Taxonomy Definition Linkbase Document**
101.LAB	-	XBRL Taxonomy Label Linkbase Document**
101.PRE	-	XBRL Taxonomy Presentation Linkbase Document**

___________________

* — Management Compensation plan or arrangement

** — Furnished electronically herewith

61

SIGNATURES

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

                                                                                                         LifePoint Health, Inc.

By:	/s/ J. Michael Grooms
	J. Michael Grooms
	Vice President and Chief Accounting Officer
	(Principal Accounting Officer)

Date: July 27, 2018

62

EX-10.2

Exhibit 10.2

FOURTH EXTENSION TO COMPUTER

AND DATA PROCESSING AGREEMENT

This Fourth Extension to Computer and Data Processing Agreement (“this Fourth Extension”), dated as of May30, 2018, is by and between HCA – Information Technology & Services, Inc., a Tennessee corporation (“IT&S”), which is a wholly owned subsidiary of HCA Healthcare Corporation, a Delaware corporation (“HCA”) formerly known as Columbia Information Systems, Inc., and LifePoint Corporate Services, General Partnership, a Delaware general partnership (together with its successors and permitted assigns “Customer”).

WITNESSETH:

WHEREAS, IT&S and Customer entered into that certain Computer and Data Processing Agreement dated as of May 19, 2008, as amended from time to time (the “Original Agreement”);

WHEREAS, Customer determined not to exercise its option to renew the Original Agreement after December 31, 2017;

WHEREAS, IT&S and Customer extended the Original Agreement until May  31, 2018 (the “Third Extension Period”);

WHEREAS, notwithstanding such first extension, IT&S and Customer desire to extend the Original Agreement, as mutually agreed in this Fourth Extension.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, IT&S and Customer agree as follows:

1.    Extension.    IT&S and Customer hereby agree to extend the Original Agreement until June 30, 2018 (the “Fourth Extension Period”);

2.    Fees.    IT&S and Customer hereby agree that, during the Fourth Extension Period and as defined and agreed under the Third Extension Agreement, the Clientshall be billed a one-time monthly fee of eleven thousand twenty four dollars ($11,024.00) on the June 2018 monthly billing statement to COID 05433 and, that the hourly amount for Professional Services shall increase to $116.00 per hour as of June 1, 2018 and for the duration of this Third Extension Period;

3.    Status of Original Agreement.    The Original Agreement, and as expressly provided in this Fourth Extension, shall remain in full force and effect during the Fourth Extension Period;

4.    Capitalized Terms.    Capitalized terms used, but not defined, herein shall have the meanings ascribed to such terms in the Original Agreement;

5.    Miscellaneous.    The applicable provisions of Sections 12 (g), 13 -16 and 18 – 19 of the Original Agreement shall apply to this Extension as if contained herein;

6.    Counterparts.  This Extension may be executed by original, facsimile, or electronic signatures (complying with the U.S. Federal ESIGN Act of 2000, 15 U.S.C. 96) and in any number of counterparts, which will be considered one instrument. Counterparts, signed facsimile and electronic copies of this Extension will legally bind the parties to the same extent as original documents.

[Signatures on the following page.]

IN WITNESS WHEREOF, the parties have caused this Fourth Extension to Computer and Data Processing Agreement to be executed by their duly authorized representatives as of the day and date first referenced above.

HCA – Information Technology & Services, Inc.

By:	/s/ Curtis Watkins
Name:	Curtis Watkins
Title:	CEO        May 30, 2018

LIFEPOINT CORPORATE SERVICES,

GENERAL PARTNERSHIP

By:	LifePoint CSLP, LLC, A Delaware limited liability company
Its:	General Partner
By:	LifePoint Hospitals Holdings, Inc., A Delaware corporation
Its:	Sole Member
By:	/s/ Sean Tuley
Name:	Sean Tuley
Title:	CIO

By:	/s/ Christopher Rehm
Name:	Christopher Rehm
Title:	CMIO

EX-10.3

Exhibit 10.3

FIFTH EXTENSION TO COMPUTER

AND DATA PROCESSING AGREEMENT

This Fifth Extension to Computer and Data Processing Agreement (“this Fifth Extension”), dated as of June28, 2018, is by and between HCA – Information Technology & Services, Inc., a Tennessee corporation (“IT&S”), which is a wholly owned subsidiary of HCA Healthcare Corporation, a Delaware corporation (“HCA”) formerly known as Columbia Information Systems, Inc., and LifePoint Corporate Services, General Partnership, a Delaware general partnership (together with its successors and permitted assigns “Customer”).

WITNESSETH:

WHEREAS, IT&S and Customer entered into that certain Computer and Data Processing Agreement dated as of May 19, 2008, as amended from time to time (the “Original Agreement”);

WHEREAS, Customer determined not to exercise its option to renew the Original Agreement after December 31, 2017;

WHEREAS, IT&S and Customer extended the Original Agreement until June  30, 2018 (the “Fourth Extension Period”);

WHEREAS, notwithstanding such first extension, IT&S and Customer desire to extend the Original Agreement, as mutually agreed in this Fifth Extension.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, IT&S and Customer agree as follows:

1.    Extension.    IT&S and Customer hereby agree to extend the Original Agreement until July  31, 2018 (the “Fifth Extension Period”);

2.    Fees.    IT&S and Customer hereby agree that, during the Fifth Extension Period and as defined and agreed under the Third and Fourth Extension Agreement, the Clientshall be billed a one-time monthly fee of eleven thousand twenty four dollars ($11,024.00) on the July 2018 monthly billing statement to COID 05433 and, that the hourly amount for Professional Services shall continueas $116.00 per hour as effective on June 1, 2018 and for the duration of this Fifth Extension Period;

3.    Status of Original Agreement.    The Original Agreement, and as expressly provided in this Fifth Extension, shall remain in full force and effect during the Fifth Extension Period;

4.    Capitalized Terms.    Capitalized terms used, but not defined, herein shall have the meanings ascribed to such terms in the Original Agreement;

5.    Miscellaneous.    The applicable provisions of Sections 12 (g), 13 -16 and 18 – 19 of the Original Agreement shall apply to this Extension as if contained herein;

6.    Counterparts.  This Extension may be executed by original, facsimile, or electronic signatures (complying with the U.S. Federal ESIGN Act of 2000, 15 U.S.C. 96) and in any number of counterparts, which will be considered one instrument. Counterparts, signed facsimile and electronic copies of this Extension will legally bind the parties to the same extent as original documents.

[Signatures on the following page.]

IN WITNESS WHEREOF, the parties have caused this Fifth Extension to Computer and Data Processing Agreement to be executed by their duly authorized representatives as of the day and date first referenced above.

HCA – Information Technology & Services, Inc.

By:	/s/ Curtis Watkins June 28, 2018
Name:	Curtis Watkins
Title:	CEO

LIFEPOINT CORPORATE SERVICES,

GENERAL PARTNERSHIP

By:	LifePoint CSLP, LLC, A Delaware limited liability company lliabilitycompanycompany
Its:	General Partner
By:	/s/ Sean Tuley 6/22/2018
Name:	Sean Tuley
Title:	SVP and CIO

By:	LifePoint Hospitals Holdings, Inc., A Delaware corporation
Its:	Sole Member
By:	/s/ Christopher Rehm   6/25/2018
Name:	Christopher Rehm
Title:	CMIO

EX-10.5

Exhibit 10.5

2018 Form of Award – RSU

(Performance-based Vesting- Group 1)

LIFEPOINT HEALTH, INC.

2013 LONG-TERM INCENTIVE PLAN

Restricted stock unit AGREEMENT

FOR

_____________________

Grant Number ___________________

1.    Award of Restricted Stock Units.  LifePoint Health, Inc. (the “Company”) grants, as of __________________ (the “Date of Grant”), to __________________ (the “Recipient”), ______________ Restricted Stock Units (the “RSUs”).  Each RSU represents the Company’s unsecured obligation to pay the Recipient up to _____% of the Fair Market Value of a Share.  The RSUs shall be settled in accordance with Section 4 in [all Shares] [all cash] [Shares, to the extent the Percentage Payable (as defined below) is equal to or less than the Threshold Percentage (as defined below) of _____% and cash, to the extent the Percentage Payable is greater than the Threshold Percentage].  The RSUs shall be subject to the terms, provisions and restrictions set forth in this Agreement and the LifePoint Health, Inc. 2013 Long-Term Incentive Plan (the “Plan”), which is incorporated herein for all purposes.  The grant of this Award, the issuance of any Shares (or any other securities of the Company pursuant thereto) and, if applicable, payment of cash, is subject to all of the terms and conditions herein and in the Plan.  Unless otherwise provided herein, terms used herein that are defined in the Plan and not defined herein shall have the meanings attributable thereto in the Plan.

2.    Vesting of RSUs.

(a)    Performance Requirement.

(i)    The percentage of the Fair Market Value of a Share which is payable per RSU (the “Percentage Payable”) and, if applicable, any modifications to the number of Shares payable pursuant to this Award, shall be determined, except as otherwise provided in this Agreement, according to the performance criteria set forth in the attached Exhibit A. 

(ii)    The “Performance Period” for the Award is _______________ through _________________. 

(iii)    Payment of the RSUs is conditioned upon the Committee determining that the Performance Goals specified herein were achieved and, if so, the level at which the Performance Goals are achieved, except as otherwise provided in this Agreement.  If the objectives are not achieved, the RSUs will be forfeited and shall not vest and no payment shall be made hereunder.

(iv)    Except as otherwise provided in this Agreement, there shall be no proportionate or partial vesting of the RSUs in or during the months, days or periods prior to the Vesting Dates identified below and all vesting of the RSUs shall occur only on the Vesting Dates.

4839-0989-7310.12

(b)    General Vesting.  Except as otherwise provided in this Agreement, the RSUs subject to this Agreement will vest in accordance with the following schedule, provided that the Continuous Service of the Recipient continues through and on each Vesting Date and the Performance Goals are met:

Vesting Date	% Vested
February 27, 2021	75%
February 27, 2022	100%

(c)    Death.  Notwithstanding any other provision in this Agreement, in the event that the Recipient’s Continuous Service terminates before the RSUs are fully vested in accordance with Section 2(b) above by reason of the Recipient’s death, the RSUs subject to this Agreement shall be immediately vested as of the date of such death, and the number of Shares payable under the Award shall be determined pursuant to Section III of Exhibit A attached hereto, unless the Recipient’s death occurs after the end of the Performance Period in which case the number of Shares payable under the Award will be determined pursuant to Sections I and II of Exhibit A as of the end of the Performance Period. 

(d)    Disability.  Notwithstanding any other provision in this Agreement, in the event that the Recipient suffers a Disability before the RSUs are fully vested in accordance with Section 2(b) above, the RSUs subject to this Agreement shall be immediately vested as of the date of such Disability, and the number of Shares payable under the Award shall be determined pursuant to Section III of Exhibit A attached hereto, unless the Recipient’s Disability occurs after the end of the Performance Period in which case the number of Shares payable under the Award will be determined pursuant to Sections I and II of Exhibit A as of the end of the Performance Period.

(e)    409A Change in Control.

(i)    Notwithstanding any other provision in this Agreement or the Plan, upon a 409A Change in Control during the Recipient’s Continuous Service, the RSUs subject to this Agreement shall be immediately vested as of the date of such event and the Percentage Payable per RSU shall be the maximum that may be earned determined pursuant to the attached Exhibit A and the number of Shares payable under this Award pursuant to this Section shall not be subject to modification as provided in the attached Exhibit A based on the designated performance criteria (or, if such 409A Change in Control occurs after the end of the Performance Period, the number of Shares payable under the Award will be determined pursuant to Sections I and II of Exhibit A as of the end of the Performance Period), unless either (A) the Company is the surviving entity in the 409A Change in Control and the RSU Award continues to be outstanding after the 409A Change in Control on substantially the same terms and conditions as were applicable immediately prior to the 409A Change in Control, or (B) the successor company or its parent company assumes or substitutes for the RSU Award, as determined in accordance with Section 10(c)(ii) of the Plan.

(ii)    Notwithstanding the foregoing, in the event the Recipient’s Continuous Service is terminated without Cause by the Company or any Related Entity or by such successor company or by the Recipient for Good Reason within 24 months following a 409A Change in Control and the RSUs subject to this Agreement did not vest due to the application of Section

2

2(e)(i)(A) or (B), the RSUs subject to this Agreement shall be immediately vested as of the date of such termination of Continuous Service and (A) if such termination occurs before the end of the Performance Period, the Percentage Payable per RSU shall be the maximum that may be earned determined pursuant to the attached Exhibit A and the number of Shares payable under the Award pursuant to this Section shall not be subject to modification as provided in the attached Exhibit A based on the designated performance criteria, or (B) if such termination occurs after the end of the Performance Period, the number of Shares payable under the Award will be determined pursuant to Sections I and II of Exhibit A as of the end of the Performance Period.

(iii)    Notwithstanding Section 2(e)(i), if the Recipient is eligible for or has taken a Retirement Termination (as defined below) at the time of a 409A Change in Control and the RSUs subject to this Agreement would not vest on such 409A Change in Control due to the application of Section 2(e)(i)(A) or (B), then, unless Section 2(e)(ii) becomes applicable, (A) the RSUs subject to this Agreement shall be immediately vested on either the last day of the Performance Period if such 409A Change in Control occurs during the Performance Period or the 409A Change in Control if such 409A Change in Control occurs after the Performance Period; and (B) the number of Shares payable under the Award will be determined pursuant to Sections I and II of Exhibit A as of the end of the Performance Period.

(f)    Termination Without Cause or For Good Reason.  Notwithstanding any other provision in this Agreement and except as otherwise provided in Section 2(e)(ii) or 2(g), in the event that the Recipient’s Continuous Service is terminated before the RSUs are fully vested in accordance with Section 2(b) either by the Company or any Related Entity without Cause or by the Recipient for Good Reason, a portion of the RSUs equal to (X) the number of full months of Continuous Service between the first day of the Performance Period and the date of termination, divided by (Y) the total number of full months between the first day of the Performance Period and the final Vesting Date (the “Prorated RSUs”), will vest in accordance with the following, provided that the Performance Goals described herein are attained during the Performance Period:

(i)    If the Recipient’s Separation from Service occurs prior to the first Vesting Date set forth in Section 2(b), the Prorated RSUs will vest on such Vesting Date and, notwithstanding any other provision herein, including without limitation Section 4(b), settlement of the Prorated RSUs will be made on such Vesting Date.

(ii)    If the Recipient’s Separation from Service occurs after the first Vesting Date set forth in Section 2(b), the Prorated RSUs, less the RSUs that became vested and settled prior to the Recipient’s Separation from Service (the “Remaining Prorated RSUs”), will vest on the Participant’s Separation from Service and, notwithstanding any other provision herein, including without limitation Section 4(b), settlement of the Remaining Prorated RSUs will be made on such Separation from Service.

The Percentage Payable and, if applicable, any modifications to the number of Shares payable pursuant to this Award, shall be determined according to the performance criteria set forth in the attached Exhibit A.

(g)    Retirement.  Notwithstanding any other provision in this Agreement, if the Recipient terminates his or her Continuous Service before the RSUs are fully vested in accordance

3

with Section 2(b) above, and after attaining age 62 (for reasons other than the reasons described in Sections 2(c), 2(d), 2(e) and 2(f) hereof) and completing at least five (5) years of Continuous Service (a “Retirement Termination”), the RSUs shall vest on the Vesting Date(s) in accordance with Section 2(b) and shall be settled in accordance with Section 4(b), provided that the Performance Goals described herein are attained during the Performance Period and provided further that, during the period (the “Restricted Period”) beginning on the date the Recipient has a Retirement Termination(the “Retirement Date”) and continuing until the latest Vesting Date, the Recipient does not, in any capacity (including, but not limited to, as an owner, member, partner, shareholder, consultant, advisor, financier, agent, employee, officer, director, manager or otherwise), whether directly or indirectly, engage in a Competitive Activity (as such term is hereinafter defined) or violate the non-solicitation restrictions set forth in Section 6(a). If the Recipient fails to comply with this provision, the Recipient shall forfeit any unvested RSUs as of the date the Recipient violates this provision. The Percentage Payable and, if applicable, any modifications to the number of Shares payable pursuant to this Award, shall be determined according to the performance criteria set forth in the attached Exhibit A. Nothing in this subsection (g) shall prohibit the Recipient’s ownership of stock in any publicly held company (other than the Company) listed on a national securities exchange or whose shares of stock are regularly traded in the over the counter market as long as such holding at no time exceeds two percent (2%) of the total outstanding stock of such company.

(h)    Definitions.  For purposes of this Agreement, the following terms shall have the meanings indicated:

(i)    “409A Change in Control” means an event which constitutes a “change in the ownership” of the Company, a “change in effective control” of the Company, or a “change in the ownership of a substantial portion of the assets” of the Company, each as defined under Treasury Regulations Section 1.409A-3(i)(5).

(ii)    “Competitive Activity” means, without the express written consent of the Company, the development, operation, management or other business activity with respect to (I) any entity that derives more than fifty percent (50%) of its revenues from acute healthcare services in a non-urban setting; (II) any entity that provides any healthcare service offered by any hospital operated by the Company or any of its subsidiaries or affiliates anywhere within the United States; (III) any entity that provides surgical, diagnostic or imaging services within a twenty-five (25) mile radius of any location where the Company or any of its subsidiaries or affiliates, currently owns, leases, manages or otherwise maintains an operating facility and of any operating facilities identified as potential acquisition targets in the Company’s strategic plan at the time the Recipient’s Continuous Service is terminated; or (IV) any entity that derives more than fifty percent (50%) of its revenues from physician recruitment services and that may, as a part of its operation, be engaged in the recruitment of physicians from facilities owned or operated by the Company or any of its subsidiaries or affiliates (excluding recruitment activities that are conducted by means of general solicitation, such as by way of newspapers or the Internet, and that are not targeted to recruit physicians from a facility that is owned or operated by the Company or any of its subsidiaries or affiliates). 

4

(iii)    “Disability” means, solely for purposes of this Agreement and notwithstanding any provision in the Plan to the contrary, the Recipient is (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company or its affiliates; or (iii) determined to be totally disabled by the Social Security Administration.  

(iv)    “Non-Vested RSUs” means any portion of the RSUs subject to this Agreement that have not become vested pursuant to this Section 2.

(v)    “Separation from Service” means the voluntary or involuntary separation from service with the Service Recipient, determined in a manner consistent with Section 409A of the Code and the Treasury Regulations thereunder.

(vi)    “Service Recipient” means the person or entity for whom the services resulting in the grant of the RSUs were performed, and with respect to whom the legally binding right to the Award arises, and all persons with whom such person would be considered a single employer under Section 414(b) of the Code (employees of a controlled group of corporations), and all persons with whom such person would be considered a single employer under Section 414(c) of the Code (employees of partnerships, proprietorships, or other entities under common control).

(vii)    “Specified Employee” means any Recipient who, at the time of his or her Separation from Service, is a “key employee”, within the meaning of Section 416(i) of the Code, of any Service Recipient the shares of which are publicly traded on an established securities market or otherwise, determined in accordance with Section 409A of the Code.

(viii)    “Vested RSUs” means any portion of the RSUs subject to this Agreement that are and have become vested pursuant to this Section 2.  

3.    Forfeiture of RSUs.  Except as otherwise provided in Section 2, if the Recipient’s Continuous Service is terminated prior to a Vesting Date, Non-Vested RSUs shall be forfeited immediately upon such termination of Continuous Service without any payment to the Recipient. 

4.    Settlement of the RSUs. 

(a)    Medium of Payment.  The RSUs may be settled in Shares, cash, or a combination thereof, as determined by the Committee at the time of grant and set forth in Section 1 hereof. 

(i)    If Section 1 provides that the RSUs shall be settled in all Shares, the RSUs shall be settled in a number of Shares equal to the aggregate number of Shares payable for the RSUs, determined in accordance with Exhibit A (the “Total Shares Earned”). 

5

(ii)    If Section 1 provides that the RSUs shall be settled in all cash, the RSUs shall be settled in cash equal to the Fair Market Value of a Share on the date of payment under Section 4(b), multiplied by the Total Shares Earned. 

(iii)    If Section 1 provides that the RSUs shall be settled in a combination of Shares and cash, the RSUs shall be settled in (A) a number of Shares equal to the lesser of (1) the Total Shares Earned or (2) the number of RSUs granted multiplied by the percentage designated in Section 1 (the “Threshold Percentage”) that is to be paid in Shares; plus (B) cash equal to the Fair Market Value of a Share on the date of payment under Section 4(b), multiplied by the difference, if any, between the Total Shares Earned and the number of Shares paid pursuant to clause (A).

(iv)    Notwithstanding the foregoing, in the event there is a 409A Change in Control on or before the date on which the Company would otherwise deliver Shares pursuant to this Section 4(b), the Company may, in lieu of delivering Shares, deliver the consideration (whether stock, cash or other securities or property) received in the 409A Change in Control transaction by holders of Shares, or such other consideration as determined by the Committee in its sole discretion, equal to the Fair Market Value of the per Share consideration received by holders of Shares in the applicable transaction, multiplied by the number of Total Shares Earned that were deliverable pursuant to this Section 4.  The determination of such substantial equality of Fair Market Value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding.

(b)    Date of Payment.  Except as otherwise provided herein and subject to any deferral election pursuant to Section 4(d), the Company shall deliver to the Recipient or in the event of the Recipient’s death, to the beneficiary or beneficiaries designated by the Recipient, or if the Recipient has not so designated any beneficiary(ies), or no designated beneficiary survives the Recipient, to the personal representative of the Recipient’s estate, vested Shares and, if applicable, cash as provided in Section 4(a), in the form of a lump sum on or as soon as administratively practicable but in no event more than sixty (60) days thereafter the earliest of:

(i)    each Vesting Date, to the extent then vested;

(ii)    the Recipient’s death;

(iii)    the Recipient’s Disability;

(iv)    a 409A Change in Control, to the extent then vested; or

(v)    the Recipient’s Separation from Service within 24 months after a 409A Change in Control, to the extent then vested. 

(c)    Distribution to Specified Employees.  Notwithstanding the foregoing, if the Recipient is a Specified Employee, then no payments otherwise required to be made under this Agreement on account of the Recipient’s Separation from Service shall be made before the date that is six (6) months after the date of the Recipient’s Separation from Service or, if earlier, the date of the Recipient’s death if such deferral is required to comply with Section 409A of the Code.

6

(d)    Deferred Distribution.  Notwithstanding any other provision, the Recipient may elect pursuant to the LifePoint Health Deferred Compensation Plan (the “NQDC Plan”) to defer settlement of all or a portion of the Total Shares Earned that are to be settled in Shares pursuant to Section 4(a)(i) or (iii) until a date or event other than the applicable date of payment under Section 4(b), but only to the extent allowed by the Company and subject to the terms and conditions of the NQDC Plan, including but not limited to those provisions governing deferral elections and the timing of such deferral elections.  The portion of the Total Shares Earned subject to a valid deferral election by the Recipient under the NQDC Plan shall be distributed according to the terms of the NQDC Plan, but otherwise shall continue to be subject to the terms of this Agreement, the Plan, and the deferral election form. Notwithstanding the foregoing, the portion of the Total Shares Earned to be settled in cash pursuant to Section 4(a)(ii) or (iii), if any, may not be deferred pursuant to this Subsection and the NQDC Plan and shall instead be distributed according to the terms of this Agreement and the Plan.

5.    Rights with Respect to RSUs.

(a)    No Rights as Shareholder Until Delivery.  Except as otherwise provided in this Section 5, the Recipient shall not have any rights, benefits or entitlements with respect to Shares corresponding to the RSUs unless and until those Shares are delivered to the Recipient (and thus shall have no voting rights, or rights to receive any dividend declared, before those Shares are so delivered).  On or after delivery, the Recipient shall have, with respect to the Shares delivered, all of the rights of a holder of Shares granted pursuant to the articles of incorporation and other governing instruments of the Company, or as otherwise available at law.  

(b)    Adjustments to RSUs.  In the event of any change affecting the number, class, market price or terms of the Shares by reason of share dividend, share split, recapitalization, reorganization, merger, consolidation, spin-off, disaffiliation of a Subsidiary, combination of Shares, exchange of Shares, Share rights offering, or other similar event, or any distribution to the stockholders other than a regular cash dividend, then the RSUs subject to this Agreement and the number, class, price or terms of Shares subject to such RSUs shall be adjusted in the same manner as the outstanding Shares of the Company.  If any such adjustment shall result in a fractional RSU, such fraction shall be disregarded.  Notwithstanding anything to the contrary in this Plan, no adjustment shall be made to any RSU under this Plan if or to the extent such adjustment would cause an outstanding RSU to fail to be exempt from or comply with Section 409A of the Code.

(c)    No Restriction on Certain Transactions.  Notwithstanding any term or provision of this Agreement to the contrary, the existence of this Agreement, or of any outstanding RSUs awarded hereunder, shall not affect in any manner the right, power or authority of the Company or any Related Entity to make, authorize or consummate: (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Company's or any Related Entity’s capital structure or its business; (ii) any merger, consolidation or similar transaction by or of the Company or any Related Entity; (iii) any offer, issue or sale by the Company or any Related Entity of any capital stock of the Company or any Related Entity, including any equity or debt securities, or preferred or preference stock that would rank prior to or on parity with the Shares represented by the RSUs and/or that would include, have or possess other rights, benefits and/or preferences superior to

7

those that such Shares include, have or possess, or any warrants, options or rights with respect to any of the foregoing; (iv) the dissolution or liquidation of the Company or any Related Entity; (v) any sale, transfer or assignment of all or any part of the stock, assets or business of the Company or any Related Entity; or (vi) any other corporate transaction, act or proceeding (whether of a similar character or otherwise).

(d)    Dividend Equivalents.  During the term of this Agreement, the Recipient shall have the right to receive distributions (the “Dividend Equivalents”) from the Company equal to any dividends or other distributions that would have been distributed to the Recipient if each RSU was instead an issued and outstanding Share owned by the Recipient.  Dividend Equivalents payable with respect to the RSUs subject to this Agreement shall be subject to the following terms and conditions: (i) Dividend Equivalents payable with respect to the RSUs subject to this Agreement shall be paid on the date the RSUs to which such Dividend Equivalents relate are settled under Section 4 hereof, with such Dividend Equivalents to be accumulated, without interest, by the Company (the “Accumulated Dividend Equivalents”); (ii) all Accumulated Dividend Equivalents payable with respect to the RSUs subject to this Agreement shall be paid in cash, reduced by any applicable withholding taxes; and (iii) any Accumulated Dividend Equivalents with respect to the RSUs subject to this Agreement shall be forfeited and all rights of the Recipient to such Accumulated Dividend Equivalents shall terminate, without further obligation on the part of the Company, unless the portion of the RSUs subject to this Agreement to which such Accumulated Dividend Equivalents relate become Vested RSUs pursuant to Section 2 hereof.  Each Dividend Equivalent shall be treated as a separate payment for purposes of Section 409A of the Code.

6.    Restrictive Covenants; Breach.

(a)    As partial consideration for the grant of this Award, Recipient agrees that, during the period beginning on the Date of Grant and ending onthe two-year anniversary of either the applicable date of payment under Section 4(b), or the date the RSUs are forfeited pursuant to Section 3, as applicable, he or she will not, in any capacity (including, but not limited to, as an owner, member, partner, shareholder, consultant, advisor, financier, agent, employee, officer, director, manager or otherwise), whether directly, indirectly or through affiliates, for the Recipient’s own account or for the benefit of any other person or entity, without the express written consent of the Company, engage in the solicitation, diversion, or hiring, or attempted solicitation, diversion, or hiring of any employees or consultants of the Company or any of its subsidiaries or affiliates to leave or to work for the Recipient or any person or entity with which the Recipient is affiliated, or the interference with the relationship between the Company or any of its subsidiaries or affiliates with any of its employees or consultants.

(b)    Recipient agrees that any breach of the covenants and agreements contained in this Agreement will result in irreparable injury to the Company (including its subsidiaries and affiliates) for which money damages would not adequately compensate the injured party and, therefore, in the event of any such breach, the Company shall be entitled (in addition to any other rights and remedies which it may have at law or in equity) to seek to have an injunction issued by any competent court of equity enjoining and restraining Recipient and any other person or entity involved therein from continuing such breach. The parties hereto intend that the covenants

8

contained in this Agreement be severable as to time, area, and restricted activity so that if any section, sentence or phrase be deemed too broad in scope as to time, area or restricted activity, then the section, sentence, phrase, period of time, geographical area or restricted activity shall be reduced to such scope as is reasonable and enforceable, and the covenant shall be construed as if it were originally drawn in such reduced form, to the end that restraints hereby may be enforced by injunction.Recipient further agrees that if he or she intends to engage in an enterprise that could result in a breach of the restrictive covenants contained in this Agreement, he or she will notify the Company in writing of such intent prior to engaging in the enterprise. 

7.    Transferability.  The RSUs are not transferable unless and until the Shares have been delivered to the Recipient in settlement of the RSUs in accordance with this Agreement, otherwise than by will or under the applicable laws of descent and distribution. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Recipient.  Except as otherwise permitted pursuant to the first sentence of this Section, any attempt to effect a Transfer of any RSUs prior to the date on which the Shares have been delivered to the Recipient in settlement of the RSUs shall be void abinitio.  For purposes of this Agreement, “Transfer” shall mean any sale, transfer, encumbrance, gift, donation, assignment, pledge, hypothecation, or other disposition, whether similar or dissimilar to those previously enumerated, whether voluntary or involuntary, and including, but not limited to, any disposition by operation of law, by court order, by judicial process, or by foreclosure, levy or attachment.

8.    Tax Matters.

(a)    Withholding.  Any minimum tax withholding obligation of the Company arising in connection with this Award, and/or the lapse of restrictions with respect hereto, shall, to the extent permitted by law, be satisfied by the retention of cash and/or Shares issuable pursuant to this Award that have a then-current Fair Market Value equal to the amount of any minimum federal, state or local taxes of any kind required by law to be withheld with respect to this Award.  If the retention of Shares described in the foregoing sentence is not permitted by law, as a condition to the Company’s obligations with respect to the RSUs (including, without limitation, any obligation to deliver any Shares) hereunder, the Recipient shall make arrangements satisfactory to the Company to pay to the Company any federal, state or local taxes of any kind required to be withheld with respect to the vesting or delivery of Shares corresponding to such RSUs. 

(b)    Recipient’s Responsibilities for Tax Consequences.  The tax consequences to the Recipient (including without limitation federal, state, local and foreign income tax consequences) with respect to the RSUs (including without limitation the grant, vesting and/or delivery thereof) are the sole responsibility of the Recipient.  The Recipient shall consult with his or her own personal accountant(s) and/or tax advisor(s) regarding these matters and the Recipient’s filing, withholding and payment (or tax liability) obligations. 

9.    Amendment, Modification & Assignment.   This Agreement may only be modified or amended in a writing signed by the parties hereto.  No promises, assurances, commitments, agreements, undertakings or representations, whether oral, written, electronic or otherwise, and whether express or implied, with respect to the subject matter hereof, have been made by either party which are not set forth expressly in this Agreement.  This Agreement (and Recipient’s rights

9

hereunder) may not be assigned, and the obligations of Recipient hereunder may not be delegated, in whole or in part.  The rights and obligations created hereunder shall be binding on the Recipient and his heirs and legal representatives and on the successors and assigns of the Company.

10.    Complete Agreement.  This Agreement (together with those agreements and documents expressly referred to herein, for the purposes referred to herein) embody the complete and entire agreement and understanding between the parties with respect to the subject matter hereof, and supersede any and all prior promises, assurances, commitments, agreements, undertakings or representations, whether oral, written, electronic or otherwise, and whether express or implied, which may relate to the subject matter hereof in any way.

11.    Miscellaneous.

(a)    No Right to (Continued) Employment or Service.  This Agreement and the grant of RSUs hereunder shall not confer, or be construed to confer, upon the Recipient any right to employment or service, or continued employment or service, with the Company or any Related Entity.

(b)    No Limit on Other Compensation Arrangements.  Nothing contained in this Agreement shall preclude the Company or any Related Entity from adopting or continuing in effect other or additional compensation plans, agreements or arrangements, and any such plans, agreements and arrangements may be either generally applicable or applicable only in specific cases or to specific persons.

(c)    Severability.  If any term or provision of this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or under any applicable law, rule or regulation, then such provision shall be construed or deemed amended to conform to applicable law (or if such provision cannot be so construed or deemed amended without materially altering the purpose or intent of this Agreement and the grant of RSUs hereunder, such provision shall be stricken as to such jurisdiction and the remainder of this Agreement and the award hereunder shall remain in full force and effect).

(d)    No Trust or Fund Created.  Neither this Agreement nor the grant of RSUs hereunder shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Related Entity and the Recipient or any other person.  To the extent that the Recipient or any other person acquires a right to receive payments from the Company or any Related Entity pursuant to this Agreement, such right shall be no greater than the right of any unsecured general creditor of the Company.

(e)    Law Governing.  This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware (without reference to the conflict of laws rules or principles thereof).

(f)    Interpretation.  This award of RSUs is subject to all of the terms, provisions and restrictions of this Agreement and the Plan.  All decisions or interpretations of the Board or the Committee upon any questions arising under this Agreement or the Plan are binding, conclusive and final. 

10

(g)    Headings.  Section, paragraph and other headings and captions are provided solely as a convenience to facilitate reference.  Such headings and captions shall not be deemed in any way material or relevant to the construction, meaning or interpretation of this Agreement or any term or provision hereof.

(h)    Notices.  Any notice under this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Company, to the Company’s General Counsel at 330 Seven Springs Way, Brentwood, Tennessee 37207, or if the Company should move its principal office, to such principal office, and, in the case of the Recipient, to the Recipient’s last permanent address as shown on the Company’s records, subject to the right of either party to designate some other address at any time hereafter in a notice satisfying the requirements of this Section.

(i)    Compliance with Section 409A

(i)    General.It is the intention of both the Company and the Recipient that the benefits and rights to which the Recipient could be entitled pursuant to this Agreement comply with Section 409A of the Code and the Treasury Regulations and other guidance promulgated or issued thereunder (“Section 409A”), to the extent that the requirements of Section 409A are applicable thereto, and the provisions of this Agreement shall be construed in a manner consistent with that intention.  If the Recipient or the Company believes, at any time, that any such benefit or right that is subject to Section 409A does not so comply, it shall promptly advise the other and shall negotiate reasonably and in good faith to amend the terms of such benefits and rights such that they comply with Section 409A (with the most limited possible economic effect on the Recipient and on the Company).

(ii)    No Representations as to Section 409A Compliance.  Notwithstanding the foregoing, the Company does not make any representation to the Recipient that the shares of RSUs and the Dividend Equivalents, if any, awarded pursuant to this Agreement are exempt from, or satisfy, the requirements of Section 409A, and the Company shall have no liability or other obligation to indemnify or hold harmless the Recipient or any Beneficiary for any tax, additional tax, interest or penalties that the Recipient or any Beneficiary may incur in the event that any provision of this Agreement, or any amendment or modification thereof or any other action taken with respect thereto is deemed to violate any of the requirements of Section 409A.

(iii)    No Acceleration of Payments.  Neither the Company nor the Recipient, individually or in combination, may accelerate any payment or benefit that is subject to Section 409A, except in compliance with Section 409A and the provisions of this Agreement, and no amount that is subject to Section 409A shall be paid prior to the earliest date on which it may be paid without violating Section 409A.

(iv)    Treatment of Each Installment as a Separate Payment. For purposes of applying the provisions of Section 409A to this Agreement, each separately identified amount to which the Recipient is entitled under this Agreement shall be treated as a separate payment.  In addition, to the extent permissible under Section 409A, any series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

11

(j)    Non-Waiver of Breach.  The waiver by any party hereto of the other party's prompt and complete performance, or breach or violation, of any term or provision of this Agreement shall be effected solely in a writing signed by such party, and shall not operate nor be construed as a waiver of any subsequent breach or violation, and the waiver by any party hereto to exercise any right or remedy which he or it may possess shall not operate nor be construed as the waiver of such right or remedy by such party, or as a bar to the exercise of such right or remedy by such party, upon the occurrence of any subsequent breach or violation. 

(k)    Clawback of Benefits.  The Committee shall have full authority to implement any policies and procedures that it determines to be necessary or appropriate to comply with applicable securities laws or other laws, including, without limitation, Section 10D of the Exchange Act and any rules promulgated thereunder, including without limitation, including in this Agreement, or amending any this Agreement, without the consent of the Recipient, to include language for the clawback (recapture) by the Company of any benefits under this Agreement that the Committee deems necessary or appropriate to comply with that statutory provision and those rules.

12

EXHIBIT A

Performance Criteria

The RSUs are earned based on the average of the Company’s achievement of the annually established performance targets for diluted earnings per share (“Diluted EPS”) for each of the 2018, 2019, and 2020 fiscal years (the “Annual Diluted EPS Goals”), with the final number of shares of Common Stock payable under the award subject to modification based on the TSR Modifier (as defined below), as set forth below:

I.    Diluted EPS Goal.  The annual performance targets are the Diluted EPS amounts expressed in the financial budgets that are adopted by the Company for each of the 2018, 2019, and 2020 fiscal years.  The annual Diluted EPS performance results shall be the amounts reported in the Company’s audited financial statements for each such fiscal year, adjusted to account for the effects of the following, to the extent applicable and as determined by the Committee:

(a)        gains or losses on sales of facilities;

(b)        operating results of acquired or divested facilities;

(c)        accelerated depreciation due to an unexpected change to the useful life of an asset;

(d)        impairment charges;

(e)        restructuring charges;

(f)        gains or losses from the settlement of pre-acquisition contingent obligations;

(g)        certain gains or losses arising from litigation or settlements with governmental entities or other third parties;

(h)        gains or losses on extinguishment of debt;

(i)        changes as a result of the implementation of new accounting and tax standards; and

(j)        other changes, which are identified by management, that are unusual, non-operational or non-recurring in nature.   

The Company’s achievement of the Annual Diluted EPS Goals for each of the three fiscal years is determined as a percentage, calculated as the annual Diluted EPS performance result divided by the annual Diluted EPS performance target for that year. The percent of target earned at the end of the Performance Period is based on the average of the three annual percentage levels of achievement of the Annual Diluted EPS Goals over the three-year Performance Period and is determined according to the following table:

Average Annual Diluted EPS Performance Results Achieved	% of Target RSUs Earned
Below 80% of target	0%
80% of target	25%
100% of target	100%
120% of target	200%

The percent of target earned will be determined using a straight-line interpolation if the average level of performance results achieved falls between two of the levels specified in the chart above.  Subject to modification based on the TSR Modifier as provided in Section 2 below, the number of Shares payable under this Award is equal to the percent of target earned, multiplied by the number of RSUs granted pursuant to this Award.

13

II.  TSR Modifier.  Notwithstanding any other provision, the number of Shares payable under this Award based on the average level of achievement of the Annual Diluted EPS Goals shall be modified based on the Company’s three-year annualized total shareholder return (“TSR”) during the Performance Period relative to its peer group, which shall be the companies in the S&P GICS Sub-industry: Health Care Facilities Index with over $500 million in revenues or its equivalent at the end of the Performance Period (the “Three-Year Relative TSR”), in accordance with the following:

(a)If the average level of achievement of the Annual Diluted EPS Goals is at or above 80% of target and the Company’s Three-Year Relative TSR is below the 25th percentile, the number of Shares payable under this Award shall be reduced by 20%, not to fall below the number of Shares that would be payable at 25% of RSUs earned.

(b)If the average level of achievement of the Annual Diluted EPS Goals is at or above 80% of target and the Company’s Three-Year Relative TSR is at or above the 75th percentile, the number of Shares payable under this Award shall be increased by 20%, not to exceed the number of Shares that would be payable at 200% of RSUs earned.

Diluted EPS and TSR shall be calculated in accordance with the definitions in the award agreements.

III. Accelerated Vesting Upon Death or Disability.   For purposes of Sections 2(c) and 2(d):

(a)        the determination of the percent of target earned under Section I above is based on the average of the Company’s achievement of the Annual Diluted EPS Goals for each of the three fiscal years within the Performance Period, which shall be (i) for any fiscal year within the Performance Period that is completed as of the Recipient’s death or Disability, as applicable, the greater of (A) 100% or (B) the calculated as the annual Diluted EPS performance result divided by the annual Diluted EPS performance target for that year; and (ii) for any other fiscal year within the Performance Period that is not completed as of the Recipient’s death or Disability, as applicable, 100%; and

(b)        the number of Shares payable under the Award shall not be modified based on the Three-Year Relative TSR, unless the Company’s Three-Year Relative TSR, using the last thirty (30) trading days immediately prior to the Recipient’s death or Disability, as applicable, to measure performance, is at or above the 75th percentile, in which event the number of Shares payable under this Award shall be increased by 20%, not to exceed the number of Shares that would be payable at 200% of RSUs earned.  

14

EX-10.6

Exhibit 10.6

Form of Award – RSU

(Time-based Vesting)

LIFEPOINT HEALTH, INC.

2013 LONG-TERM INCENTIVE PLAN

Restricted stock unit AGREEMENT

FOR

[Insert name of Recipient]

1.    Award of Restricted Stock Units.  LifePoint Health, Inc. (the “Company”) hereby grants, as of _________________ (the “Date of Grant”), to __________________ (the “Recipient”), the right to receive, at the times specified in Section 4 hereof, shares of the Company’s common stock, par value $0.01 per share (collectively the “RSUs”).  The RSUs shall be subject to the terms, provisions and restrictions set forth in this Agreement and the LifePoint Health, Inc. 2013 Long-Term Incentive Plan (the “Plan”), which is incorporated herein for all purposes.  The grant of this Award and the issuance of any Shares (or any other securities of the Company pursuant thereto) is subject to all of the terms and conditions herein and in the Plan.  Unless otherwise provided herein, terms used herein that are defined in the Plan and not defined herein shall have the meanings attributable thereto in the Plan.

2.    Vesting of RSUs.

(a)    General Vesting.  The RSUs shall become vested in the following amounts, at the following times and upon the following conditions, provided that the Continuous Service of the Recipient continues through and on the Vesting Dates identified below:

Number of Shares Subject to the RSUs	Vesting Date
[1/4	First anniversary of the Date of Grant]
[1/4	Second anniversary of the Date of Grant]
[1/4	Third anniversary of the Date of Grant]
[1/4	Fourth anniversary of the Date of Grant]

There shall be no proportionate or partial vesting of Shares subject to the RSUs in or during the months, days or periods prior to each Vesting Date, and except as otherwise provided in Section 2 hereof, all vesting of Shares subject to the RSUs shall occur only on each Vesting Date.

(b)    Death.  In the event that the Recipient’s Continuous Service terminates by reason of the Recipient’s death, the RSUs subject to this Agreement shall be immediately vested as of the date of such death.

(c)    Disability.  In the event that the Recipient suffers a Disability prior to the termination of the Recipient’s Continuous Service, the RSUs subject to this Agreement shall be immediately vested as of the date of such Disability.

(d)    409A Change in Control.  The RSUs subject to this Agreement shall be immediately vested as of the date during the Recipient’s Continuous Service there is a 409A

Change in Control, unless either (i) the Company is the surviving entity in the 409A Change in Control and the RSU Award continues to be outstanding after the 409A Change in Control on substantially the same terms and conditions as were applicable immediately prior to the 409A Change in Control, or (ii) the successor company or its parent company assumes or substitutes for the RSU Award, as determined in accordance with Section 10(c)(ii) of the Plan.

(e)    Termination following a 409A Change in Control.  In the event of a 409A Change in Control in which the RSU Awards do not vest pursuant to Section 2(d) hereof, and the Recipient’s Continuous Service is terminated within 24 months following such 409A Change in Control either (i) without Cause by the Company or any Related Entity or by a successor company that assumes or substitutes for the RSU Award according to Section 10(c)(ii) of the Plan, or (ii) for Good Reason by the Recipient, the RSUs subject to this Agreement shall be immediately vested as of the date of such termination of Continuous Service. 

(f)    Retirement.  If the Recipient terminates his or her Continuous Service (for reasons other than the reasons described in Sections 2(b), 2(c), and 2(e) hereof) after attaining age 62 and completing at least five (5) years of Continuous Service (a “Retirement Termination”), the RSUs subject to this Agreement will continue to vest pursuant to the schedule set forth in subsection (a) above; provided, however, that, during the period (the “Restricted Period”) beginning on the date the Recipient has a Retirement Termination (the “Retirement Date”) and continuing until the date the RSUs are fully vested pursuant to the schedule set forth in subsection (a) above, the Recipient agrees that he or she will not, in any capacity (including, but not limited to, as an owner, member, partner, shareholder, consultant, advisor, financier, agent, employee, officer, director, manager or otherwise), whether directly or indirectly, engage in a Competitive Activity (as such term is hereinafter defined) or violate the non-solicitation restrictions set forth in Section 7(a).  If the Recipient fails to comply with this provision, the Recipient will forfeit any unvested RSUs as of the date the Recipient violates this provision. 

(g)    Definitions.  For purposes of this Agreement, the following terms shall have the meanings indicated:

(i)    “409A Change in Control” means an event which constitutes a “change in the ownership” of the Company, a “change in effective control” of the Company, or a “change in the ownership of a substantial portion of the assets” of the Company, each as defined under Treasury Regulations Section 1.409A-3(i)(5).

(ii)    “Competitive Activity” means, without the express written consent of the Company, the development, operation, management or other business activity with respect to (A) any entity that derives more than fifty percent (50%) of its revenues from acute healthcare services in a non-urban setting; (B) any entity that provides any healthcare service offered by any hospital operated by the Company or any of its subsidiaries or affiliates anywhere within the United States; (C) any entity that provides surgical, diagnostic or imaging services within a twenty-five (25) mile radius of any location where the Company or any of its subsidiaries or affiliates, currently owns, leases, manages or otherwise maintains an operating facility and of any operating facilities identified as potential acquisition targets in the Company’s strategic plan at the time the

2

Recipient’s Continuous Service is terminated; or (D) any entity that derives more than fifty percent (50%) of its revenues from physician recruitment services and that may, as a part of its operation, be engaged in the recruitment of physicians from facilities owned or operated by the Company or any of its subsidiaries or affiliates (excluding recruitment activities that are conducted by means of general solicitation, such as by way of newspapers or the Internet, and that are not targeted to recruit physicians from a facility that is owned or operated by the Company or any of its subsidiaries or affiliates).

(iii)    “Disability” means, solely for purposes of this Agreement and notwithstanding any provision in the Plan to the contrary, the Recipient is (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company or its affiliates; or (iii) determined to be totally disabled by the Social Security Administration.

(iv)    “Non-Vested RSUs” means any portion of the RSUs subject to this Agreement that have not become vested pursuant to this Section 2.

(v)    “Separation from Service” means the voluntary or involuntary separation from service with the Service Recipient, determined in a manner consistent with Section 409A of the Code and the Treasury Regulations thereunder.

(vi)    “Service Recipient” means the person or entity for whom the services resulting in the grant of the RSUs were performed, and with respect to whom the legally binding right to the Award arises, and all persons with whom such person would be considered a single employer under Section 414(b) of the Code (employees of a controlled group of corporations), and all persons with whom such person would be considered a single employer under Section 414(c) of the Code (employees of partnerships, proprietorships, or other entities under common control).

(vii)    “Specified Employee” means any Recipient who, at the time of his or her Separation from Service, is a “key employee”, within the meaning of Section 416(i) of the Code, of any Service Recipient the shares of which are publicly traded on an established securities market or otherwise, determined in accordance with Section 409A of the Code.

(viii)    “Vested RSUs” means any portion of the RSUs subject to this Agreement that are and have become vested pursuant to this Section 2.

3.    Forfeiture of Non-Vested RSUs.  If the Recipient’s Continuous Service is terminated for any reason, any RSUs that are not Vested RSUs, and that do not become Vested RSUs pursuant to Section 2 hereof as a result of such termination or as a result of a Retirement Termination, shall be forfeited immediately upon such termination of Continuous Service or at such other time as provided in Section 2(f), without any payment to the Recipient.  The Committee shall have the

3

power and authority to enforce on behalf of the Company any rights of the Company under this Agreement in the event of the Recipient’s forfeiture of Non-Vested RSUs pursuant to this Section 3. 

4.    Settlement of the RSUs. 

(a)    Delivery of Shares. 

(i)    The Company shall deliver to the Recipient or in the event of the Recipient’s death, to the beneficiary or beneficiaries designated by the Recipient, or if the Recipient has not so designated any beneficiary(ies), or no designated beneficiary survives the Recipient, to the personal representative of the Recipient’s estate, Shares corresponding to the Vested RSUs on, or as soon as administratively practicable after, the earliest of (A) each Vesting Date, to the extent then vested; (B) the Recipient’s death; (C) the Recipient’s Disability; (D) a 409A Change in Control, to the extent then vested; or (E) the Recipient’s Separation from Service within 24 months after a 409A Change in Control, to the extent then vested.  Notwithstanding the foregoing, in the event of a 409A Change in Control on or after the date the Recipient is first eligible for a Retirement Termination pursuant to Section 2(f), any Shares corresponding to RSUs that would vest and be delivered on future Vesting Dates shall be delivered to the Recipient on such 409A Change in Control, regardless of whether such RSUs become vested pursuant to Section 2(d).

(ii)    Notwithstanding the foregoing, in the event there is a 409A Change in Control on or before the date on which the Company would otherwise deliver Shares pursuant to this Section 4(a), the Company may, in lieu of delivering Shares, deliver the consideration (whether stock, cash or other securities or property) received in the 409A Change in Control transaction by holders of Shares, or such other consideration as determined by the Committee in its sole discretion, equal to the Fair Market Value of the per Share consideration received by holders of Shares in the applicable transaction, multiplied by the number of RSUs subject to this Agreement that were vested and deliverable pursuant to this Section 4(a).  The determination of such substantial equality of Fair Market Value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding. 

(b)    Distribution to Specified Employees.  Notwithstanding the foregoing, if the Recipient is a Specified Employee, then no distributions otherwise required to be made under this Agreement on account of the Recipient’s Separation from Service shall be made before the date that is six (6) months after the date of the Recipient’s Separation from Service or, if earlier, the date of the Recipient’s death if such deferral is required to comply with Section 409A of the Code.

5.    Rights with Respect to RSUs.

(a)    No Rights as Shareholder Until Delivery.  Except as otherwise provided in this Section 5, the Recipient shall not have any rights, benefits or entitlements with respect to the Shares corresponding to the RSUs unless and until those Shares are delivered to the Recipient (and thus shall have no voting rights, or rights to receive any dividend declared, before those Shares are so delivered).  On or after delivery, the Recipient shall have, with respect to the Shares delivered, all

4

of the rights of a holder of Shares granted pursuant to the articles of incorporation and other governing instruments of the Company, or as otherwise available at law.

(b)    Adjustments to RSUs.  If at any time while this Agreement is in effect and before any Shares have been delivered with respect to any RSUs, there shall be any increase or decrease in the number of issued and outstanding Shares of the Company through the declaration of a stock dividend or through any recapitalization resulting in a stock split-up, combination or exchange of such Shares, then the Shares subject to the RSUs then subject to this Agreement shall be adjusted in the same manner as the outstanding Shares of the Company.  If any such adjustment shall result in a fractional Share, such fraction shall be disregarded.

(c)    No Restriction on Certain Transactions.  Notwithstanding any term or provision of this Agreement to the contrary, the existence of this Agreement, or of any outstanding RSUs awarded hereunder, shall not affect in any manner the right, power or authority of the Company or any Related Entity to make, authorize or consummate: (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s or any Related Entity’s capital structure or its business; (ii) any merger, consolidation or similar transaction by or of the Company or any Related Entity; (iii) any offer, issue or sale by the Company or any Related Entity of any capital stock of the Company or any Related Entity, including any equity or debt securities, or preferred or preference stock that would rank prior to or on parity with the Shares represented by the RSUs and/or that would include, have or possess other rights, benefits and/or preferences superior to those that such Shares include, have or possess, or any warrants, options or rights with respect to any of the foregoing; (iv) the dissolution or liquidation of the Company or any Related Entity; (v) any sale, transfer or assignment of all or any part of the stock, assets or business of the Company or any Related Entity; or (vi) any other corporate transaction, act or proceeding (whether of a similar character or otherwise).

(d)    Dividend Equivalents.  During the term of this Agreement, the Recipient shall have the right to receive distributions (the “Dividend Equivalents”) from the Company equal to any dividends or other distributions that would have been distributed to the Recipient if each of the Shares subject to the RSUs instead was an issued and outstanding Share owned by the Recipient.  Dividend Equivalents payable with respect to the RSUs subject to this Agreement shall be subject to the following terms and conditions: (i) Dividend Equivalents payable with respect to the RSUs subject to this Agreement shall be paid on the date the RSUs to which such Dividend Equivalents relate are settled under Section 4 hereof, with such Dividend Equivalents to be accumulated, without interest, by the Company (the “Accumulated Dividend Equivalents”), (ii) all Accumulated Dividend Equivalents payable with respect to the RSUs subject to this Agreement shall be paid in cash, reduced by any applicable withholding taxes, and (iii) any Accumulated Dividend Equivalents with respect to the RSUs subject to this Agreement shall be forfeited and all rights of the Recipient to such Accumulated Dividend Equivalents shall terminate, without further obligation on the part of the Company, unless the portion of the RSUs subject to this Agreement to which such Accumulated Dividend Equivalents relate become Vested RSUs pursuant to Section 2 hereof.  Each Dividend Equivalent shall be treated as a separate payment for purposes of Section 409A of the Code.

5

6.    Transferability.  The RSUs are not transferable unless and until the Shares have been delivered to the Recipient in settlement of the RSUs in accordance with this Agreement, otherwise than by will or under the applicable laws of descent and distribution. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Recipient.  Except as otherwise permitted pursuant to the first sentence of this Section, any attempt to effect a Transfer of any RSUs prior to the date on which the Shares have been delivered to the Recipient in settlement of the RSUs shall be void abinitio.  For purposes of this Agreement, “Transfer” shall mean any sale, transfer, encumbrance, gift, donation, assignment, pledge, hypothecation, or other disposition, whether similar or dissimilar to those previously enumerated, whether voluntary or involuntary, and including, but not limited to, any disposition by operation of law, by court order, by judicial process, or by foreclosure, levy or attachment.

7.    Restrictive Covenants; Breach.

(a)    Non-Solicitation.  As partial consideration for the grant of this Award, Recipient agrees that, during the period beginning on the Date of Grant and ending on the two-year anniversary of  either the last Vesting Date or the date the RSUs are forfeited pursuant to Section 3, as applicable, he or she will not, in any capacity (including, but not limited to, as an owner, member, partner, shareholder, consultant, advisor, financier, agent, employee, officer, director, manager or otherwise), whether directly, indirectly or through affiliates, for the Recipient’s own account or for the benefit of any other person or entity, without the express written consent of the Company, engage in the solicitation, diversion, or hiring, or attempted solicitation, diversion, or hiring of any employees or consultants of the Company or any of its subsidiaries or affiliates to leave or to work for the Recipient or any person or entity with which the Recipient is affiliated, or the interference with the relationship between the Company or any of its subsidiaries or affiliates with any of its employees or consultants.

(b)    Breach.  Recipient agrees that any breach of the covenants and agreements contained in this Agreement will result in irreparable injury to the Company (including its subsidiaries and affiliates) for which money damages would not adequately compensate the injured party and, therefore, in the event of any such breach, the Company shall be entitled (in addition to any other rights and remedies which it may have at law or in equity) to seek to have an injunction issued by any competent court of equity enjoining and restraining Recipient and any other person or entity involved therein from continuing such breach. The parties hereto intend that the covenants contained in this Agreement be severable as to time, area, and restricted activity so that if any section, sentence or phrase be deemed too broad in scope as to time, area or restricted activity, then the section, sentence, phrase, period of time, geographical area or restricted activity shall be reduced to such scope as is reasonable and enforceable, and the covenant shall be construed as if it were originally drawn in such reduced form, to the end that restraints hereby may be enforced by injunction.  Recipient further agrees that if he or she intends to engage in an enterprise that could result in a breach of the restrictive covenants contained in this Agreement, he or she will notify the Company in writing of such intent prior to engaging in the enterprise.

6

8.    Tax Matters.

(a)    Withholding.  Any tax withholding obligation of the Company arising in connection with this Award, and/or the lapse of restrictions with respect hereto, shall, to the extent permitted by law, be satisfied by the retention of Shares issuable pursuant to this Award that have a then-current Fair Market Value equal to the amount of any federal, state or local taxes of any kind required by law to be withheld with respect to such Shares.  If the retention of Shares described in the foregoing sentence is not permitted by law, as a condition to the Company’s obligations with respect to the RSUs (including, without limitation, any obligation to deliver any Shares) hereunder, the Recipient shall make arrangements satisfactory to the Company to pay to the Company any federal, state or local taxes of any kind required to be withheld with respect to the vesting or delivery of Shares corresponding to such RSUs. 

(b)    Recipient’s Responsibilities for Tax Consequences.  The tax consequences to the Recipient (including without limitation federal, state, local and foreign income tax consequences) with respect to the RSUs (including without limitation the grant, vesting and/or delivery thereof) are the sole responsibility of the Recipient.  The Recipient shall consult with his or her own personal accountant(s) and/or tax advisor(s) regarding these matters and the Recipient’s filing, withholding and payment (or tax liability) obligations. 

9.    Amendment, Modification & Assignment.   This Agreement may only be modified or amended in a writing signed by the parties hereto.  No promises, assurances, commitments, agreements, undertakings or representations, whether oral, written, electronic or otherwise, and whether express or implied, with respect to the subject matter hereof, have been made by either party which are not set forth expressly in this Agreement.  This Agreement (and Recipient’s rights hereunder) may not be assigned, and the obligations of Recipient hereunder may not be delegated, in whole or in part.  The rights and obligations created hereunder shall be binding on the Recipient and his heirs and legal representatives and on the successors and assigns of the Company.

10.    Complete Agreement.  This Agreement (together with those agreements and documents expressly referred to herein, for the purposes referred to herein) embody the complete and entire agreement and understanding between the parties with respect to the subject matter hereof, and supersede any and all prior promises, assurances, commitments, agreements, undertakings or representations, whether oral, written, electronic or otherwise, and whether express or implied, which may relate to the subject matter hereof in any way.

11.    Miscellaneous.

(a)    No Right to (Continued) Employment or Service.  This Agreement and the grant of RSUs hereunder shall not confer, or be construed to confer, upon the Recipient any right to employment or service, or continued employment or service, with the Company or any Related Entity.

(b)    No Limit on Other Compensation Arrangements.  Nothing contained in this Agreement shall preclude the Company or any Related Entity from adopting or continuing in effect other or additional compensation plans, agreements or arrangements, and any such plans,

7

agreements and arrangements may be either generally applicable or applicable only in specific cases or to specific persons.

(c)    Severability.  If any term or provision of this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or under any applicable law, rule or regulation, then such provision shall be construed or deemed amended to conform to applicable law (or if such provision cannot be so construed or deemed amended without materially altering the purpose or intent of this Agreement and the grant of RSUs hereunder, such provision shall be stricken as to such jurisdiction and the remainder of this Agreement and the award hereunder shall remain in full force and effect).

(d)    No Trust or Fund Created.  Neither this Agreement nor the grant of RSUs hereunder shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Related Entity and the Recipient or any other person.  To the extent that the Recipient or any other person acquires a right to receive payments from the Company or any Related Entity pursuant to this Agreement, such right shall be no greater than the right of any unsecured general creditor of the Company.

(e)    Law Governing.  This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware (without reference to the conflict of laws rules or principles thereof).

(f)    Interpretation.  This award of RSUs is subject to all of the terms, provisions and restrictions of this Agreement and the Plan.  All decisions or interpretations of the Board or the Committee upon any questions arising under this Agreement or the Plan are binding, conclusive and final. 

(g)    Headings.  Section, paragraph and other headings and captions are provided solely as a convenience to facilitate reference.  Such headings and captions shall not be deemed in any way material or relevant to the construction, meaning or interpretation of this Agreement or any term or provision hereof.

(h)    Notices.  Any notice under this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Company, to the Company’s General Counsel at 330 Seven Springs Way, Brentwood, Tennessee 37207, or if the Company should move its principal office, to such principal office, and, in the case of the Recipient, to the Recipient’s last permanent address as shown on the Company’s records, subject to the right of either party to designate some other address at any time hereafter in a notice satisfying the requirements of this Section.

(i)    Compliance with Section 409A

(i)    General.It is the intention of both the Company and the Recipient that the benefits and rights to which the Recipient could be entitled pursuant to this Agreement comply with Section 409A of the Code and the Treasury Regulations and other guidance promulgated or

8

issued thereunder (“Section 409A”), to the extent that the requirements of Section 409A are applicable thereto, and the provisions of this Agreement shall be construed in a manner consistent with that intention.  If the Recipient or the Company believes, at any time, that any such benefit or right that is subject to Section 409A does not so comply, it shall promptly advise the other and shall negotiate reasonably and in good faith to amend the terms of such benefits and rights such that they comply with Section 409A (with the most limited possible economic effect on the Recipient and on the Company).

(ii)    No Representations as to Section 409A Compliance.  Notwithstanding the foregoing, the Company does not make any representation to the Recipient that the shares of RSUs and the Dividend Equivalents, if any, awarded pursuant to this Agreement are exempt from, or satisfy, the requirements of Section 409A, and the Company shall have no liability or other obligation to indemnify or hold harmless the Recipient or any Beneficiary for any tax, additional tax, interest or penalties that the Recipient or any Beneficiary may incur in the event that any provision of this Agreement, or any amendment or modification thereof or any other action taken with respect thereto is deemed to violate any of the requirements of Section 409A.

(iii)    No Acceleration of Payments.  Neither the Company nor the Recipient, individually or in combination, may accelerate any payment or benefit that is subject to Section 409A, except in compliance with Section 409A and the provisions of this Agreement, and no amount that is subject to Section 409A shall be paid prior to the earliest date on which it may be paid without violating Section 409A.

(iv)    Treatment of Each Installment as a Separate Payment. For purposes of applying the provisions of Section 409A to this Agreement, each separately identified amount to which the Recipient is entitled under this Agreement shall be treated as a separate payment.  In addition, to the extent permissible under Section 409A, any series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

(j)    Non-Waiver of Breach.  The waiver by any party hereto of the other party’s prompt and complete performance, or breach or violation, of any term or provision of this Agreement shall be effected solely in a writing signed by such party, and shall not operate nor be construed as a waiver of any subsequent breach or violation, and the waiver by any party hereto to exercise any right or remedy which he or it may possess shall not operate nor be construed as the waiver of such right or remedy by such party, or as a bar to the exercise of such right or remedy by such party, upon the occurrence of any subsequent breach or violation. 

(k)    Clawback of Benefits.  The Committee shall have full authority to implement any policies and procedures that it determines to be necessary or appropriate to comply with applicable securities laws or other laws, including, without limitation, Section 10D of the Exchange Act and any rules promulgated thereunder, including without limitation, including in this Agreement, or amending any this Agreement, without the consent of the Recipient, to include language for the clawback (recapture) by the Company of any benefits under this Agreement that the Committee deems necessary or appropriate to comply with that statutory provision and those rules.

9

EX-31.1

EXHIBIT 31.1

LIFEPOINT HEALTH, INC.

CERTIFICATION

I, William F. Carpenter III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LifePoint Health, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ William F. Carpenter III

William F. Carpenter III

Chief Executive Officer and

                                                                                      Chairman of the Board of Directors

Date: July27, 2018

EX-31.2

EXHIBIT 31.2

LIFEPOINT HEALTH, INC.

CERTIFICATION

I, Michael S.  Coggin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LifePoint Health, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ MichaelS.  Coggin

Michael S.  Coggin

Executive Vice President and Chief Financial Officer

Date: July27, 2018

EX-32.1

EXHIBIT 32.1

LIFEPOINT HEALTH, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Report of LifePoint Health, Inc. (the “Company”) on Form 10-Q for the quarter ended June  30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William F. Carpenter III, Chief Executive Officer and Chairman of the Board of Directors of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) To the best of my knowledge information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William F. Carpenter III

William F. Carpenter III

Chief Executive Officer and

Chairman of the Board of Directors

Date: July 27, 2018

EX-32.2

EXHIBIT 32.2

LIFEPOINT HEALTH, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Report of LifePoint Health, Inc. (the “Company”) on Form 10-Q for the quarter ended June  30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael S.Coggin, Executive Vice President andChief Financial Officerof the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) To the best of my knowledge information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael S. Coggin

Michael S. Coggin

Executive Vice President and Chief Financial Officer

Date: July 27, 2018

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 20, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Entity Registrant Name	LIFEPOINT HEALTH, INC.
Entity Central Index Key	0001301611
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		38,725,509
Trading Symbol	LPNT

XML

Condensed Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Condensed Consolidated Statements of Income [Abstract]
Revenues	$ 1,569.8	$ 1,594.8	$ 3,172.6	$ 3,225.0
Salaries and benefits	740.2	762.0	1,502.7	1,558.9
Supplies	256.0	263.2	522.0	531.4
Other operating expenses, net	386.6	377.4	772.4	746.9
Depreciation and amortization	81.4	88.7	163.0	176.8
Interest expense, net	37.0	37.6	74.0	75.0
Other non-operating (gains) losses, net	(3.2)	(4.5)	69.5	(30.4)
Costs, Expenses, Non-operating (Income) Expense, and Interest and Debt Expense, Total	1,498.0	1,524.4	3,103.6	3,058.6
Income before income taxes	71.8	70.4	69.0	166.4
Provision for income taxes	17.0	24.4	19.5	56.4
Net income	54.8	46.0	49.5	110.0
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests	(2.4)	(3.5)	(5.9)	(7.6)
Net income attributable to LifePoint Health, Inc.	$ 52.4	$ 42.5	$ 43.6	$ 102.4
Weighted average shares outstanding - basic	38.8	40.3	38.9	40.2
Effect of dilutive stock options and other stock-based awards	0.7	1.0	0.6	1.0
Weighted average shares outstanding - diluted	39.5	41.3	39.5	41.2
Earnings per share attributable to LifePoint Health, Inc. stockholders:
Basic	$ 1.35	$ 1.06	$ 1.12	$ 2.55
Diluted	$ 1.33	$ 1.03	$ 1.10	$ 2.49

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 143.8	$ 112.0	[1]
Accounts receivable	802.7	822.4	[1]
Inventories	152.9	153.1	[1]
Prepaid expenses	76.5	67.2	[1]
Other current assets	101.3	110.5	[1]
Total current assets	1,277.2	1,265.2	[1]
Property and equipment:
Land	181.3	182.4	[1]
Buildings and improvements	2,557.5	2,564.7	[1]
Equipment	2,349.3	2,340.4	[1]
Construction in progress (estimated costs to complete after June 30, 2018 is $359.7)	341.6	353.8	[1]
Property and equipment, gross	5,429.7	5,441.3	[1]
Accumulated depreciation	(2,426.0)	(2,351.0)	[1]
Property and equipment, net	3,003.7	3,090.3	[1]
Intangible assets, net	78.2	76.3	[1]
Other long-term assets	123.2	116.8	[1]
Goodwill	1,733.8	1,737.8	[1]
Total assets	6,216.1	6,286.4	[1]
Current liabilities:
Accounts payable	186.6	210.3	[1]
Accrued salaries	203.9	216.3	[1]
Other current liabilities	277.4	296.0
Current maturities of long-term debt	22.6	22.3	[1]
Total current liabilities	690.5	744.9	[1]
Long-term debt, net	2,905.8	2,877.4	[1]
Deferred income taxes	10.2	32.3	[1]
Long-term portion of reserves for self-insurance claims	141.0	140.9	[1]
Other long-term liabilities	85.9	80.1	[1]
Total liabilities	3,833.4	3,875.6	[1]
Redeemable noncontrolling interests	93.1	125.0	[1]
LifePoint Health, Inc. stockholders' equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized; no shares issued			[1]
Common stock, $0.01 par value; 90,000,000 shares authorized; 68,250,713 and 67,990,507 shares issued at June 30, 2018 and December 31, 2017, respectively	0.7	0.7	[1]
Capital in excess of par value	1,624.9	1,620.8	[1]
Accumulated other comprehensive loss	(3.6)	(3.6)	[1]
Retained earnings	1,922.9	1,879.3	[1]
Common stock in treasury, at cost, 29,525,204 and 28,632,630 shares at June 30, 2018 and December 31, 2017, respectively	(1,297.6)	(1,254.7)	[1]
Total LifePoint Health, Inc. stockholders' equity	2,247.3	2,242.5	[1]
Noncontrolling interests	42.3	43.3	[1]
Total equity	2,289.6	2,285.8	[1]
Total liabilities and equity	$ 6,216.1	$ 6,286.4	[1]

[1] Derived from audited consolidated financial statements.

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Condensed Consolidated Balance Sheets [Abstract]
Estimated cost to complete	$ 359.7
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	68,250,713	67,990,507
Common stock in treasury, shares	29,525,204	28,632,630

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018		Jun. 30, 2017
Cash flows from operating activities:
Net income	$ 54.8	$ 46.0	$ 49.5		$ 110.0
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	6.5	5.3	14.7		11.9
Depreciation and amortization	81.4	88.7	163.0		176.8
Other non-cash amortization	2.7	3.1	5.3		6.4
Other non-operating (gains) losses, net	(3.2)	(4.5)	69.5		(30.4)
Deferred income taxes	3.4	0.1	(22.1)		(1.0)
Reserve for self-insurance claims, net of payments	0.5	(5.1)	(1.6)		(36.8)
Increase (decrease) in cash from operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable	26.6	21.0	7.3		11.5
Inventories, prepaid expenses and other current assets	20.2	20.3	14.3		20.4
Accounts payable, accrued salaries and other current liabilities	(50.7)	(32.7)	(82.0)		(35.2)
Income taxes payable/receivable	(12.7)	(30.5)	13.6		(22.2)
Other	5.3	(1.1)	3.9		(9.1)
Net cash provided by operating activities	134.8	110.6	235.4		202.3
Cash flows from investing activities:
Purchases of property and equipment	(81.4)	(89.2)	(137.6)		(157.7)
Proceeds from sale of businesses		2.1	1.5		14.9
Other	2.7	0.8	(4.0)		(2.4)
Net cash used in investing activities	(78.7)	(86.3)	(140.1)		(145.2)
Cash flows from financing activities:
Proceeds from borrowings	75.0	60.0	125.0		140.0
Payments of borrowings	(64.4)	(64.4)	(93.8)		(148.8)
Repurchases of common stock	(10.1)	(20.5)	(42.9)		(26.4)
Redemptions of noncontrolling interests and redeemable noncontrolling interests, net of sales	(36.9)	(0.2)	(34.7)		(0.2)
Distributions to noncontrolling interests and redeemable noncontrolling interests	(15.1)	(3.0)	(16.3)		(4.8)
Proceeds from exercise of stock options	0.4	5.9	1.7		15.3
Other	(1.3)	3.0	(2.5)		2.6
Net cash used in financing activities	(52.4)	(19.2)	(63.5)		(22.3)
Change in cash and cash equivalents	3.7	5.1	31.8		34.8
Cash and cash equivalents at beginning of period	140.1	125.8	112.0	[1]	96.1
Cash and cash equivalents at end of period	143.8	130.9	143.8		130.9
Supplemental disclosure of cash flow information:
Interest payments	65.5	63.3	72.2		68.8
Capitalized interest	3.7	1.5	6.9		3.0
Income tax payments, net	$ 26.3	$ 54.8	$ 28.0		$ 79.6

[1] Derived from audited consolidated financial statements.

XML

Condensed Consolidated Statement of Stockholders' Equity - 6 months ended Jun. 30, 2018 - USD ($) shares in Millions, $ in Millions		Common Stock Outstanding [Member]	Capital In Excess Of Par Value [Member]	Accumulated Other Comprehensive Loss [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Noncontrolling Interests [Member]	Total
Balance at Dec. 31, 2017	[1]	$ 0.7	$ 1,620.8	$ (3.6)	$ 1,879.3	$ (1,254.7)	$ 43.3	$ 2,285.8
Balance, shares at Dec. 31, 2017	[1]	39.3
Net income					43.6		0.1	43.7
Exercise of stock options			1.7					1.7
Exercise of stock options, shares		0.3
Stock-based compensation			14.7					14.7
Repurchases of common stock, at cost						(42.9)		(42.9)
Repurchases of common stock, at cost, shares		(0.9)
Fair value adjustments related to redeemable noncontrolling interests			(12.6)					(12.6)
Proceeds from (distributions to) noncontrolling interests			0.3				(1.1)	(0.8)
Balance at Jun. 30, 2018		$ 0.7	$ 1,624.9	$ (3.6)	$ 1,922.9	$ (1,297.6)	$ 42.3	$ 2,289.6
Balance, shares at Jun. 30, 2018		38.7

[1] Derived from audited consolidated financial statements.

XML

Organization, Basis of Presentation and Recently Issued Accounting Standards

6 Months Ended

Jun. 30, 2018

Organization, Basis of Presentation and Recently Issued Accounting Standards [Abstract]

Organization, Basis of Presentation and Recently Issued Accounting Standards

Note 1. Organization, Basis of Presentation and Recently Issued Accounting Standards

Organization

LifePoint Health, Inc., a Delaware corporation, acting through its subsidiaries, owns and operates community hospitals, regional health systems, physician practices, outpatient centers, and post-acute facilities in 22 states throughout the United States (“U.S.”). Unless the context otherwise indicates, LifePoint Health, Inc. and its subsidiaries are referred to herein as “LifePoint” or the “Company.”

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 six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. 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, 2017.

Additionally, the accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all subsidiaries and entities controlled by the Company through its direct or indirect ownership of a majority interest and exclusive rights granted to the Company as the sole general partner or controlling member of such entities, including Duke LifePoint Healthcare, a joint venture between LifePoint and a wholly-controlled affiliate of Duke University Health System, Inc., and the Regional Health Network of Kentucky and Southern Indiana, a joint venture between LifePoint and Norton Healthcare, Inc.  Furthermore, the Company consolidates any entities for which it receives the majority of the entity’s expected returns or is at risk for the majority of the entity’s expected losses based upon its investment or financial interest in the entity.  All significant intercompany accounts and transactions within the Company have been eliminated in consolidation.

Adoption of Recently Issued Accounting Standards

ASC 606-10, “Revenue from Contracts with Customers”

Effective January 1, 2018, the Company adopted the provisions of Accounting Standards Codification (“ASC”) 606-10, “Revenue from Contracts with Customers” (“ASC 606-10”), which supersedes most existing revenue recognition guidance, including industry-specific healthcare guidance, by applying the full retrospective method for all periods presented.  ASC 606-10 provides for a single comprehensive principles-based standard for the recognition of revenue across all industries through the application of the following five-step process:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

The adoption of the provisions of ASC 606-10 had no impact on the Company’s current or historical financial position, results of operations or cash flows.  Additionally, management does not anticipate that the provisions of ASC 606-10 will have an impact on the amount or timing of when the Company recognizes revenue prospectively.  However, in accordance with ASC 606-10, the Company now recognizes the majority of its previously reported provision for doubtful accounts, primarily related to its self-pay patient population, as a direct reduction to revenues as an implicit pricing concession, instead of separately as a discrete deduction to arrive at revenue, and the related presentation of the allowance for doubtful accounts has been eliminated for all periods presented.  The Company’s revenue recognition and accounts receivable policies are more fully described in Note 2.

SAB 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act”

The Company is applying the guidance in accordance with Staff Accounting Bulletin 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act”, when accounting for the enactment-date effects of the Tax Cuts and Jobs Act (the “Tax Act”).  As of June 30, 2018, the Company has not completed its accounting for all of the tax effects of the Tax Act, and the Company did not make any adjustments to the provisional amounts that it recorded at December 31, 2017 during the six months ended June 30, 2018.  As the Company completes its analysis of the Tax Act, including the collection of data and interpretation of any additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service, and other standard-setting bodies, it may make adjustments to the provisional amounts.  Those adjustments may materially impact the Company’s provision for income taxes in the period in which the adjustments are made.

Accounting Standards Not Yet Adopted

ASU 2016-2, “Leases”

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-2 “Leases” (“ASU 2016-2”).  ASU 2016-2 requires the rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet.  ASU 2016-2 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years.  Early adoption is permitted. The Company anticipates that the adoption of ASU 2016-2 will result in an increase in both total assets and total liabilities reflected in the Company’s balance sheets. The Company is still evaluating the impact that the adoption of this standard will have on its policies, procedures, financial disclosures, and control framework.

ASU 2018-2, “Income Statement – Reporting Comprehensive Income”

In January 2018, the FASB issued ASU 2018-2, “Income Statement – Reporting Comprehensive Income (Topic 220)” (“ASU 2018-2”), which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded income tax effects resulting from the Tax Act.  ASU 2018-2 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years.  Early adoption is permitted.  The Company has not determined whether or not it will adopt ASU 2018-2, but the Company does not anticipate that the adoption of this standard would have a significant impact on its balance sheet. 

XML

Revenue Recognition and Accounts Receivable

6 Months Ended

Jun. 30, 2018

Revenue Recognition and Accounts Receivable [Abstract]

Revenue Recognition and Accounts Receivable

Note 2. Revenue Recognition and Accounts Receivable

Revenue from Contracts with Customers

Overview

The Company recognizes revenues in the period in which performance obligations are satisfied. Generally, the Company bills patients and third-party payers several days after the services are performed or the patient is discharged. Accounts receivable primarily consist of amounts due from third-party payers and patients. The Company’s ability to collect outstanding accounts receivable is critical to its results of operations and cash flows.  Amounts the Company receives for treatment of patients covered by governmental programs and third-party payers such as Medicare, Medicaid, health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”) and private insurers as well as directly from patients are subject to contractual adjustments, discounts and implicit price concessions.  Accordingly, the revenue and accounts receivable reported in the Company’s condensed consolidated financial statements are recorded at the net consideration to which the Company expects to be entitled to in exchange for providing patient care. 

The majority of the Company’s performance obligations are satisfied over time for the delivery of patient care in both outpatient and inpatient settings.  Revenue for performance obligations satisfied over time is recognized based on actual charges incurred in relation to total expected charges for services anticipated to be provided.  The Company believes that this method provides a faithful depiction of the transfer of services over the term of the performance obligation based on the remaining services needed to satisfy the obligation. Generally, unsatisfied or partially unsatisfied performance obligations at the end of the reporting period are related to patients admitted to the Company’s hospitals that have not yet been discharged.  The performance obligations for these patients are typically satisfied when the patients are discharged, which generally occurs within a matter of days of admission.  Patients are generally billed when discharged, though they may be billed on an interim basis for longer stays. Accordingly, because all of the Company’s performance obligations are part of a contract that is expected to have a duration of one year or less, the Company has elected to apply the exemption provided by ASC 606-10 to not disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of period end.

Subsequent adjustments that are determined to be the result of an adverse change in the patient’s or the payer’s ability to pay are recognized as bad debt expense.  With the adoption of ASC 606-10, bad debt expense is included under the caption “Other operating expenses, net” in the accompanying condensed consolidated statements of income, instead of separately as a deduction to arrive at revenue.  Bad debt expense for the three and six months ended June 30, 2018 and 2017 was not material for the Company. 

Contractual Discounts

The Company derives a significant portion of its revenues from Medicare, Medicaid and other payers that receive discounts from the Company’s established billing rates. The Company must estimate the total amount of these discounts to prepare its condensed consolidated financial statements. The Medicare and Medicaid regulations and various managed care contracts under which these discounts must be calculated are complex and are subject to interpretation and adjustment. The Company estimates contractual discounts on a payer-specific basis given its interpretation of the applicable regulations or contract terms. These interpretations sometimes result in payments that differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management. Subsequent changes in estimates for contractual discounts are reflected as an adjustment to revenues in the period of the change.  Medicare, Medicaid and other discounted payer accounts receivables are written off after they have been final settled with the payer.

Cost Report Settlements

Cost report settlements under reimbursement agreements with Medicare, Medicaid and certain other payers for retroactive adjustments due to audits, reviews or investigations are considered variable consideration and are included in the determination of the estimated transaction price for providing patient care.  These settlements are estimated based on the payment terms of the reimbursement agreement with the payer, correspondence from the payer, and the Company’s historical experience.  Estimated settlements are adjusted in future periods as final settlements are determined.  There is a reasonable possibility that recorded estimates will change by a material amount in the near term.  Net adjustments arising from a change in the transaction price for estimated settlements under reimbursement agreements resulted in increases to revenues of $1.4 million and $14.3  million during the three months ended June 30, 2018 and 2017, respectively, and $9.9 million and $21.1 million for the six months ended June 30, 2018 and 2017, respectively.

The net cost report settlements due from the Company at June 30, 2018 were $3.2million and are included under the caption “Other current liabilities” in the accompanying unaudited condensed consolidated balance sheet.  The net cost report settlements due to the Company at December 31, 2017 were $2.7 million and are included under the caption “Accounts receivable” in the accompanying unaudited condensed consolidated balance sheet.  The Company’s management believes that adequate provisions have been made for adjustments that may result from final determination of amounts earned under these programs consistent with the constraints that are required by ASC 606-10.

Self-Pay Revenues

Self-pay revenues are derived from patients who do not have any form of healthcare coverage as well as from patients with third party healthcare coverage related to the patient responsibility portion, including deductibles and co-payments.  The Company evaluates these patients, after the patient’s medical condition is determined to be stable, for their ability to pay based upon federal and state poverty guidelines, qualifications for Medicaid or other governmental assistance programs.  The Company estimates the transaction price for self-pay patients and the patient responsibility portion using a number of analytical tools, benchmarks and market conditions. No single statistic or measurement determines the transaction price for these patients.  Some of the analytical tools that the Company utilizes include, but are not limited to, historical cash collection experience, revenue trends by payer classification and revenue days in accounts receivable. 

The revenues associated with self-pay patients are reported at the net amount that the Company expects to collect.  Because the Company provides care to patients regardless of their ability to pay, the Company has determined that the differences between the amounts it bills based on gross or discounted charges and the amounts the Company expects to collect represent implicit price concessions.  The final amount that will be received from the patient is not known at the date of service, and the Company accounts for this variable consideration in accordance with the provisions of ASC 606-10.  Self-pay accounts receivable are written off after collection efforts have been followed in accordance with the Company’s policies. 

Charity Care

The Company provides care without charge to certain patients that qualify under the local charity care policy of each of its hospitals. The Company estimates that its costs of care provided under its charity care programs approximated $5.5 million and $6.7 million for the three months ended June 30, 2018 and 2017, respectively, and $10.8 million and $13.6 million for the six months ended June 30, 2018 and 2017, respectively.  The Company does not report a charity care patient’s charges in revenues as it is the Company’s policy not to pursue collection of amounts related to these patients, and therefore contracts with these patients do not exist.

The Company’s management estimates its costs of care provided under its charity care programs utilizing a calculated ratio of costs to gross charges multiplied by the Company’s gross charity care charges provided.  The Company’s gross charity care charges include only services provided to patients who are unable to pay and qualify under the Company’s local charity care policies.  To the extent the Company receives reimbursement through the various governmental assistance programs in which it participates to subsidize its care of indigent patients, the Company does not include these patients’ charges in its cost of care provided under its charity care program. 

Financing Component

The Company has elected to apply the practical expedient permitted under ASC 606-10 and does not adjust the estimated amount of consideration from patients and third-party payers for the effects of a significant financing component because the Company expects that the period between the time the service is provided to a patient and the time that the patient or a third-party payer pays for that service will be one year or less.

Rental Income

The Company leases certain real estate assets it owns to unrelated third parties, primarily medical office buildings to non-employed physicians. The Company recognizes rental income for these operating lease arrangements in which the Company is the lessor on a straight-line basis over the lease term in accordance with ASC 840-10, “Leases”. 

Concentration of Revenues

The Company’s revenues by source, as well as approximate percentages of revenues, were as follows for the three and six months ended June 30, 2018 and 2017 (in millions):

	Three Months Ended June 30,								Six Months Ended June 30,
	2018				2017				2018				2017
			% of				% of				% of				% of
	Amount		Revenues		Amount		Revenues		Amount		Revenues		Amount		Revenues
Medicare	$	577.3	36.8	%	$	594.8	37.3	%	$	1,185.2	37.4	%	$	1,225.2	38.0	%
Medicaid		219.7	14.0			229.9	14.4			439.4	13.8			472.7	14.6
HMOs, PPOs and other private insurers		736.5	46.9			736.1	46.1			1,475.1	46.5			1,454.4	45.1
Self-pay		6.6	0.4			6.0	0.4			12.8	0.4			12.0	0.4
Other		26.3	1.7			23.6	1.5			53.3	1.7			51.6	1.6
Revenue from contracts with customers		1,566.4	99.8			1,590.4	99.7			3,165.8	99.8			3,215.9	99.7
Rental income		3.4	0.2			4.4	0.3			6.8	0.2			9.1	0.3
Revenues	$	1,569.8	100.0	%	$	1,594.8	100.0	%	$	3,172.6	100.0	%	$	3,225.0	100.0	%

During the three months ended June 30, 2018 and 2017, approximately 50.8% and 51.7%, respectively, of the Company’s revenues related to patients participating in the Medicare and Medicaid programs, collectively.  During the six months ended June 30, 2018 and 2017, approximately 51.2% and 52.6%, respectively, of the Company’s revenues related to patients participating in the Medicare and Medicaid programs, collectively.  The Company’s management recognizes that revenues and receivables from government agencies are significant to the Company’s operations, but it does not believe that there are significant credit risks associated with these government agencies. The Company’s management does not believe that there are any other significant concentrations of revenues from any particular payer that would subject the Company to any significant credit risks in the collection of its accounts receivable.

The Company’s revenues by primary service type and approximate percentages of revenues were as follows for the three and six months ended June 30, 2018 and 2017 (in millions):

	Three Months Ended June 30,								Six Months Ended June 30,
	2018				2017				2018				2017
			% of				% of				% of				% of
	Amount		Revenues		Amount		Revenues		Amount		Revenues		Amount		Revenues
Outpatient services	$	938.7	59.8	%	$	933.7	58.5	%	$	1,872.2	59.0	%	$	1,853.9	57.5	%
Inpatient services		601.4	38.3			633.1	39.7			1,240.3	39.1			1,310.4	40.6
Non-patient (ancillary goods,
services and rental income)		29.7	1.9			28.0	1.8			60.1	1.9			60.7	1.9
Revenues	$	1,569.8	100.0	%	$	1,594.8	100.0	%	$	3,172.6	100.0	%	$	3,225.0	100.0	%

The Company’s revenues are particularly sensitive to regulatory and economic changes in certain states where the Company generates significant revenues. The following is an analysis by state of revenues as a percentage of the Company’s total revenues for those states in which the Company generated significant revenues for the three and six months ended June 30, 2018 and 2017:

		Three Months Ended June 30,								Six Months Ended June 30,
	Hospital Campuses	2018				2017				2018				2017
	in State as of			% of				% of				% of				% of
	June 30, 2018	Amount		Revenues		Amount		Revenues		Amount		Revenues		Amount		Revenues
North Carolina	9	$	237.9	15.2	%	$	240.0	15.1	%	$	476.4	15.0	%	$	477.1	14.8	%
Kentucky	10		181.6	11.6			170.7	10.7			364.2	11.5			349.8	10.8
Virginia	6		164.7	10.5			158.7	10.0			335.0	10.6			325.2	10.1
Pennsylvania	4		133.4	8.5			140.9	8.8			266.4	8.4			281.7	8.7
Tennessee	10		120.4	7.7			114.9	7.2			238.0	7.5			232.2	7.2
Michigan	3		112.3	7.2			113.5	7.1			224.8	7.1			225.9	7.0
New Mexico	2		94.1	6.0			87.8	5.5			188.7	5.9			172.7	5.4

Any changes in the current demographic, economic, competitive or regulatory conditions, or to Medicaid programs, in the above-mentioned states could have an adverse effect on the Company’s revenues or results of operations.

Certain changes have been made to the Company’s classification of historical sources of revenues and revenue concentration by state to reflect the Company’s adoption of ASC 606-10. 

XML

General and Administrative Costs

6 Months Ended

Jun. 30, 2018

General and Administrative Costs [Abstract]

General and Administrative Costs

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 health support center overhead costs, which were $52.4million and $56.9million for the three months ended June 30, 2018 and 2017, respectively, and $111.6 million and $118.7 million for the six months ended June 30, 2018 and 2017, respectively.

XML

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2018

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

Note 4. Fair Value of Financial Instruments

In accordance with 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. as administrative agent, and the lenders party thereto (the “Senior Credit Agreement”), 5.5% unsecured senior notes due December 1, 2021 (the “5.5% Senior Notes”), 5.875% unsecured senior notes due December 1, 2023 (the “5.875% Senior Notes”) and 5.375% unsecured senior notes due May 1, 2024 (the “5.375% Senior Notes”), excluding unamortized debt issuance costs and premium, as of June 30, 2018 and December 31, 2017 were as follows (in millions):

	Carrying Amount				Fair Value
	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Senior Credit Agreement:
Term Facility	$	665.0	$	673.8	$	665.0	$	673.8
Revolving Facility	$	40.0	$	-	$	40.0	$	-
5.5% Senior Notes	$	1,100.0	$	1,100.0	$	1,102.8	$	1,117.9
5.875% Senior Notes	$	500.0	$	500.0	$	496.9	$	504.4
5.375% Senior Notes	$	500.0	$	500.0	$	478.8	$	498.1

The fair values of the Company’s long-term debt instruments 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.

XML

Other Non-Operating Gains and Losses

6 Months Ended

Jun. 30, 2018

Other Non-Operating Gains and Losses [Abstract]

Other Non-Operating Gains and Losses

Note 5. Other Non-Operating Gains and Losses

Louisiana Market Divestitures

In March 2018, the Company entered into definitive agreements to sell the assets of Mercy Regional Medical Center (“Mercy”) located in Ville Platte, Louisiana, Acadian Medical Center (“Acadian”), which is a campus of Mercy located in Eunice, Louisiana, and Minden Medical Center (“Minden”) located in Minden, Louisiana. The Company anticipates these sales will be completed during the third quarter of 2018.

Included in the Company’s consolidated results of operations for the three months ended June 30, 2018 and 2017 are net operating losses before income taxes attributable to these three hospitals of $0.5 million and $2.0 million, respectively. Additionally, included in the Company’s consolidated results of operations for the six months ended June 30, 2018 and 2017 are net operating losses before income taxes attributable to these three hospitals of $1.7 million and $3.4 million, respectively.

The Company has recorded both an asset and a liability of$26.9 millionand$4.3 million, respectively, related to the assets and liabilities held for sale in connection with these transactions included under the captions “Other current assets” and “Other current liabilities” in the accompanying unaudited condensed consolidated balance sheet as of June 30, 2018.

During the six months ended June 30, 2018, the Company recognized impairment losses in the aggregate of $74.3 million, $58.2 million net of income taxes, or $1.47loss per diluted share, primarily in connection with the Company’s entry into definitive agreements to sell the assets of Mercy, Acadian and Minden, which is included under the caption “Other non-operating (gains) losses, net” in the accompanying unaudited condensed consolidated statement of income for the six months ended June 30, 2018.  The impairment losses include the write-down of property, equipment, allocated goodwill and certain other assets to their estimated fair values.

In-Home Healthcare Partnership

Effective January 1, 2017, the Company entered into a joint venture agreement with a wholly-owned subsidiary of LHC Group, Inc. (“LHC”) to form In-Home Healthcare Partnership (“IHHP”), the purpose of which is to own and operate the Company’s home health agencies and hospices and certain of LHC’s home health agencies and hospices, leveraging the combined expertise of the Company and LHC to enhance home health and hospice services in the communities served by the Company’s hospitals.  The Company accounts for its ownership interest in IHHP as an equity method investment in accordance with ASC 323-10, “Investments – Equity Method and Joint Ventures”. 

Throughout 2017, ownership and management of 19 of the Company’s home health agencies and 10 of the Company’s hospices were transferred to IHHP over the course of three phases.  Additionally, effective February 2, 2018, ownership and management of one remaining home health agency was transferred to IHHP in a fourth and final phase (“Phase IV”).  In connection with Phase IV, the Company transferred assets primarily comprised of accounts receivable and allocated goodwill in exchange for cash, and recognized a gain of approximately $1.6 million, $1.2 net of income taxes, or $0.03 earnings per diluted share, which is included under the caption “Other non-operating (gains) losses, net” in the accompanying unaudited condensed consolidated statement of income for the six months ended June 30, 2018.

Gain on Sale of Ancillary Rehabilitation Facility

During the three months ended June 30, 2018, the Company recognized a net gain of $3.2 million, $2.4 million net of income taxes, or $0.06 earnings per diluted share, primarily attributable to the sale of an ancillary rehabilitation facility at one of our hospital campuses.

XML

Redeemable Noncontrolling Interests

6 Months Ended

Jun. 30, 2018

Redeemable Noncontrolling Interests [Abstract]

Redeemable Noncontrolling Interests

Note 6. Redeemable Noncontrolling Interests

Certain of the Company’s joint venture partners’ noncontrolling interests include redemption features that cause these interests not to meet the requirements for classification as equity in accordance with ASC 480-10-S99-3, “Distinguishing Liabilities from Equity”. Redemption features related to these interests could require the Company to deliver cash, if exercised.  Accordingly, these redeemable noncontrolling interests are classified in the mezzanine section of the Company’s accompanying unaudited condensed consolidated balance sheets under the caption “Redeemable noncontrolling interests”. 

Effective June 1, 2018, the Company purchased its joint venture partner’s 20%noncontrolling interest in Fauquier Health (“Fauquier”), a 97 bed hospital and 113 bed long-term care facility located in Warrenton, Virginia,for approximately $49.9million.  The total transaction price includes the estimated fair value of the joint venture partner’s 20% interest in Fauquier in addition to undistributed earnings allocable to the joint venture partner as of the transaction date.As a result of this transaction, Fauquier became a wholly-owned subsidiary of the Company.

The following table presents the changes in the Company’s redeemable noncontrolling interests, which are included in the accompanying unaudited condensed consolidated balance sheets at June 30, 2018 and December 31, 2017 (in millions):

Balance at December 31, 2017	$	125.0
Net income attributable to redeemable noncontrolling interests		5.8
Fair value adjustments		12.6
Redemptions, net of sales		(35.1)
Distributions		(15.2)
Balance at June 30, 2018	$	93.1

XML

Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets [Abstract]

Goodwill and Intangible Assets

Note 7. 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 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, 2017 and did not incur an impairment charge.

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 June 30, 2018 and December 31, 2017 (in millions):

	June 30,		December 31,
	2018		2017
Amortized intangible assets:
Contract-based physician minimum revenue guarantees
Gross carrying amount	$	33.7	$	30.1
Accumulated amortization		(17.2)		(16.5)
Net total		16.5		13.6
Non-competition agreements and other
Gross carrying amount		18.2		18.2
Accumulated amortization		(14.2)		(13.3)
Net total		4.0		4.9
Total amortized intangible assets
Gross carrying amount		51.9		48.3
Accumulated amortization		(31.4)		(29.8)
Net total		20.5		18.5
Indefinite-lived intangible assets:
Certificates of need and certificates of need exemptions		35.9		35.9
Licenses, provider numbers, accreditations and other		21.8		21.9
Net total		57.7		57.8
Total intangible assets:
Gross carrying amount		109.6		106.1
Accumulated amortization		(31.4)		(29.8)
Net total	$	78.2	$	76.3

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.

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 three to five years and is included as an expense under the caption “Other operating expenses, net” in the accompanying unaudited condensed consolidated statements of income.  The Company’s liability for contract-based physician minimum revenue guarantees was $9.9million and $6.5 millionas ofJune 30, 2018 and December 31, 2017, respectively.These amounts are included in the accompanying unaudited condensed consolidated balance sheets under the caption “Other current liabilities”.

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 of new facilities, the acquisition or 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 has acquired facilities 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, Trade Names and Other

To operate certain of its facilities, including facilities acquired by the Company, the Company must obtain certain licenses, provider numbers and accreditations from federal, state and other accrediting agencies.  Additionally, the Company has acquired trade names in connection with certain acquisitions.  The Company has determined that these intangible assets have an indefinite useful life.

XML

Common Stock in Treasury

6 Months Ended

Jun. 30, 2018

Common Stock in Treasury [Abstract]

Common Stock in Treasury

Note 8.  Common Stock in Treasury

The Company’s Board of Directors authorizes, from time to time, plans for 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 Company repurchased approximately 0.8 million and 0.3 million shares for an aggregate purchase price, including commissions, of $40.0 million and $20.4 million at an average purchase price of $48.35 and $64.32 per share during the six months ended June 30, 2018 and 2017, respectively.  As of June 30, 2018, the Company had remaining authority to repurchase approximately $190.0 million in shares through April 24, 2019in accordance with a repurchase plan approved by the Company’s Board of Directors on October 24, 2017. The Company is not obligated to repurchase any specific number of shares under its repurchase plan.  The Company has designated the shares repurchased in accordance with its repurchase plans as treasury stock.

The Company redeems shares from employees for minimum statutory tax withholding purposes upon vesting of certain stock awards granted pursuant to the Company’s various stockholder approved stock-based compensation plans. The Company redeemed approximately 0.1 million shares vested under these plans during each of the six months ended June 30, 2018 and 2017  for aggregate purchase prices of approximately $2.9million and $6.0million, respectively. The Company has designated these shares as treasury stock.

XML

Stock-Based Compensation

6 Months Ended

Jun. 30, 2018

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 9. 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 and performance shares) to certain officers, employees and non-employee directors in accordance with the Company’s stockholder-approved Amended and Restated 2013 Long-Term Incentive Plan (the “LTIP”). 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.

Notwithstanding the specific grant vesting requirements, award agreements under the LTIP may provide for accelerated vesting in certain circumstances.  Award agreements generally provide for full vesting upon the death or disability of the participant or upon a change in control or termination of employment.  Some award agreements also provide for partial or full vesting upon involuntary termination of employment, provided that if the award is performance-based then the accelerated vesting would occur only if the performance goals are attained.

Stock Options

The Company granted options to purchase 496,781  and 885,122shares of the Company’s common stock to certain officers and employees in accordance with the LTIP during the six months ended June 30, 2018 and 2017, 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 of grant, determined based on the closing price on the trading date immediately prior to the grant date. The options granted during the six months ended June 30, 2018 and 2017 become ratably exercisable beginning one year from the date of grant to either three or four 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 a binomial lattice option valuation model and a single option award approach.  The Company uses a binomial lattice option valuation model 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 binomial lattice option valuation 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 or four years.  The stock options vest at either 33.3% or 25.0%on eachgrant anniversary date over three or four years of continued employment, respectively.

The following table shows the weighted average assumptions the Company used to develop the fair value estimates under its lattice option valuation models and the resulting estimates of weighted-average fair value per share of stock options granted during the six months ended June 30, 2018 and 2017:

	Six Months Ended June 30,
	2018			2017
Expected volatility		33.1	%		32.9	%
Risk-free interest rate		2.88	%		2.37	%
Expected dividends		-			-
Average expected term (years)		6.6			6.1
Fair value per share of stock options granted	$	16.46		$	21.42

The total intrinsic value of stock options exercised during the six months endedJune 30, 2018 and 2017 was $1.1million and $9.6million, respectively. The Company received$1.7 million and $15.3 million in cash from stock option exercises duringthe six months ended June 30, 2018 and 2017, respectively. The actual tax benefit realized for the tax deductions from stock option exercises was $0.2 million and $2.0 million for the six months ended June 30, 2018 and 2017, respectively.

As of June 30, 2018, there was $20.8million 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 1.7years.

Other Stock-Based Awards

The Company granted  309,511and  141,882 restricted stock units to certain officers, employees and non-employee directors in accordance with the LTIP during the six months ended June 30, 2018 and 2017, respectively. Vesting and payment of these restricted stock units are generally subject to continuing service of the employee or non-employee director over the ratable vesting periods beginning one year from the date of grant to either three or four years after the date of grant, or cliff-vesting periods one year from the date of grant. The fair values of these restricted stock units were determined based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date. 

During the six months ended June 30, 2018 and 2017,  the Company granted 272,671and 144,535targeted performance-based restricted stock units, respectively, that vest subject to the achievement of performance and market conditions.  In addition to the achievement of the performance and market conditions, these performance-based restricted stock units are generally subject to the continuing service of the employee over cliff-vesting periods of three or four years from the grant date.

The performance condition for the targeted performance-based restricted stock units granted during each of the six months ended June 30, 2018 and 2017 is based on the Company’s average level of achievement of annually established targets for diluted earnings per share over a three year performance measurement period.  Additionally, the number of shares payable under certain of the targeted performance-based restricted stock units granted during each of the six months ended June 30, 2018 and 2017 are based, in part, on the Company’s three-year annualized total shareholder return relative to a peer group, Standard and Poor’s Global Industry Classification Standard’s Sub-Industry:  Health Care Facilities with over $500.0 million in revenues or its equivalent.  For these restricted stock units, the number of shares payable at the end of the vesting periods ranges from 0% to 200% of the targeted units based on the Company’s actual performance results compared to the targets. For the restricted stock units not subject to the Company’s total shareholder return,  the number of shares payable at the end of the vesting periods ranges from 50% to 150% of the targeted units based on the Company’s actual performance results compared to the targets.

The fair value of these restricted stock units was determined based on a combination, where applicable, of the closing price of the Company’s common stock on the trading date immediately prior to the grant date for units subject to performance conditions, or at its Monte-Carlo simulation value for units subject to market conditions.  The Company recognizes compensation expense for the portion of the targeted performance-based restricted stock units subject to market conditions even if the condition is never satisfied.  However, if the performance conditions are not met for the portion of the targeted performance-based restricted stock units subject to such performance conditions, no compensation expense will be recognized, and any previously recognized compensation expense will be reversed.

As of June 30, 2018, there was $31.8million of total estimated unrecognized compensation cost related to other stock-based awards. 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 2.6years.

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 six months ended June 30, 2018 and 2017 (in millions):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Equity awards:
Other stock-based awards	$	3.7	$	2.1	$	8.5	$	5.0
Stock options		2.8		3.2		6.2		6.9
Total stock-based compensation expense	$	6.5	$	5.3	$	14.7	$	11.9
Tax benefit on stock-based compensation expense	$	1.5	$	2.1	$	3.3	$	4.6

The Company did not capitalize any stock-based compensation cost during the six months ended June 30, 2018 or 2017. As of June 30, 2018, there was $52.6million 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  2.2years.

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 10. Commitments and Contingencies

Legal Proceedings and General Liability Claims

Healthcare facilities 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 addition, healthcare facilities 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 healthcare facilities that submit false claims for payments to, or improperly retain identified overpayments from, governmental payers. Some states have adopted similar state whistleblower and false claims provisions. These qui tam or “whistleblower” actions initiated under the civil False Claims Act may be pending but placed under seal by the court to comply with the False Claims Act’s requirements for filing such suits. As a result, they could be proceeding without the Company’s knowledge. If a provider is found to be liable under the federal False Claims Act, the provider may be required to pay up to three times the actual damages sustained by the government plusmandatory civil monetary penalties of between $11,181to $22,363 for each separate false claim, subject to annual adjustment for inflation.

Although the healthcare industry has seen numerous ongoing investigations related to compliance and billing practices, hospitals, in particular, continue to be a primary enforcement target for the Office of Inspector General (“OIG”), the Department of Justice (“DOJ”) and other governmental agencies and fraud and abuse programs. Certain of the Company’s individual facilities have received, and from time to time, other facilities may receive, inquiries or subpoenas from Medicare Administrative Contractors, and federal and state agencies. Any proceedings against the Company may involve potentially substantial amounts as well as the possibility of civil, criminal, or administrative fines, penalties, or other sanctions, which could be material. Settlements of suits involving Medicare and Medicaid issues routinely require both monetary payments as well as corporate integrity agreements. 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 the Company’s financial position, results of operations and liquidity.

The Company does not control and cannot predict with certainty the progress or final outcome of discussions with government agencies, investigations and legal proceedings against the Company.  Therefore, the final amounts paid to resolve such matters, claims and obligations could be material and could materially differ from amounts currently recorded, if any.  Any such changes in the Company’s estimates or any adverse judgments could materially adversely impact the Company’s future results of operations and cash flows.

On September 16, 2013, the Company and two of its affiliated hospitals, Vaughan Regional Medical Center, located in Selma, Alabama, and Raleigh General Hospital, located in Raleigh, West Virginia, made a voluntary self-disclosure to the Civil Division of the DOJ. The voluntary self-disclosures related to concerns regarding the clinical appropriateness of certain interventional cardiology procedures conducted by one physician in each of these hospitals’ cardiac catheterization laboratories. The Company cooperated with the government in its investigations of the voluntary self-disclosure and provided additional documentation, as requested. The Company believes that the government’s investigations are now closed.   Following reviews by independent interventional cardiologists, the Company notified patients of these two physicians who may have received an unnecessary procedure of such fact.

The Company and/or Vaughan Regional Medical Center and several of the Company’s subsidiaries, as well as Dr. Seydi V. Aksut and certain parties unaffiliated with the Company, were named defendants in 26 individual lawsuits filed since December 2014 in the Circuit Court of Dallas County, Alabama, alleging that patients at Vaughan Regional Medical Center underwent improper interventional cardiology procedures.  These lawsuits, as they pertain to entities affiliated with the Company, were settled and dismissed in February 2017.

Two putative class action lawsuits were filed in the Circuit Court of Dallas County, Alabama.  The first putative class action lawsuit, filed in November 2014, sought certification of a class consisting of all Alabama citizens who underwent an invasive cardiology procedure at any Company-owned Alabama hospital and who received notice regarding the medical necessity of that procedure.  The Company reached an agreement in principle to settle this lawsuit, and on August 14, 2017, the Court entered an order certifying this class for settlement purposes only and granted the parties’ motion for preliminary approval of settlement.  A fairness hearing to determine whether the settlement was fair, reasonable, and adequate, and whether it should be approved by the Court, was conducted on November 8, 2017, at which time the settlement was approved. The Court’s order approving settlement became final and non-appealable on January 2, 2018.

The second putative class action lawsuit, filed in February 2015 , sought certification of a class of individuals that underwent an interventional cardiology procedure that was not medically necessary and performed by Dr. Aksut, and asserted, among other claims, claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). In March 2015, the Company removed the second class action to the U.S. District Court in Mobile, Alabama which dismissed with prejudice the RICO claims and refused to exercise jurisdiction over the remaining state law claims, and the lawsuit was remanded for further proceedings.  In July 2017, this lawsuit was settled and dismissed as it pertained to entities affiliated with the Company.

Additionally, the Company and two of its subsidiaries, including Raleigh General Hospital, as well as Dr. Kenneth Glaser, have been named in 82 individual lawsuits filed in the circuit court of Raleigh County, West Virginia.  Additionally, three patients had notified Raleigh General Hospital of their claims and intent to file a lawsuit.  These lawsuits and claims alleged that patients at Raleigh General Hospital underwent unnecessary interventional cardiology procedures.  In January 2017, all parties to these lawsuits and claims entered into settlement agreements settling all claims against the Company, its subsidiaries, Raleigh General Hospital and Dr. Kenneth Glaser.  Following these settlements, two additional lawsuits were filed against the same parties alleging the same claims.  These two lawsuits were settled in March 2017.  In February 2017, the Company received a notice of a threatened claim with respect to a putative class action lawsuit in the Circuit Court of Raleigh County, West Virginia against it, two of its subsidiaries, Raleigh General Hospital and Dr. Glaser, alleging that patients at Raleigh General Hospital underwent medically unnecessary interventional cardiology procedures and seeking to certify a class of such patients.  The threatened claims seek compensatory and punitive damages, costs, attorneys’ fees and other available damages.

The settlements described above were accomplished within the amounts previously accrued for loss contingencies for cardiology-related lawsuits. Additional claims with respect to these matters, including claims involving patients to whom the Company did not send notice, may be asserted against the Company or the hospitals.  Any present or future claims that are ultimately successful could result in the Company and/or the hospitals being found liable, and such liability could be material.The Company accrues an estimate for a contingent liability when losses are both probable and reasonably estimable.  The Company reviews its accruals each quarter and adjusts them to reflect the impact of developments, advice of legal counsel and other information pertaining to a particular matter.

Capital Expenditure Commitments

The Company is reconfiguring some of its facilities to more effectively accommodate patient services and to provide for a greater variety of services. The Company has incurred approximately $341.6million in costs related to uncompleted projects as of June 30, 2018, which is included under the caption “Construction in progress” in the accompanying unaudited condensed consolidated balance sheet. At June 30, 2018, these uncompleted projects had an estimated cost to complete of approximately $359.7million.The estimated timeframe for completion of these projects generally ranges from less than one year up to three years.  Additionally, the Company is subject to annual capital expenditure commitments in connection with several of its facilities.  As part of the Company’s current acquisition strategy, management expects capital expenditure commitments to be a component of future acquisitions.At June 30, 2018, the Company estimated its total remaining capital expenditure commitments, including commitments for routine projects, to be approximately $1,229.2 million, which generally have remaining terms of four to eight years.

Marquette Replacement Facility

In December 2015, the Company acquired a parcel of land in Marquette, Michigan,and in May 2016, began constructing a replacement hospital for the existing Marquette General Hospital (“Marquette General”).  The Company anticipates that it will continue to operate the existing hospital campus until such point that the replacement hospital is ready for its intended use.  The Company currently expects that the construction of the replacement hospital will conclude in early 2019.   The assets associated with Marquette General are currently recorded at their estimated fair value as measured under ASC 820-10, using estimated future net cash flows expected to be generated by market participants.  The estimate of fair value is subject to change as a result of negotiations with interested parties, regulatory approvals, or changes in market conditions.

Acquisitions

The Company has historically acquired businesses with prior operating histories. Acquired businesses may have unknown or contingent liabilities, including liabilities for failure to comply with healthcare laws and regulations, medical and general professional liabilities, workers compensation liabilities, previous tax liabilities and unacceptable business practices. Although the Company institutes policies designed to conform practices to its standards following completion of acquisitions, there can be no assurance that the Company will not become liable for past activities that may later be asserted to be improper by private plaintiffs or government agencies. Although the Company generally seeks to obtain indemnification from prospective sellers covering such matters, there can be no assurance that any such matter will be covered by indemnification, or if covered, that such indemnification will be adequate to cover potential losses and fines.

XML

Guarantor and Non-Guarantor Supplementary Information

6 Months Ended

Jun. 30, 2018

Guarantor and Non-Guarantor Supplementary Information [Abstract]

Guarantor and Non-Guarantor Supplementary Information

Note 11. Guarantor and Non-Guarantor Supplementary Information

The 5.5%Senior Notes, 5.875% Senior Notes and 5.375% Senior Notes are jointly and severally guaranteed on an unsecured senior basis by substantially all of the Company’s existing subsidiaries that guarantee the Company’s Senior Credit Agreement. The guarantors are 100% owned by the Company. Additionally, the guarantees are full and unconditional and are subject to customary release provisions as set forth in the agreements for the 5.5% Senior Notes, 5.875% Senior Notes and 5.375% Senior Notes.

The condensed consolidating financial information for the parent issuer, 100% owned guarantor subsidiaries, non-guarantor subsidiaries, certain eliminations and the Company is presented below for the three and six months ended June 30, 2018 and 2017 and as of June 30, 2018 and December 31, 2017.

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Income
For the Three Months Ended June 30, 2018

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Revenues	$	-	$	918.8	$	651.0	$	-	$	1,569.8
Salaries and benefits		6.5		434.4		299.3		-		740.2
Supplies		-		141.2		114.8		-		256.0
Other operating expenses, net		(1.0)		231.4		156.2		-		386.6
Equity in earnings of affiliates		(80.2)		-		-		80.2		-
Depreciation and amortization		-		51.5		29.9		-		81.4
Interest expense, net		28.7		2.1		6.2		-		37.0
Other non-operating gain, net		-		-		(3.2)		-		(3.2)
Management (income) fees		-		(18.2)		18.2		-		-
		(46.0)		842.4		621.4		80.2		1,498.0
Income before income taxes		46.0		76.4		29.6		(80.2)		71.8
(Benefit) provision for income taxes		(6.4)		23.4		-		-		17.0
Net income		52.4		53.0		29.6		(80.2)		54.8
Less:  Net income attributable to
noncontrolling interests and
redeemable noncontrolling interests		-		-		(2.4)		-		(2.4)
Net income attributable to LifePoint
Health, Inc.	$	52.4	$	53.0	$	27.2	$	(80.2)	$	52.4

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Income
For the Three Months Ended June 30, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Revenues	$	-	$	906.1	$	688.7	$	-	$	1,594.8
Salaries and benefits		5.3		430.8		325.9		-		762.0
Supplies		-		144.0		119.2		-		263.2
Other operating expenses, net		(2.0)		224.1		155.3		-		377.4
Equity in earnings of affiliates		(77.4)		-		-		77.4		-
Depreciation and amortization		-		54.7		34.0		-		88.7
Interest expense, net		31.6		1.4		4.6		-		37.6
Other non-operating loss (gain), net		-		3.4		(7.9)		-		(4.5)
Management (income) fees		-		(19.7)		19.7		-		-
		(42.5)		838.7		650.8		77.4		1,524.4
Income before income taxes		42.5		67.4		37.9		(77.4)		70.4
Provision for income taxes		-		24.4		-		-		24.4
Net income		42.5		43.0		37.9		(77.4)		46.0
Less:  Net income attributable to
noncontrolling interests and
redeemable noncontrolling interests		-		-		(3.5)		-		(3.5)
Net income attributable to LifePoint
Health, Inc.	$	42.5	$	43.0	$	34.4	$	(77.4)	$	42.5

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Income
For the Six Months Ended June 30, 2018

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Revenues	$	-	$	1,856.5	$	1,316.1	$	-	$	3,172.6
Salaries and benefits		14.7		883.6		604.4		-		1,502.7
Supplies		-		289.8		232.2		-		522.0
Other operating expenses, net		(1.6)		465.5		308.5		-		772.4
Equity in earnings of affiliates		(110.7)		-		-		110.7		-
Depreciation and amortization		-		104.1		58.9		-		163.0
Interest expense, net		58.0		3.3		12.7		-		74.0
Other non-operating losses (gains), net		-		70.1		(0.6)		-		69.5
Management (income) fees		-		(36.1)		36.1		-		-
		(39.6)		1,780.3		1,252.2		110.7		3,103.6
Income before income taxes		39.6		76.2		63.9		(110.7)		69.0
(Benefit) provision for income taxes		(4.0)		23.5		-		-		19.5
Net income		43.6		52.7		63.9		(110.7)		49.5
Less:  Net income attributable to
noncontrolling interests and
redeemable noncontrolling interests		-		-		(5.9)		-		(5.9)
Net income attributable to LifePoint
Health, Inc.	$	43.6	$	52.7	$	58.0	$	(110.7)	$	43.6

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Income
For the Six Months Ended June 30, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Revenues	$	-	$	1,833.2	$	1,391.8	$	-	$	3,225.0
Salaries and benefits		11.9		880.6		666.4		-		1,558.9
Supplies		-		287.5		243.9		-		531.4
Other operating expenses, net		(2.0)		441.1		307.8		-		746.9
Equity in earnings of affiliates		(179.4)		-		-		179.4		-
Depreciation and amortization		-		109.4		67.4		-		176.8
Interest expense, net		63.1		2.6		9.3		-		75.0
Other non-operating losses (gains), net		-		2.9		(33.3)		-		(30.4)
Management (income) fees		-		(38.6)		38.6		-		-
		(106.4)		1,685.5		1,300.1		179.4		3,058.6
Income before income taxes		106.4		147.7		91.7		(179.4)		166.4
Provision for income taxes		4.0		52.4		-		-		56.4
Net income		102.4		95.3		91.7		(179.4)		110.0
Less:  Net income attributable to
noncontrolling interests and
redeemable noncontrolling interests		-		-		(7.6)		-		(7.6)
Net income attributable to LifePoint
Health, Inc.	$	102.4	$	95.3	$	84.1	$	(179.4)	$	102.4

LIFEPOINT HEALTH, INC.
Condensed Consolidating Balance Sheets
June 30, 2018

(In millions)  

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	49.8	$	94.0	$	-	$	143.8
Accounts receivable		-		477.5		325.2		-		802.7
Inventories		-		93.3		59.6		-		152.9
Prepaid expenses		0.2		52.5		23.8		-		76.5
Other current assets		-		77.9		23.4		-		101.3
		0.2		751.0		526.0		-		1,277.2
Property and equipment:
Land		-		96.9		84.4		-		181.3
Buildings and improvements		-		1,754.8		802.7		-		2,557.5
Equipment		-		1,697.9		651.4		-		2,349.3
Construction in progress		-		98.2		243.4		-		341.6
		-		3,647.8		1,781.9		-		5,429.7
Accumulated depreciation		-		(1,888.3)		(537.7)		-		(2,426.0)
		-		1,759.5		1,244.2		-		3,003.7
Intangible assets, net		-		35.2		43.0		-		78.2
Investments in subsidiaries		2,854.9		-		-		(2,854.9)		-
Due from subsidiaries		2,192.0		-		-		(2,192.0)		-
Other long-term assets		14.5		58.7		50.0		-		123.2
Goodwill		-		1,421.7		312.1		-		1,733.8
Total assets	$	5,061.6	$	4,026.1	$	2,175.3	$	(5,046.9)	$	6,216.1
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	-	$	114.7	$	71.9	$	-	$	186.6
Accrued salaries		-		122.6		81.3		-		203.9
Other current liabilities		18.9		187.5		71.0		-		277.4
Current maturities of long-term debt		17.5		1.0		4.1		-		22.6
		36.4		425.8		228.3		-		690.5
Long-term debt, net		2,767.7		44.7		93.4		-		2,905.8
Due to Parent		-		1,359.7		832.3		(2,192.0)		-
Deferred income taxes		10.2		-		-		-		10.2
Long-term portion of reserves for self-insurance claims		-		85.6		55.4		-		141.0
Other long-term liabilities		-		50.2		35.7		-		85.9
Total liabilities		2,814.3		1,966.0		1,245.1		(2,192.0)		3,833.4
Redeemable noncontrolling interests		-		-		93.1		-		93.1
Total LifePoint Health, Inc. stockholders' equity		2,247.3		2,060.1		794.8		(2,854.9)		2,247.3
Noncontrolling interests		-		-		42.3		-		42.3
Total equity		2,247.3		2,060.1		837.1		(2,854.9)		2,289.6
Total liabilities and equity	$	5,061.6	$	4,026.1	$	2,175.3	$	(5,046.9)	$	6,216.1

LIFEPOINT HEALTH, INC.
Condensed Consolidating Balance Sheets
December 31, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	21.9	$	90.1	$	-	$	112.0
Accounts receivable		-		499.3		323.1		-		822.4
Inventories		-		94.2		58.9		-		153.1
Prepaid expenses		0.1		45.4		21.7		-		67.2
Other current assets		7.6		46.5		56.4		-		110.5
		7.7		707.3		550.2		-		1,265.2
Property and equipment:
Land		-		99.0		83.4		-		182.4
Buildings and improvements		-		1,826.5		738.2		-		2,564.7
Equipment		-		1,721.4		619.0		-		2,340.4
Construction in progress		-		89.0		264.8		-		353.8
		-		3,735.9		1,705.4		-		5,441.3
Accumulated depreciation		-		(1,868.2)		(482.8)		-		(2,351.0)
		-		1,867.7		1,222.6		-		3,090.3
Intangible assets, net		-		35.8		40.5		-		76.3
Investments in subsidiaries		2,756.5		-		-		(2,756.5)		-
Due from subsidiaries		2,262.9		-		-		(2,262.9)		-
Other long-term assets		15.6		53.5		47.7		-		116.8
Goodwill		-		1,425.7		312.1		-		1,737.8
Total assets	$	5,042.7	$	4,090.0	$	2,173.1	$	(5,019.4)	$	6,286.4
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	-	$	131.1	$	79.2	$	-	$	210.3
Accrued salaries		-		135.1		81.2		-		216.3
Other current liabilities		12.7		200.1		83.2		-		296.0
Current maturities of long-term debt		17.5		0.8		4.0		-		22.3
		30.2		467.1		247.6		-		744.9
Long-term debt, net		2,737.7		44.3		95.4		-		2,877.4
Due to Parent		-		1,415.9		847.0		(2,262.9)		-
Deferred income taxes		32.3		-		-		-		32.3
Long-term portion of reserves for self-insurance claims		-		83.0		57.9		-		140.9
Other long-term liabilities		-		45.6		34.5		-		80.1
Total liabilities		2,800.2		2,055.9		1,282.4		(2,262.9)		3,875.6
Redeemable noncontrolling interests		-		-		125.0		-		125.0
Total LifePoint Health, Inc. stockholders' equity		2,242.5		2,034.1		722.4		(2,756.5)		2,242.5
Noncontrolling interests		-		-		43.3		-		43.3
Total equity		2,242.5		2,034.1		765.7		(2,756.5)		2,285.8
Total liabilities and equity	$	5,042.7	$	4,090.0	$	2,173.1	$	(5,019.4)	$	6,286.4

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Cash Flows
For the Three Months Ended June 30, 2018

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	52.4	$	53.0	$	29.6	$	(80.2)	$	54.8
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Equity in earnings of affiliates		(80.2)		-		-		80.2		-
Stock-based compensation		6.5		-		-		-		6.5
Depreciation and amortization		-		51.5		29.9		-		81.4
Other non-cash amortization		1.2		1.1		0.4		-		2.7
Other non-operating gain, net		-		-		(3.2)		-		(3.2)
Deferred income taxes		3.4		-		-		-		3.4
Reserve for self-insurance claims, net of payments		-		1.5		(1.0)		-		0.5
Increase (decrease) in cash from operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable		-		9.0		17.6		-		26.6
Inventories, prepaid expenses and other current assets		(0.2)		(9.2)		29.6		-		20.2
Accounts payable, accrued salaries and other current liabilities		(29.0)		(9.6)		(12.1)		-		(50.7)
Income taxes payable/receivable		(12.7)		-		-		-		(12.7)
Other		(0.4)		(0.1)		5.8		-		5.3
Net cash (used in) provided by operating activities		(59.0)		97.2		96.6		-		134.8
Cash flows from investing activities:
Purchases of property and equipment		-		(33.4)		(48.0)		-		(81.4)
Other		(0.7)		(0.1)		3.5		-		2.7
Net cash used in investing activities		(0.7)		(33.5)		(44.5)		-		(78.7)
Cash flows from financing activities:
Proceeds from borrowings		75.0		-		-		-		75.0
Payments of borrowings		(64.4)		-		-		-		(64.4)
Repurchases of common stock		(10.1)		-		-		-		(10.1)
Redemption of noncontrolling interest and redeemable
noncontrolling interests, net of sales		-		-		(36.9)		-		(36.9)
Distributions to noncontrolling interests and
redeemable noncontrolling interests		-		-		(15.1)		-		(15.1)
Proceeds from exercise of stock options		0.4		-		-		-		0.4
Change in intercompany balances with affiliates, net		58.8		(64.7)		5.9		-		-
Other		-		0.2		(1.5)		-		(1.3)
Net cash provided by (used in) financing activities		59.7		(64.5)		(47.6)		-		(52.4)
Change in cash and cash equivalents		-		(0.8)		4.5		-		3.7
Cash and cash equivalents at beginning of period		-		50.6		89.5		-		140.1
Cash and cash equivalents at end of period	$	-	$	49.8	$	94.0	$	-	$	143.8

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Cash Flows
For the Three Months Ended June 30, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	42.5	$	43.0	$	37.9	$	(77.4)	$	46.0
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Equity in earnings of affiliates		(77.4)		-		-		77.4		-
Stock-based compensation		5.3		-		-		-		5.3
Depreciation and amortization		-		54.7		34.0		-		88.7
Other non-cash amortization		1.2		1.4		0.5		-		3.1
Other non-operating loss (gain), net		-		3.4		(7.9)		-		(4.5)
Deferred income taxes		0.1		-		-		-		0.1
Reserve for self-insurance claims, net of payments		-		(2.5)		(2.6)		-		(5.1)
Increase (decrease) in cash from operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable		-		11.4		9.6		-		21.0
Inventories, prepaid expenses and other current assets		(0.1)		(9.5)		29.9		-		20.3
Accounts payable, accrued salaries and other current liabilities		(28.4)		23.2		(27.5)		-		(32.7)
Income taxes payable/receivable		(30.5)		-		-		-		(30.5)
Other		(0.1)		2.9		(3.9)		-		(1.1)
Net cash (used in) provided by operating activities		(87.4)		128.0		70.0		-		110.6
Cash flows from investing activities:
Purchases of property and equipment		-		(30.8)		(58.4)		-		(89.2)
Proceeds from sale of businesses		-		2.1		-		-		2.1
Other		0.3		(0.3)		0.8		-		0.8
Net cash provided by (used in) investing activities		0.3		(29.0)		(57.6)		-		(86.3)
Cash flows from financing activities:
Proceeds from borrowings		60.0		-		-		-		60.0
Payments of borrowings		(64.4)		-		-		-		(64.4)
Repurchases of common stock		(20.5)		-		-		-		(20.5)
Redemption of noncontrolling interest and redeemable
noncontrolling interests, net of sales		-		-		(0.2)		-		(0.2)
Distributions to noncontrolling interests and
redeemable noncontrolling interests		-		-		(3.0)		-		(3.0)
Proceeds from exercise of stock options		5.9		-		-		-		5.9
Change in intercompany balances with affiliates, net		106.4		(89.1)		(17.3)		-		-
Other		(0.3)		(2.3)		5.6		-		3.0
Net cash provided by (used in) in financing activities		87.1		(91.4)		(14.9)		-		(19.2)
Change in cash and cash equivalents		-		7.6		(2.5)		-		5.1
Cash and cash equivalents at beginning of period		-		31.6		94.2		-		125.8
Cash and cash equivalents at end of period	$	-	$	39.2	$	91.7	$	-	$	130.9

XML

Subsequent Event

6 Months Ended

Jun. 30, 2018

Subsequent Event [Abstract]

Subsequent Event

Note 12.  Subsequent Event

On July 22, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with RegionalCare Hospital Partners Holdings, Inc. (D/B/A RCCH HealthCare Partners), a Delaware corporation (“RCCH”), and Legend Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of RCCH (“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a subsidiary of RCCH on the terms and conditions set forth in the Merger Agreement. RCCH is owned by certain funds managed by affiliates of Apollo Global Management, LLC.   At the effective time of the Merger, each outstanding share of the Company’s common stock (other than common stock held directly by RCCH or Merger Sub, common stock held by the Company as treasury stock, common stock held by any subsidiary of either the Company or RCCH (other than Merger Sub) and common stock owned by holders who have properly exercised appraisal rights under Delaware law) will be converted into the right to receive $65.00 in cash, without interest.   The consummation of the proposed Merger is subject to the satisfaction or waiver of specified closing conditions, including (i) the affirmative vote in favor of the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of the Company’s common stock entitled to vote thereon, (ii) receipt of certain regulatory approvals, including the expiration or early termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the absence of any statute, regulation, ruling or injunction of any governmental entity or any other order prohibiting or enjoining consummation of the Merger and (iv) other customary closing conditions.  Additional information about the proposed Merger is set forth in the Company’s Current Report on Form 8-K filed with the SEC on July 23, 2018 and the exhibits thereto, including the Merger Agreement.

XML

Organization, Basis of Presentation and Recently Issued Accounting Standards (Policy)

6 Months Ended

Jun. 30, 2018

Organization, Basis of Presentation and Recently Issued Accounting Standards [Abstract]

Organization

Organization

LifePoint Health, Inc., a Delaware corporation, acting through its subsidiaries, owns and operates community hospitals, regional health systems, physician practices, outpatient centers, and post-acute facilities in 22 states throughout the United States (“U.S.”). Unless the context otherwise indicates, LifePoint Health, Inc. and its subsidiaries are referred to herein as “LifePoint” or the “Company.”

Basis of Presentation

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 six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. 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, 2017.

Additionally, the accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all subsidiaries and entities controlled by the Company through its direct or indirect ownership of a majority interest and exclusive rights granted to the Company as the sole general partner or controlling member of such entities, including Duke LifePoint Healthcare, a joint venture between LifePoint and a wholly-controlled affiliate of Duke University Health System, Inc., and the Regional Health Network of Kentucky and Southern Indiana, a joint venture between LifePoint and Norton Healthcare, Inc.  Furthermore, the Company consolidates any entities for which it receives the majority of the entity’s expected returns or is at risk for the majority of the entity’s expected losses based upon its investment or financial interest in the entity.  All significant intercompany accounts and transactions within the Company have been eliminated in consolidation.

Adoption of Recently Issued Accounting Standards

Adoption of Recently Issued Accounting Standards

ASC 606-10, “Revenue from Contracts with Customers”

Effective January 1, 2018, the Company adopted the provisions of Accounting Standards Codification (“ASC”) 606-10, “Revenue from Contracts with Customers” (“ASC 606-10”), which supersedes most existing revenue recognition guidance, including industry-specific healthcare guidance, by applying the full retrospective method for all periods presented.  ASC 606-10 provides for a single comprehensive principles-based standard for the recognition of revenue across all industries through the application of the following five-step process:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

The adoption of the provisions of ASC 606-10 had no impact on the Company’s current or historical financial position, results of operations or cash flows.  Additionally, management does not anticipate that the provisions of ASC 606-10 will have an impact on the amount or timing of when the Company recognizes revenue prospectively.  However, in accordance with ASC 606-10, the Company now recognizes the majority of its previously reported provision for doubtful accounts, primarily related to its self-pay patient population, as a direct reduction to revenues as an implicit pricing concession, instead of separately as a discrete deduction to arrive at revenue, and the related presentation of the allowance for doubtful accounts has been eliminated for all periods presented.  The Company’s revenue recognition and accounts receivable policies are more fully described in Note 2.

SAB 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act”

The Company is applying the guidance in accordance with Staff Accounting Bulletin 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act”, when accounting for the enactment-date effects of the Tax Cuts and Jobs Act (the “Tax Act”).  As of June 30, 2018, the Company has not completed its accounting for all of the tax effects of the Tax Act, and the Company did not make any adjustments to the provisional amounts that it recorded at December 31, 2017 during the six months ended June 30, 2018.  As the Company completes its analysis of the Tax Act, including the collection of data and interpretation of any additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service, and other standard-setting bodies, it may make adjustments to the provisional amounts.  Those adjustments may materially impact the Company’s provision for income taxes in the period in which the adjustments are made.

Accounting Standards Not Yet Adopted

Accounting Standards Not Yet Adopted

ASU 2016-2, “Leases”

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-2 “Leases” (“ASU 2016-2”).  ASU 2016-2 requires the rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet.  ASU 2016-2 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years.  Early adoption is permitted. The Company anticipates that the adoption of ASU 2016-2 will result in an increase in both total assets and total liabilities reflected in the Company’s balance sheets. The Company is still evaluating the impact that the adoption of this standard will have on its policies, procedures, financial disclosures, and control framework.

ASU 2018-2, “Income Statement – Reporting Comprehensive Income”

In January 2018, the FASB issued ASU 2018-2, “Income Statement – Reporting Comprehensive Income (Topic 220)” (“ASU 2018-2”), which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded income tax effects resulting from the Tax Act.  ASU 2018-2 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years.  Early adoption is permitted.  The Company has not determined whether or not it will adopt ASU 2018-2, but the Company does not anticipate that the adoption of this standard would have a significant impact on its balance sheet. 

XML

Revenue Recognition and Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2018

Revenue Recognition and Accounts Receivable [Abstract]

Schedule of Revenues by Payer and Approximate Percentages of Revenues

	Three Months Ended June 30,								Six Months Ended June 30,
	2018				2017				2018				2017
			% of				% of				% of				% of
	Amount		Revenues		Amount		Revenues		Amount		Revenues		Amount		Revenues
Medicare	$	577.3	36.8	%	$	594.8	37.3	%	$	1,185.2	37.4	%	$	1,225.2	38.0	%
Medicaid		219.7	14.0			229.9	14.4			439.4	13.8			472.7	14.6
HMOs, PPOs and other private insurers		736.5	46.9			736.1	46.1			1,475.1	46.5			1,454.4	45.1
Self-pay		6.6	0.4			6.0	0.4			12.8	0.4			12.0	0.4
Other		26.3	1.7			23.6	1.5			53.3	1.7			51.6	1.6
Revenue from contracts with customers		1,566.4	99.8			1,590.4	99.7			3,165.8	99.8			3,215.9	99.7
Rental income		3.4	0.2			4.4	0.3			6.8	0.2			9.1	0.3
Revenues	$	1,569.8	100.0	%	$	1,594.8	100.0	%	$	3,172.6	100.0	%	$	3,225.0	100.0	%

Schedule of Revenues by Primary Service Type and Approximate Percentages of Revenues

	Three Months Ended June 30,								Six Months Ended June 30,
	2018				2017				2018				2017
			% of				% of				% of				% of
	Amount		Revenues		Amount		Revenues		Amount		Revenues		Amount		Revenues
Outpatient services	$	938.7	59.8	%	$	933.7	58.5	%	$	1,872.2	59.0	%	$	1,853.9	57.5	%
Inpatient services		601.4	38.3			633.1	39.7			1,240.3	39.1			1,310.4	40.6
Non-patient (ancillary goods,
services and rental income)		29.7	1.9			28.0	1.8			60.1	1.9			60.7	1.9
Revenues	$	1,569.8	100.0	%	$	1,594.8	100.0	%	$	3,172.6	100.0	%	$	3,225.0	100.0	%

Schedule of Revenues by State and Approximate Percentages of Revenues

		Three Months Ended June 30,								Six Months Ended June 30,
	Hospital Campuses	2018				2017				2018				2017
	in State as of			% of				% of				% of				% of
	June 30, 2018	Amount		Revenues		Amount		Revenues		Amount		Revenues		Amount		Revenues
North Carolina	9	$	237.9	15.2	%	$	240.0	15.1	%	$	476.4	15.0	%	$	477.1	14.8	%
Kentucky	10		181.6	11.6			170.7	10.7			364.2	11.5			349.8	10.8
Virginia	6		164.7	10.5			158.7	10.0			335.0	10.6			325.2	10.1
Pennsylvania	4		133.4	8.5			140.9	8.8			266.4	8.4			281.7	8.7
Tennessee	10		120.4	7.7			114.9	7.2			238.0	7.5			232.2	7.2
Michigan	3		112.3	7.2			113.5	7.1			224.8	7.1			225.9	7.0
New Mexico	2		94.1	6.0			87.8	5.5			188.7	5.9			172.7	5.4

XML

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value of Financial Instruments [Abstract]

Schedule of Carrying Amount and Fair Value

	Carrying Amount				Fair Value
	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Senior Credit Agreement:
Term Facility	$	665.0	$	673.8	$	665.0	$	673.8
Revolving Facility	$	40.0	$	-	$	40.0	$	-
5.5% Senior Notes	$	1,100.0	$	1,100.0	$	1,102.8	$	1,117.9
5.875% Senior Notes	$	500.0	$	500.0	$	496.9	$	504.4
5.375% Senior Notes	$	500.0	$	500.0	$	478.8	$	498.1

XML

Redeemable Noncontrolling Interests (Tables)

6 Months Ended

Jun. 30, 2018

Redeemable Noncontrolling Interests [Abstract]

Schedule of Changes in Redeemable Noncontrolling Interests

Balance at December 31, 2017	$	125.0
Net income attributable to redeemable noncontrolling interests		5.8
Fair value adjustments		12.6
Redemptions, net of sales		(35.1)
Distributions		(15.2)
Balance at June 30, 2018	$	93.1

XML

Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets [Abstract]

Schedule of Intangible Assets

	June 30,		December 31,
	2018		2017
Amortized intangible assets:
Contract-based physician minimum revenue guarantees
Gross carrying amount	$	33.7	$	30.1
Accumulated amortization		(17.2)		(16.5)
Net total		16.5		13.6
Non-competition agreements and other
Gross carrying amount		18.2		18.2
Accumulated amortization		(14.2)		(13.3)
Net total		4.0		4.9
Total amortized intangible assets
Gross carrying amount		51.9		48.3
Accumulated amortization		(31.4)		(29.8)
Net total		20.5		18.5
Indefinite-lived intangible assets:
Certificates of need and certificates of need exemptions		35.9		35.9
Licenses, provider numbers, accreditations and other		21.8		21.9
Net total		57.7		57.8
Total intangible assets:
Gross carrying amount		109.6		106.1
Accumulated amortization		(31.4)		(29.8)
Net total	$	78.2	$	76.3

XML

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Stock-Based Compensation [Abstract]

Schedule of Estimates of Weighted-Average Fair Value Per Share of Stock Options Granted

	Six Months Ended June 30,
	2018			2017
Expected volatility		33.1	%		32.9	%
Risk-free interest rate		2.88	%		2.37	%
Expected dividends		-			-
Average expected term (years)		6.6			6.1
Fair value per share of stock options granted	$	16.46		$	21.42

Schedule of Total Stock-Based Compensation Expense and Total Recognized Tax Benefits

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Equity awards:
Other stock-based awards	$	3.7	$	2.1	$	8.5	$	5.0
Stock options		2.8		3.2		6.2		6.9
Total stock-based compensation expense	$	6.5	$	5.3	$	14.7	$	11.9
Tax benefit on stock-based compensation expense	$	1.5	$	2.1	$	3.3	$	4.6

XML

Guarantor and Non-Guarantor Supplementary Information (Tables)

6 Months Ended

Jun. 30, 2018

Guarantor and Non-Guarantor Supplementary Information [Abstract]

Schedule of Condensed Consolidating Statements of Operations

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Income
For the Three Months Ended June 30, 2018

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Revenues	$	-	$	918.8	$	651.0	$	-	$	1,569.8
Salaries and benefits		6.5		434.4		299.3		-		740.2
Supplies		-		141.2		114.8		-		256.0
Other operating expenses, net		(1.0)		231.4		156.2		-		386.6
Equity in earnings of affiliates		(80.2)		-		-		80.2		-
Depreciation and amortization		-		51.5		29.9		-		81.4
Interest expense, net		28.7		2.1		6.2		-		37.0
Other non-operating gain, net		-		-		(3.2)		-		(3.2)
Management (income) fees		-		(18.2)		18.2		-		-
		(46.0)		842.4		621.4		80.2		1,498.0
Income before income taxes		46.0		76.4		29.6		(80.2)		71.8
(Benefit) provision for income taxes		(6.4)		23.4		-		-		17.0
Net income		52.4		53.0		29.6		(80.2)		54.8
Less:  Net income attributable to
noncontrolling interests and
redeemable noncontrolling interests		-		-		(2.4)		-		(2.4)
Net income attributable to LifePoint
Health, Inc.	$	52.4	$	53.0	$	27.2	$	(80.2)	$	52.4

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Income
For the Three Months Ended June 30, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Revenues	$	-	$	906.1	$	688.7	$	-	$	1,594.8
Salaries and benefits		5.3		430.8		325.9		-		762.0
Supplies		-		144.0		119.2		-		263.2
Other operating expenses, net		(2.0)		224.1		155.3		-		377.4
Equity in earnings of affiliates		(77.4)		-		-		77.4		-
Depreciation and amortization		-		54.7		34.0		-		88.7
Interest expense, net		31.6		1.4		4.6		-		37.6
Other non-operating loss (gain), net		-		3.4		(7.9)		-		(4.5)
Management (income) fees		-		(19.7)		19.7		-		-
		(42.5)		838.7		650.8		77.4		1,524.4
Income before income taxes		42.5		67.4		37.9		(77.4)		70.4
Provision for income taxes		-		24.4		-		-		24.4
Net income		42.5		43.0		37.9		(77.4)		46.0
Less:  Net income attributable to
noncontrolling interests and
redeemable noncontrolling interests		-		-		(3.5)		-		(3.5)
Net income attributable to LifePoint
Health, Inc.	$	42.5	$	43.0	$	34.4	$	(77.4)	$	42.5

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Income
For the Six Months Ended June 30, 2018

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Revenues	$	-	$	1,856.5	$	1,316.1	$	-	$	3,172.6
Salaries and benefits		14.7		883.6		604.4		-		1,502.7
Supplies		-		289.8		232.2		-		522.0
Other operating expenses, net		(1.6)		465.5		308.5		-		772.4
Equity in earnings of affiliates		(110.7)		-		-		110.7		-
Depreciation and amortization		-		104.1		58.9		-		163.0
Interest expense, net		58.0		3.3		12.7		-		74.0
Other non-operating losses (gains), net		-		70.1		(0.6)		-		69.5
Management (income) fees		-		(36.1)		36.1		-		-
		(39.6)		1,780.3		1,252.2		110.7		3,103.6
Income before income taxes		39.6		76.2		63.9		(110.7)		69.0
(Benefit) provision for income taxes		(4.0)		23.5		-		-		19.5
Net income		43.6		52.7		63.9		(110.7)		49.5
Less:  Net income attributable to
noncontrolling interests and
redeemable noncontrolling interests		-		-		(5.9)		-		(5.9)
Net income attributable to LifePoint
Health, Inc.	$	43.6	$	52.7	$	58.0	$	(110.7)	$	43.6

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Income
For the Six Months Ended June 30, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Revenues	$	-	$	1,833.2	$	1,391.8	$	-	$	3,225.0
Salaries and benefits		11.9		880.6		666.4		-		1,558.9
Supplies		-		287.5		243.9		-		531.4
Other operating expenses, net		(2.0)		441.1		307.8		-		746.9
Equity in earnings of affiliates		(179.4)		-		-		179.4		-
Depreciation and amortization		-		109.4		67.4		-		176.8
Interest expense, net		63.1		2.6		9.3		-		75.0
Other non-operating losses (gains), net		-		2.9		(33.3)		-		(30.4)
Management (income) fees		-		(38.6)		38.6		-		-
		(106.4)		1,685.5		1,300.1		179.4		3,058.6
Income before income taxes		106.4		147.7		91.7		(179.4)		166.4
Provision for income taxes		4.0		52.4		-		-		56.4
Net income		102.4		95.3		91.7		(179.4)		110.0
Less:  Net income attributable to
noncontrolling interests and
redeemable noncontrolling interests		-		-		(7.6)		-		(7.6)
Net income attributable to LifePoint
Health, Inc.	$	102.4	$	95.3	$	84.1	$	(179.4)	$	102.4

Schedule of Condensed Consolidating Balance Sheets

LIFEPOINT HEALTH, INC.
Condensed Consolidating Balance Sheets
June 30, 2018

(In millions)  

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	49.8	$	94.0	$	-	$	143.8
Accounts receivable		-		477.5		325.2		-		802.7
Inventories		-		93.3		59.6		-		152.9
Prepaid expenses		0.2		52.5		23.8		-		76.5
Other current assets		-		77.9		23.4		-		101.3
		0.2		751.0		526.0		-		1,277.2
Property and equipment:
Land		-		96.9		84.4		-		181.3
Buildings and improvements		-		1,754.8		802.7		-		2,557.5
Equipment		-		1,697.9		651.4		-		2,349.3
Construction in progress		-		98.2		243.4		-		341.6
		-		3,647.8		1,781.9		-		5,429.7
Accumulated depreciation		-		(1,888.3)		(537.7)		-		(2,426.0)
		-		1,759.5		1,244.2		-		3,003.7
Intangible assets, net		-		35.2		43.0		-		78.2
Investments in subsidiaries		2,854.9		-		-		(2,854.9)		-
Due from subsidiaries		2,192.0		-		-		(2,192.0)		-
Other long-term assets		14.5		58.7		50.0		-		123.2
Goodwill		-		1,421.7		312.1		-		1,733.8
Total assets	$	5,061.6	$	4,026.1	$	2,175.3	$	(5,046.9)	$	6,216.1
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	-	$	114.7	$	71.9	$	-	$	186.6
Accrued salaries		-		122.6		81.3		-		203.9
Other current liabilities		18.9		187.5		71.0		-		277.4
Current maturities of long-term debt		17.5		1.0		4.1		-		22.6
		36.4		425.8		228.3		-		690.5
Long-term debt, net		2,767.7		44.7		93.4		-		2,905.8
Due to Parent		-		1,359.7		832.3		(2,192.0)		-
Deferred income taxes		10.2		-		-		-		10.2
Long-term portion of reserves for self-insurance claims		-		85.6		55.4		-		141.0
Other long-term liabilities		-		50.2		35.7		-		85.9
Total liabilities		2,814.3		1,966.0		1,245.1		(2,192.0)		3,833.4
Redeemable noncontrolling interests		-		-		93.1		-		93.1
Total LifePoint Health, Inc. stockholders' equity		2,247.3		2,060.1		794.8		(2,854.9)		2,247.3
Noncontrolling interests		-		-		42.3		-		42.3
Total equity		2,247.3		2,060.1		837.1		(2,854.9)		2,289.6
Total liabilities and equity	$	5,061.6	$	4,026.1	$	2,175.3	$	(5,046.9)	$	6,216.1

LIFEPOINT HEALTH, INC.
Condensed Consolidating Balance Sheets
December 31, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	21.9	$	90.1	$	-	$	112.0
Accounts receivable		-		499.3		323.1		-		822.4
Inventories		-		94.2		58.9		-		153.1
Prepaid expenses		0.1		45.4		21.7		-		67.2
Other current assets		7.6		46.5		56.4		-		110.5
		7.7		707.3		550.2		-		1,265.2
Property and equipment:
Land		-		99.0		83.4		-		182.4
Buildings and improvements		-		1,826.5		738.2		-		2,564.7
Equipment		-		1,721.4		619.0		-		2,340.4
Construction in progress		-		89.0		264.8		-		353.8
		-		3,735.9		1,705.4		-		5,441.3
Accumulated depreciation		-		(1,868.2)		(482.8)		-		(2,351.0)
		-		1,867.7		1,222.6		-		3,090.3
Intangible assets, net		-		35.8		40.5		-		76.3
Investments in subsidiaries		2,756.5		-		-		(2,756.5)		-
Due from subsidiaries		2,262.9		-		-		(2,262.9)		-
Other long-term assets		15.6		53.5		47.7		-		116.8
Goodwill		-		1,425.7		312.1		-		1,737.8
Total assets	$	5,042.7	$	4,090.0	$	2,173.1	$	(5,019.4)	$	6,286.4
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	-	$	131.1	$	79.2	$	-	$	210.3
Accrued salaries		-		135.1		81.2		-		216.3
Other current liabilities		12.7		200.1		83.2		-		296.0
Current maturities of long-term debt		17.5		0.8		4.0		-		22.3
		30.2		467.1		247.6		-		744.9
Long-term debt, net		2,737.7		44.3		95.4		-		2,877.4
Due to Parent		-		1,415.9		847.0		(2,262.9)		-
Deferred income taxes		32.3		-		-		-		32.3
Long-term portion of reserves for self-insurance claims		-		83.0		57.9		-		140.9
Other long-term liabilities		-		45.6		34.5		-		80.1
Total liabilities		2,800.2		2,055.9		1,282.4		(2,262.9)		3,875.6
Redeemable noncontrolling interests		-		-		125.0		-		125.0
Total LifePoint Health, Inc. stockholders' equity		2,242.5		2,034.1		722.4		(2,756.5)		2,242.5
Noncontrolling interests		-		-		43.3		-		43.3
Total equity		2,242.5		2,034.1		765.7		(2,756.5)		2,285.8
Total liabilities and equity	$	5,042.7	$	4,090.0	$	2,173.1	$	(5,019.4)	$	6,286.4

Schedule of Condensed Consolidating Statements of Cash Flows

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Cash Flows
For the Three Months Ended June 30, 2018

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	52.4	$	53.0	$	29.6	$	(80.2)	$	54.8
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Equity in earnings of affiliates		(80.2)		-		-		80.2		-
Stock-based compensation		6.5		-		-		-		6.5
Depreciation and amortization		-		51.5		29.9		-		81.4
Other non-cash amortization		1.2		1.1		0.4		-		2.7
Other non-operating gain, net		-		-		(3.2)		-		(3.2)
Deferred income taxes		3.4		-		-		-		3.4
Reserve for self-insurance claims, net of payments		-		1.5		(1.0)		-		0.5
Increase (decrease) in cash from operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable		-		9.0		17.6		-		26.6
Inventories, prepaid expenses and other current assets		(0.2)		(9.2)		29.6		-		20.2
Accounts payable, accrued salaries and other current liabilities		(29.0)		(9.6)		(12.1)		-		(50.7)
Income taxes payable/receivable		(12.7)		-		-		-		(12.7)
Other		(0.4)		(0.1)		5.8		-		5.3
Net cash (used in) provided by operating activities		(59.0)		97.2		96.6		-		134.8
Cash flows from investing activities:
Purchases of property and equipment		-		(33.4)		(48.0)		-		(81.4)
Other		(0.7)		(0.1)		3.5		-		2.7
Net cash used in investing activities		(0.7)		(33.5)		(44.5)		-		(78.7)
Cash flows from financing activities:
Proceeds from borrowings		75.0		-		-		-		75.0
Payments of borrowings		(64.4)		-		-		-		(64.4)
Repurchases of common stock		(10.1)		-		-		-		(10.1)
Redemption of noncontrolling interest and redeemable
noncontrolling interests, net of sales		-		-		(36.9)		-		(36.9)
Distributions to noncontrolling interests and
redeemable noncontrolling interests		-		-		(15.1)		-		(15.1)
Proceeds from exercise of stock options		0.4		-		-		-		0.4
Change in intercompany balances with affiliates, net		58.8		(64.7)		5.9		-		-
Other		-		0.2		(1.5)		-		(1.3)
Net cash provided by (used in) financing activities		59.7		(64.5)		(47.6)		-		(52.4)
Change in cash and cash equivalents		-		(0.8)		4.5		-		3.7
Cash and cash equivalents at beginning of period		-		50.6		89.5		-		140.1
Cash and cash equivalents at end of period	$	-	$	49.8	$	94.0	$	-	$	143.8

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Cash Flows
For the Three Months Ended June 30, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	42.5	$	43.0	$	37.9	$	(77.4)	$	46.0
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Equity in earnings of affiliates		(77.4)		-		-		77.4		-
Stock-based compensation		5.3		-		-		-		5.3
Depreciation and amortization		-		54.7		34.0		-		88.7
Other non-cash amortization		1.2		1.4		0.5		-		3.1
Other non-operating loss (gain), net		-		3.4		(7.9)		-		(4.5)
Deferred income taxes		0.1		-		-		-		0.1
Reserve for self-insurance claims, net of payments		-		(2.5)		(2.6)		-		(5.1)
Increase (decrease) in cash from operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable		-		11.4		9.6		-		21.0
Inventories, prepaid expenses and other current assets		(0.1)		(9.5)		29.9		-		20.3
Accounts payable, accrued salaries and other current liabilities		(28.4)		23.2		(27.5)		-		(32.7)
Income taxes payable/receivable		(30.5)		-		-		-		(30.5)
Other		(0.1)		2.9		(3.9)		-		(1.1)
Net cash (used in) provided by operating activities		(87.4)		128.0		70.0		-		110.6
Cash flows from investing activities:
Purchases of property and equipment		-		(30.8)		(58.4)		-		(89.2)
Proceeds from sale of businesses		-		2.1		-		-		2.1
Other		0.3		(0.3)		0.8		-		0.8
Net cash provided by (used in) investing activities		0.3		(29.0)		(57.6)		-		(86.3)
Cash flows from financing activities:
Proceeds from borrowings		60.0		-		-		-		60.0
Payments of borrowings		(64.4)		-		-		-		(64.4)
Repurchases of common stock		(20.5)		-		-		-		(20.5)
Redemption of noncontrolling interest and redeemable
noncontrolling interests, net of sales		-		-		(0.2)		-		(0.2)
Distributions to noncontrolling interests and
redeemable noncontrolling interests		-		-		(3.0)		-		(3.0)
Proceeds from exercise of stock options		5.9		-		-		-		5.9
Change in intercompany balances with affiliates, net		106.4		(89.1)		(17.3)		-		-
Other		(0.3)		(2.3)		5.6		-		3.0
Net cash provided by (used in) in financing activities		87.1		(91.4)		(14.9)		-		(19.2)
Change in cash and cash equivalents		-		7.6		(2.5)		-		5.1
Cash and cash equivalents at beginning of period		-		31.6		94.2		-		125.8
Cash and cash equivalents at end of period	$	-	$	39.2	$	91.7	$	-	$	130.9

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Cash Flows
For the Six Months Ended June 30, 2018

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	43.6	$	52.7	$	63.9	$	(110.7)	$	49.5
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Equity in earnings of affiliates		(110.7)		-		-		110.7		-
Stock-based compensation		14.7		-		-		-		14.7
Depreciation and amortization		-		104.1		58.9		-		163.0
Other non-cash amortization		2.4		2.2		0.7		-		5.3
Other non-operating losses (gains), net		-		70.1		(0.6)		-		69.5
Deferred income taxes		(22.1)		-		-		-		(22.1)
Reserve for self-insurance claims, net of payments		-		3.8		(5.4)		-		(1.6)
Increase (decrease) in cash from operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable		-		(5.2)		12.5		-		7.3
Inventories, prepaid expenses and other current assets		(0.1)		1.9		12.5		-		14.3
Accounts payable, accrued salaries and other current liabilities		0.2		(64.5)		(17.7)		-		(82.0)
Income taxes payable/receivable		13.6		-		-		-		13.6
Other		(1.0)		2.7		2.2		-		3.9
Net cash (used in) provided by operating activities		(59.4)		167.8		127.0		-		235.4
Cash flows from investing activities:
Purchases of property and equipment		-		(54.7)		(82.9)		-		(137.6)
Proceeds from sale of businesses		-		1.5		-		-		1.5
Other		(1.4)		(3.1)		0.5		-		(4.0)
Net cash used in investing activities		(1.4)		(56.3)		(82.4)		-		(140.1)
Cash flows from financing activities:
Proceeds from borrowings		125.0		-		-		-		125.0
Payments of borrowings		(93.8)		-		-		-		(93.8)
Repurchases of common stock		(42.9)		-		-		-		(42.9)
Redemption of noncontrolling interest and redeemable
noncontrolling interests, net of sales		-		-		(34.7)		-		(34.7)
Distributions to noncontrolling interests and
redeemable noncontrolling interests		-		-		(16.3)		-		(16.3)
Proceeds from exercise of stock options		1.7		-		-		-		1.7
Change in intercompany balances with affiliates, net		70.8		(83.0)		12.2		-		-
Other		-		(0.6)		(1.9)		-		(2.5)
Net cash provided by (used in) financing activities		60.8		(83.6)		(40.7)		-		(63.5)
Change in cash and cash equivalents		-		27.9		3.9		-		31.8
Cash and cash equivalents at beginning of period		-		21.9		90.1		-		112.0
Cash and cash equivalents at end of period	$	-	$	49.8	$	94.0	$	-	$	143.8

LIFEPOINT HEALTH, INC.
Condensed Consolidating Statements of Cash Flows

For the Six Months Ended June 30, 2017

(In millions)

	Parent				Non-
	Issuer		Guarantors		Guarantors		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	102.4	$	95.3	$	91.7	$	(179.4)	$	110.0
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Equity in earnings of affiliates		(179.4)		-		-		179.4		-
Stock-based compensation		11.9		-		-		-		11.9
Depreciation and amortization		-		109.4		67.4		-		176.8
Other non-cash amortization		2.4		3.2		0.8		-		6.4
Other non-operating losses (gains), net		-		2.9		(33.3)		-		(30.4)
Deferred income taxes		(1.0)		-		-		-		(1.0)
Reserve for self-insurance claims, net of payments		-		(40.9)		4.1		-		(36.8)
Increase (decrease) in cash from operating assets and
liabilities, net of effects of acquisitions and divestitures:
Accounts receivable		-		(3.3)		14.8		-		11.5
Inventories, prepaid expenses and other current assets		(0.1)		1.0		19.5		-		20.4
Accounts payable, accrued salaries and other current liabilities		0.7		(10.7)		(25.2)		-		(35.2)
Income taxes payable/receivable		(22.2)		-		-		-		(22.2)
Other		-		(0.1)		(9.0)		-		(9.1)
Net cash (used in) provided by operating activities		(85.3)		156.8		130.8		-		202.3
Cash flows from investing activities:
Purchases of property and equipment		-		(58.8)		(98.9)		-		(157.7)
Proceeds from sale of businesses		-		14.9		-		-		14.9
Other		(0.2)		(0.6)		(1.6)		-		(2.4)
Net cash used in investing activities		(0.2)		(44.5)		(100.5)		-		(145.2)
Cash flows from financing activities:
Proceeds from borrowings		140.0		-		-		-		140.0
Payments of borrowings		(148.8)		-		-		-		(148.8)
Repurchases of common stock		(26.4)		-		-		-		(26.4)
Redemption of noncontrolling interest and redeemable
noncontrolling interests, net of sales		-		-		(0.2)		-		(0.2)
Distributions to noncontrolling interests and
redeemable noncontrolling interests		-		-		(4.8)		-		(4.8)
Proceeds from exercise of stock options		15.3		-		-		-		15.3
Change in intercompany balances with affiliates, net		105.8		(80.0)		(25.8)		-		-
Other		(0.4)		(1.6)		4.6		-		2.6
Net cash provided by (used in) financing activities		85.5		(81.6)		(26.2)		-		(22.3)
Change in cash and cash equivalents		-		30.7		4.1		-		34.8
Cash and cash equivalents at beginning of period		-		8.5		87.6		-		96.1
Cash and cash equivalents at end of period	$	-	$	39.2	$	91.7	$	-	$	130.9

XML

Organization, Basis of Presentation and Recently Issued Accounting Standards (Narrative) (Details)	Jun. 30, 2018 state
Organization, Basis of Presentation and Recently Issued Accounting Standards [Abstract]
Number of states in which the company operates	22

XML

Revenue Recognition and Accounts Receivable (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Cost report settlement, net adjustment to revenue	$ 1.4	$ 14.3	$ 9.9	$ 21.1
Net cost report settlement due	3.2		3.2		$ 2.7
Estimated cost of services provided under charity/indigent care	$ 5.5	$ 6.7	$ 10.8	$ 13.6
Revenues [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
% of Revenues	100.00%	100.00%	100.00%	100.00%
Revenue from Contracts with Customer [Member] | Revenues [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
% of Revenues	99.80%	99.70%	99.80%	99.70%
Revenue from Contracts with Customer [Member] | Revenues [Member] | Medicare and Medicaid [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
% of Revenues	50.80%	51.70%	51.20%	52.60%

XML

Revenue Recognition and Accounts Receivable (Schedule of Revenues by Payer and Approximate Percentages of Revenues) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue from contracts with customers	$ 1,566.4	$ 1,590.4	$ 3,165.8	$ 3,215.9
Rental income	3.4	4.4	6.8	9.1
Revenues	$ 1,569.8	$ 1,594.8	$ 3,172.6	$ 3,225.0
Revenues [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
% of Revenues	100.00%	100.00%	100.00%	100.00%
Revenues [Member] | Revenue from Contracts with Customer [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
% of Revenues	99.80%	99.70%	99.80%	99.70%
Revenues [Member] | Rental Income [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
% of Revenues	0.20%	0.30%	0.20%	0.30%
Medicare [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue from contracts with customers	$ 577.3	$ 594.8	$ 1,185.2	$ 1,225.2
Medicare [Member] | Revenues [Member] | Revenue from Contracts with Customer [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
% of Revenues	36.80%	37.30%	37.40%	38.00%
Medicaid [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue from contracts with customers	$ 219.7	$ 229.9	$ 439.4	$ 472.7
Medicaid [Member] | Revenues [Member] | Revenue from Contracts with Customer [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
% of Revenues	14.00%	14.40%	13.80%	14.60%
HMOs, PPOs And Other Private Insurers [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue from contracts with customers	$ 736.5	$ 736.1	$ 1,475.1	$ 1,454.4
HMOs, PPOs And Other Private Insurers [Member] | Revenues [Member] | Revenue from Contracts with Customer [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
% of Revenues	46.90%	46.10%	46.50%	45.10%
Self-pay [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue from contracts with customers	$ 6.6	$ 6.0	$ 12.8	$ 12.0
Self-pay [Member] | Revenues [Member] | Revenue from Contracts with Customer [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
% of Revenues	0.40%	0.40%	0.40%	0.40%
Other [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue from contracts with customers	$ 26.3	$ 23.6	$ 53.3	$ 51.6
Other [Member] | Revenues [Member] | Revenue from Contracts with Customer [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
% of Revenues	1.70%	1.50%	1.70%	1.60%

XML

Revenue Recognition and Accounts Receivable (Schedule of Revenues by Primary Service Type and Approximate Percentages of Revenues) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	$ 1,566.4	$ 1,590.4	$ 3,165.8	$ 3,215.9
Revenues	1,569.8	1,594.8	3,172.6	3,225.0
Outpatient Services [Member]
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	938.7	933.7	1,872.2	1,853.9
Inpatient Services [Member]
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	601.4	633.1	1,240.3	1,310.4
Non-patient (ancillary goods, services and rental income) [Member]
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	$ 29.7	$ 28.0	$ 60.1	$ 60.7
Revenues [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	100.00%	100.00%	100.00%	100.00%
Revenues [Member] | Revenue from Contracts with Customer [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	99.80%	99.70%	99.80%	99.70%
Revenues [Member] | Outpatient Services [Member] | Revenue from Contracts with Customer [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	59.80%	58.50%	59.00%	57.50%
Revenues [Member] | Inpatient Services [Member] | Revenue from Contracts with Customer [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	38.30%	39.70%	39.10%	40.60%
Revenues [Member] | Non-patient (ancillary goods, services and rental income) [Member] | Revenue from Contracts with Customer [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	1.90%	1.80%	1.90%	1.90%

XML

Revenue Recognition and Accounts Receivable (Schedule of Revenues by State and Approximate Percentages of Revenues) (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) site	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) site	Jun. 30, 2017 USD ($)
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	$ 1,566.4	$ 1,590.4	$ 3,165.8	$ 3,215.9
North Carolina [Member]
Disaggregation of Revenue [Line Items]
Hospital Campuses in State | site	9		9
Revenue from contracts with customers	$ 237.9	240.0	$ 476.4	477.1
Kentucky [Member]
Disaggregation of Revenue [Line Items]
Hospital Campuses in State | site	10		10
Revenue from contracts with customers	$ 181.6	170.7	$ 364.2	349.8
Virginia [Member]
Disaggregation of Revenue [Line Items]
Hospital Campuses in State | site	6		6
Revenue from contracts with customers	$ 164.7	158.7	$ 335.0	325.2
Pennsylvania [Member]
Disaggregation of Revenue [Line Items]
Hospital Campuses in State | site	4		4
Revenue from contracts with customers	$ 133.4	140.9	$ 266.4	281.7
Tennessee [Member]
Disaggregation of Revenue [Line Items]
Hospital Campuses in State | site	10		10
Revenue from contracts with customers	$ 120.4	114.9	$ 238.0	232.2
Michigan [Member]
Disaggregation of Revenue [Line Items]
Hospital Campuses in State | site	3		3
Revenue from contracts with customers	$ 112.3	113.5	$ 224.8	225.9
New Mexico [Member]
Disaggregation of Revenue [Line Items]
Hospital Campuses in State | site	2		2
Revenue from contracts with customers	$ 94.1	$ 87.8	$ 188.7	$ 172.7
Revenues [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	100.00%	100.00%	100.00%	100.00%
Revenues [Member] | Revenue from Contracts with Customer [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	99.80%	99.70%	99.80%	99.70%
Revenues [Member] | Revenue from Contracts with Customer [Member] | North Carolina [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	15.20%	15.10%	15.00%	14.80%
Revenues [Member] | Revenue from Contracts with Customer [Member] | Kentucky [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	11.60%	10.70%	11.50%	10.80%
Revenues [Member] | Revenue from Contracts with Customer [Member] | Virginia [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	10.50%	10.00%	10.60%	10.10%
Revenues [Member] | Revenue from Contracts with Customer [Member] | Pennsylvania [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	8.50%	8.80%	8.40%	8.70%
Revenues [Member] | Revenue from Contracts with Customer [Member] | Tennessee [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	7.70%	7.20%	7.50%	7.20%
Revenues [Member] | Revenue from Contracts with Customer [Member] | Michigan [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	7.20%	7.10%	7.10%	7.00%
Revenues [Member] | Revenue from Contracts with Customer [Member] | New Mexico [Member]
Disaggregation of Revenue [Line Items]
% of Revenues	6.00%	5.50%	5.90%	5.40%

XML

General and Administrative Costs (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Hospital Support Center [Member]
General And Administrative Costs [Line Items]
General and administrative included in corporate overhead costs	$ 52.4	$ 56.9	$ 111.6	$ 118.7

XML

Fair Value of Financial Instruments (Narrative) (Details) - Unsecured Senior Notes [Member]	6 Months Ended
	Jun. 30, 2018
5.5% Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument, stated interest rate	5.50%
Debt instrument, maturity date	Dec. 01, 2021
5.875% Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument, stated interest rate	5.875%
Debt instrument, maturity date	Dec. 01, 2023
5.375% Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument, stated interest rate	5.375%
Debt instrument, maturity date	May 01, 2024

XML

Fair Value of Financial Instruments (Schedule of Carrying Amount and Fair Value) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Term Facility [Member] | Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 665.0	$ 673.8
Term Facility [Member] | Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	665.0	673.8
Revolving Facility [Member] | Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	40.0
Revolving Facility [Member] | Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 40.0
5.5% Senior Notes [Member] | Unsecured Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument, stated interest rate	5.50%
5.5% Senior Notes [Member] | Unsecured Senior Notes [Member] | Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 1,100.0	1,100.0
5.5% Senior Notes [Member] | Unsecured Senior Notes [Member] | Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 1,102.8	1,117.9
5.875% Senior Notes [Member] | Unsecured Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument, stated interest rate	5.875%
5.875% Senior Notes [Member] | Unsecured Senior Notes [Member] | Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 500.0	500.0
5.875% Senior Notes [Member] | Unsecured Senior Notes [Member] | Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 496.9	504.4
5.375% Senior Notes [Member] | Unsecured Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument, stated interest rate	5.375%
5.375% Senior Notes [Member] | Unsecured Senior Notes [Member] | Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 500.0	500.0
5.375% Senior Notes [Member] | Unsecured Senior Notes [Member] | Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 478.8	$ 498.1

XML

Other Non-Operating Gains and Losses (Narrative) (Details) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) $ / shares item	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) $ / shares item	Jun. 30, 2017 USD ($)	Feb. 28, 2018 item	Dec. 31, 2017 item
Other Non-Operating Gain (Loss) [Line Items]
Other non-operating gain	$ 3.2	$ 4.5	$ (69.5)	$ 30.4
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Mercy, Acadian and Minden [Member]
Other Non-Operating Gain (Loss) [Line Items]
Number of facilities/hospitals | item	3		3
Operating income (loss)	$ (0.5)	$ (2.0)	$ (1.7)	$ (3.4)
Other current assets	26.9		26.9
Other current liabilities	$ 4.3		4.3
Impairment loss of assets to be disposed of			74.3
Impairment loss of assets to be disposed of, net of income taxes			$ 58.2
Impairment loss of assets to be disposed of, net of income taxes, earning per diluted share | $ / shares			$ 1.47
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Ancillary Rehabilitation Facility [Member]
Other Non-Operating Gain (Loss) [Line Items]
Number of facilities/hospitals | item	1		1
Other non-operating gain	$ 3.2
Other non-operating gain, net of income taxes	$ 2.4
Other non-operating gain, net of income taxes, earnings per diluted share | $ / shares	$ 0.06
IHHP [Member]
Other Non-Operating Gain (Loss) [Line Items]
Number of home health agencies transferred to partnership | item					1	19
Number of hospices transferred to partnership | item						10
Other non-operating gain			$ 1.6
Other non-operating gain, net of income taxes			$ 1.2
Other non-operating gain, net of income taxes, earnings per diluted share | $ / shares			$ 0.03

XML

Redeemable Noncontrolling Interests (Narrative) (Details) - Fauquier [Member] $ in Millions	Jun. 01, 2018 USD ($) item
Business Acquisition [Line Items]
Percentage of interest acquired	20.00%
Number of beds in hospital	97
Number of beds in long-term care facility	113
Total consideration for acquisition | $	$ 49.9

XML

Redeemable Noncontrolling Interests (Schedule of Changes in Redeemable Noncontrolling Interests) (Details) $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($)
Redeemable Noncontrolling Interests [Abstract]
Balance at December 31, 2017	$ 125.0	[1]
Net income attributable to redeemable noncontrolling interests	5.8
Fair value adjustments related to redeemable noncontrolling interests	12.6
Redemptions, net of sales	(35.1)
Distributions	(15.2)
Balance at June 30, 2018	$ 93.1

[1] Derived from audited consolidated financial statements.

XML

Goodwill and Intangible Assets (Narrative) (Details)	6 Months Ended
	Jun. 30, 2018 USD ($) segment	Dec. 31, 2017 USD ($)
Finite-Lived Intangible Assets [Line Items]
Number of reporting units | segment	1
Goodwill impairment loss	$ 0
Other current liabilities	277,400,000	$ 296,000,000
Contract-Based Physician Minimum Revenue Guarantees [Member]
Finite-Lived Intangible Assets [Line Items]
Other current liabilities	$ 9,900,000	$ 6,500,000
Contract-Based Physician Minimum Revenue Guarantees [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible asset useful life	3 years
Contract-Based Physician Minimum Revenue Guarantees [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible asset useful life	5 years

XML

Goodwill and Intangible Assets (Schedule of Intangible Assets) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Goodwill And Intangible Assets [Line Items]
Gross carrying amount	$ 51.9	$ 48.3
Accumulated amortization	(31.4)	(29.8)
Total amortized intangible assets	20.5	18.5
Indefinite-lived intangible assets	57.7	57.8
Gross carrying amount	109.6	106.1
Total intangible assets	78.2	76.3	[1]
Contract-Based Physician Minimum Revenue Guarantees [Member]
Goodwill And Intangible Assets [Line Items]
Gross carrying amount	33.7	30.1
Accumulated amortization	(17.2)	(16.5)
Total amortized intangible assets	16.5	13.6
Non-Competition Agreements And Other [Member]
Goodwill And Intangible Assets [Line Items]
Gross carrying amount	18.2	18.2
Accumulated amortization	(14.2)	(13.3)
Total amortized intangible assets	4.0	4.9
Certificates Of Need And Certificates Of Need Exemptions [Member]
Goodwill And Intangible Assets [Line Items]
Indefinite-lived intangible assets	35.9	35.9
Licenses, Provider Numbers, Accreditations And Other [Member]
Goodwill And Intangible Assets [Line Items]
Indefinite-lived intangible assets	$ 21.8	$ 21.9

[1] Derived from audited consolidated financial statements.

XML

Common Stock in Treasury (Narrative) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Stockholders' Equity [Line Items]
Aggregate purchase price	$ 42.9
Common Stock [Member]
Stockholders' Equity [Line Items]
Vested shares redeemed under LTIP and MSPP	0.1	0.1
Aggregate price of vested shares redeemed under LTIP and MSPP	$ 2.9	$ 6.0
Repurchase Plan [Member]
Stockholders' Equity [Line Items]
Total number of shares repurchased	0.8	0.3
Aggregate purchase price	$ 40.0	$ 20.4
Average purchase price per share for shares repurchased	$ 48.35	$ 64.32
Remaining amount authorized to repurchase	$ 190.0
Stock repurchase plan, expiration date	Apr. 24, 2019
Stock repurchase plan, commencement date	Oct. 24, 2017

XML

Stock-Based Compensation (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividends
Total intrinsic value of stock options exercised			$ 1.1	$ 9.6
Amount received in cash from stock option exercises	$ 0.4	$ 5.9	1.7	15.3
Actual tax benefit realized for the tax deductions from stock option exercises			0.2	2.0
Capitalized stock-based compensation			0.0	$ 0.0
Total estimated unrecognized compensation costs	52.6		$ 52.6
Expected weighted average period for recognition of unrecognized compensation cost (in years)			2 years 2 months 12 days
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period			10 years	10 years
Unrecognized compensation cost related to stock options	20.8		$ 20.8
Expected weighted average period for recognition of unrecognized compensation cost (in years)			1 year 8 months 12 days
Stock Options [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Vesting percentage			33.30%
Continued employment period for vesting			3 years
Stock Options [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			4 years
Vesting percentage			25.00%
Continued employment period for vesting			4 years
Other Stock-Based Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to other stock-based awards	$ 31.8		$ 31.8
Expected weighted average period for recognition of unrecognized compensation cost (in years)			2 years 7 months 6 days
Minimum [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			1 year	1 year
Maximum [Member] | Stock Options [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years	3 years
Maximum [Member] | Stock Options [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			4 years	4 years
Long-Term Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted in period			496,781	885,122
Long-Term Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Other stock based awards granted in period			309,511	141,882
Long-Term Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | Cliff Vesting [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			1 year
Long-Term Incentive Plan [Member] | Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Other stock based awards granted in period			272,671	144,535
Performance period			3 years	3 years
Long-Term Incentive Plan [Member] | Minimum [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			1 year
Share award percentage			50.00%
Long-Term Incentive Plan [Member] | Minimum [Member] | Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share award percentage			0.00%
Long-Term Incentive Plan [Member] | Minimum [Member] | Performance Shares [Member] | Cliff Vesting [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Long-Term Incentive Plan [Member] | Maximum [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share award percentage			150.00%
Long-Term Incentive Plan [Member] | Maximum [Member] | Restricted Stock Units (RSUs) [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Long-Term Incentive Plan [Member] | Maximum [Member] | Restricted Stock Units (RSUs) [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			4 years
Long-Term Incentive Plan [Member] | Maximum [Member] | Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share award percentage			200.00%
Long-Term Incentive Plan [Member] | Maximum [Member] | Performance Shares [Member] | Cliff Vesting [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			4 years

XML

Stock-Based Compensation (Schedule of Estimates of Weighted-Average Fair Value Per Share of Stock Options Granted) (Details) - $ / shares	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Stock-Based Compensation [Abstract]
Expected volatility	33.10%	32.90%
Risk-free interest rate	2.88%	2.37%
Expected dividends
Average expected term (years)	6 years 7 months 6 days	6 years 1 month 6 days
Fair value per share of stock options granted	$ 16.46	$ 21.42

XML

Stock-Based Compensation (Schedule of Total Stock-Based Compensation Expense and Total Recognized Tax Benefits) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity awards: stock-based compensation	$ 6.5	$ 5.3	$ 14.7	$ 11.9
Total stock-based compensation expense	6.5	5.3	14.7	11.9
Tax benefit on stock-based compensation expense	1.5	2.1	3.3	4.6
Other Stock-Based Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity awards: stock-based compensation	3.7	2.1	8.5	5.0
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity awards: stock-based compensation	$ 2.8	$ 3.2	$ 6.2	$ 6.9

XML

Commitments and Contingencies (Narrative) (Details) $ in Millions		1 Months Ended			4 Months Ended	6 Months Ended
	Sep. 16, 2013 item	Mar. 31, 2017 lawsuit	Feb. 28, 2017 item customer lawsuit	Dec. 31, 2014 lawsuit	Feb. 28, 2015 lawsuit	Jun. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	[1]
Commitments And Contingencies [Line Items]
Construction in progress | $						$ 341.6	$ 353.8
Estimated cost to complete and equip construction in progress | $						359.7
Total remaining capital expenditure commitments | $						$ 1,229.2
Voluntary Self-Disclosure [Member]
Commitments And Contingencies [Line Items]
Number of hospitals | item	2
Number of physicians | item	2
Individual Lawsuits [Member]
Commitments And Contingencies [Line Items]
Number of subsidiaries | item			2
Number of lawsuits			82	26
Number of additional lawsuits after settlement			2
Number of lawsuits settled		2
Number of additional patients intending to file lawsuit | customer			3
Putative Class Action Lawsuits [Member]
Commitments And Contingencies [Line Items]
Number of lawsuits					2
Minimum [Member]
Commitments And Contingencies [Line Items]
Capital expenditure commitment term						4 years
Estimated period to complete construction						1 year
Maximum [Member]
Commitments And Contingencies [Line Items]
Capital expenditure commitment term						8 years
Estimated period to complete construction						3 years

[1] Derived from audited consolidated financial statements.

XML

Guarantor and Non-Guarantor Supplementary Information (Narrative) (Details)	6 Months Ended
	Jun. 30, 2018
Guarantors [Member]
Guarantor And Non-Guarantor Supplementary Information [Line Items]
Ownership percentage of guarantor subsidiaries	100.00%
Unsecured Senior Notes [Member] | 5.5% Senior Notes [Member]
Guarantor And Non-Guarantor Supplementary Information [Line Items]
Debt instrument, stated interest rate	5.50%
Unsecured Senior Notes [Member] | 5.875% Senior Notes [Member]
Guarantor And Non-Guarantor Supplementary Information [Line Items]
Debt instrument, stated interest rate	5.875%
Unsecured Senior Notes [Member] | 5.375% Senior Notes [Member]
Guarantor And Non-Guarantor Supplementary Information [Line Items]
Debt instrument, stated interest rate	5.375%

XML

Guarantor and Non-Guarantor Supplementary Information (Schedule of Condensed Consolidating Statements of Operations) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Condensed Income Statements, Captions [Line Items]
Revenues	$ 1,569.8	$ 1,594.8	$ 3,172.6	$ 3,225.0
Salaries and benefits	740.2	762.0	1,502.7	1,558.9
Supplies	256.0	263.2	522.0	531.4
Other operating expenses, net	386.6	377.4	772.4	746.9
Equity in earnings of affiliates
Depreciation and amortization	81.4	88.7	163.0	176.8
Interest expense, net	37.0	37.6	74.0	75.0
Other non-operating (gains) losses, net	(3.2)	(4.5)	69.5	(30.4)
Management (income) fees
Costs, Expenses, Non-operating (Income) Expense, and Interest and Debt Expense, Total	1,498.0	1,524.4	3,103.6	3,058.6
Income before income taxes	71.8	70.4	69.0	166.4
(Benefit) provision for income taxes	17.0	24.4	19.5	56.4
Net income	54.8	46.0	49.5	110.0
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests	(2.4)	(3.5)	(5.9)	(7.6)
Net income attributable to LifePoint Health, Inc.	52.4	42.5	43.6	102.4
Eliminations [Member]
Condensed Income Statements, Captions [Line Items]
Revenues
Salaries and benefits
Supplies
Other operating expenses, net
Equity in earnings of affiliates	80.2	77.4	110.7	179.4
Depreciation and amortization
Interest expense, net
Other non-operating (gains) losses, net
Management (income) fees
Costs, Expenses, Non-operating (Income) Expense, and Interest and Debt Expense, Total	80.2	77.4	110.7	179.4
Income before income taxes	(80.2)	(77.4)	(110.7)	(179.4)
(Benefit) provision for income taxes
Net income	(80.2)	(77.4)	(110.7)	(179.4)
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests
Net income attributable to LifePoint Health, Inc.	(80.2)	(77.4)	(110.7)	(179.4)
Parent Issuer [Member]
Condensed Income Statements, Captions [Line Items]
Revenues
Salaries and benefits	6.5	5.3	14.7	11.9
Supplies
Other operating expenses, net	(1.0)	(2.0)	(1.6)	(2.0)
Equity in earnings of affiliates	(80.2)	(77.4)	(110.7)	(179.4)
Depreciation and amortization
Interest expense, net	28.7	31.6	58.0	63.1
Other non-operating (gains) losses, net
Management (income) fees
Costs, Expenses, Non-operating (Income) Expense, and Interest and Debt Expense, Total	(46.0)	(42.5)	(39.6)	(106.4)
Income before income taxes	46.0	42.5	39.6	106.4
(Benefit) provision for income taxes	(6.4)		(4.0)	4.0
Net income	52.4	42.5	43.6	102.4
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests
Net income attributable to LifePoint Health, Inc.	52.4	42.5	43.6	102.4
Guarantors [Member]
Condensed Income Statements, Captions [Line Items]
Revenues	918.8	906.1	1,856.5	1,833.2
Salaries and benefits	434.4	430.8	883.6	880.6
Supplies	141.2	144.0	289.8	287.5
Other operating expenses, net	231.4	224.1	465.5	441.1
Equity in earnings of affiliates
Depreciation and amortization	51.5	54.7	104.1	109.4
Interest expense, net	2.1	1.4	3.3	2.6
Other non-operating (gains) losses, net		3.4	70.1	2.9
Management (income) fees	(18.2)	(19.7)	(36.1)	(38.6)
Costs, Expenses, Non-operating (Income) Expense, and Interest and Debt Expense, Total	842.4	838.7	1,780.3	1,685.5
Income before income taxes	76.4	67.4	76.2	147.7
(Benefit) provision for income taxes	23.4	24.4	23.5	52.4
Net income	53.0	43.0	52.7	95.3
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests
Net income attributable to LifePoint Health, Inc.	53.0	43.0	52.7	95.3
Non-Guarantors [Member]
Condensed Income Statements, Captions [Line Items]
Revenues	651.0	688.7	1,316.1	1,391.8
Salaries and benefits	299.3	325.9	604.4	666.4
Supplies	114.8	119.2	232.2	243.9
Other operating expenses, net	156.2	155.3	308.5	307.8
Equity in earnings of affiliates
Depreciation and amortization	29.9	34.0	58.9	67.4
Interest expense, net	6.2	4.6	12.7	9.3
Other non-operating (gains) losses, net	(3.2)	(7.9)	(0.6)	(33.3)
Management (income) fees	18.2	19.7	36.1	38.6
Costs, Expenses, Non-operating (Income) Expense, and Interest and Debt Expense, Total	621.4	650.8	1,252.2	1,300.1
Income before income taxes	29.6	37.9	63.9	91.7
(Benefit) provision for income taxes
Net income	29.6	37.9	63.9	91.7
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests	(2.4)	(3.5)	(5.9)	(7.6)
Net income attributable to LifePoint Health, Inc.	$ 27.2	$ 34.4	$ 58.0	$ 84.1

XML

Guarantor and Non-Guarantor Supplementary Information (Schedule of Condensed Consolidating Balance Sheets) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017		Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 143.8	$ 140.1	$ 112.0	[1]	$ 130.9	$ 125.8	$ 96.1
Accounts receivable	802.7		822.4	[1]
Inventories	152.9		153.1	[1]
Prepaid expenses	76.5		67.2	[1]
Other current assets	101.3		110.5	[1]
Total current assets	1,277.2		1,265.2	[1]
Property and equipment:
Land	181.3		182.4	[1]
Buildings and improvements	2,557.5		2,564.7	[1]
Equipment	2,349.3		2,340.4	[1]
Construction in progress	341.6		353.8	[1]
Property and equipment, gross	5,429.7		5,441.3	[1]
Accumulated depreciation	(2,426.0)		(2,351.0)	[1]
Property and equipment, net	3,003.7		3,090.3	[1]
Intangible assets, net	78.2		76.3	[1]
Investments in subsidiaries
Due from subsidiaries
Other long-term assets	123.2		116.8	[1]
Goodwill	1,733.8		1,737.8	[1]
Total assets	6,216.1		6,286.4	[1]
Current liabilities:
Accounts payable	186.6		210.3	[1]
Accrued salaries	203.9		216.3	[1]
Income taxes payable	277.4		296.0	[1]
Other current liabilities	277.4		296.0
Current maturities of long-term debt	22.6		22.3	[1]
Total current liabilities	690.5		744.9	[1]
Long-term debt, net	2,905.8		2,877.4	[1]
Due to Parent
Deferred income taxes	10.2		32.3	[1]
Long-term portion of reserves for self-insurance claims	141.0		140.9	[1]
Other long-term liabilities	85.9		80.1	[1]
Total liabilities	3,833.4		3,875.6	[1]
Redeemable Noncontrolling Interest, Equity, Carrying Amount	93.1		125.0	[1]
Total LifePoint Health, Inc. stockholders' equity	2,247.3		2,242.5	[1]
Noncontrolling interests	42.3		43.3	[1]
Total equity	2,289.6		2,285.8	[1]
Total liabilities and equity	6,216.1		6,286.4	[1]
Eliminations [Member]
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses
Other current assets
Total current assets
Property and equipment:
Land
Buildings and improvements
Equipment
Construction in progress
Property and equipment, gross
Accumulated depreciation
Property and equipment, net
Intangible assets, net
Investments in subsidiaries	(2,854.9)		(2,756.5)
Due from subsidiaries	(2,192.0)		(2,262.9)
Other long-term assets
Goodwill
Total assets	(5,046.9)		(5,019.4)
Current liabilities:
Accounts payable
Accrued salaries
Other current liabilities
Current maturities of long-term debt
Total current liabilities
Long-term debt, net
Due to Parent	(2,192.0)		(2,262.9)
Deferred income taxes
Long-term portion of reserves for self-insurance claims
Other long-term liabilities
Total liabilities	(2,192.0)		(2,262.9)
Redeemable Noncontrolling Interest, Equity, Carrying Amount
Total LifePoint Health, Inc. stockholders' equity	(2,854.9)		(2,756.5)
Noncontrolling interests
Total equity	(2,854.9)		(2,756.5)
Total liabilities and equity	(5,046.9)		(5,019.4)
Parent Issuer [Member]
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses	0.2		0.1
Other current assets			7.6
Total current assets	0.2		7.7
Property and equipment:
Land
Buildings and improvements
Equipment
Construction in progress
Property and equipment, gross
Accumulated depreciation
Property and equipment, net
Intangible assets, net
Investments in subsidiaries	2,854.9		2,756.5
Due from subsidiaries	2,192.0		2,262.9
Other long-term assets	14.5		15.6
Goodwill
Total assets	5,061.6		5,042.7
Current liabilities:
Accounts payable
Accrued salaries
Other current liabilities	18.9		12.7
Current maturities of long-term debt	17.5		17.5
Total current liabilities	36.4		30.2
Long-term debt, net	2,767.7		2,737.7
Due to Parent
Deferred income taxes	10.2		32.3
Long-term portion of reserves for self-insurance claims
Other long-term liabilities
Total liabilities	2,814.3		2,800.2
Redeemable Noncontrolling Interest, Equity, Carrying Amount
Total LifePoint Health, Inc. stockholders' equity	2,247.3		2,242.5
Noncontrolling interests
Total equity	2,247.3		2,242.5
Total liabilities and equity	5,061.6		5,042.7
Guarantors [Member]
Current assets:
Cash and cash equivalents	49.8	50.6	21.9		39.2	31.6	8.5
Accounts receivable	477.5		499.3
Inventories	93.3		94.2
Prepaid expenses	52.5		45.4
Other current assets	77.9		46.5
Total current assets	751.0		707.3
Property and equipment:
Land	96.9		99.0
Buildings and improvements	1,754.8		1,826.5
Equipment	1,697.9		1,721.4
Construction in progress	98.2		89.0
Property and equipment, gross	3,647.8		3,735.9
Accumulated depreciation	(1,888.3)		(1,868.2)
Property and equipment, net	1,759.5		1,867.7
Intangible assets, net	35.2		35.8
Investments in subsidiaries
Due from subsidiaries
Other long-term assets	58.7		53.5
Goodwill	1,421.7		1,425.7
Total assets	4,026.1		4,090.0
Current liabilities:
Accounts payable	114.7		131.1
Accrued salaries	122.6		135.1
Other current liabilities	187.5		200.1
Current maturities of long-term debt	1.0		0.8
Total current liabilities	425.8		467.1
Long-term debt, net	44.7		44.3
Due to Parent	1,359.7		1,415.9
Deferred income taxes
Long-term portion of reserves for self-insurance claims	85.6		83.0
Other long-term liabilities	50.2		45.6
Total liabilities	1,966.0		2,055.9
Redeemable Noncontrolling Interest, Equity, Carrying Amount
Total LifePoint Health, Inc. stockholders' equity	2,060.1		2,034.1
Noncontrolling interests
Total equity	2,060.1		2,034.1
Total liabilities and equity	4,026.1		4,090.0
Non-Guarantors [Member]
Current assets:
Cash and cash equivalents	94.0	$ 89.5	90.1		$ 91.7	$ 94.2	$ 87.6
Accounts receivable	325.2		323.1
Inventories	59.6		58.9
Prepaid expenses	23.8		21.7
Other current assets	23.4		56.4
Total current assets	526.0		550.2
Property and equipment:
Land	84.4		83.4
Buildings and improvements	802.7		738.2
Equipment	651.4		619.0
Construction in progress	243.4		264.8
Property and equipment, gross	1,781.9		1,705.4
Accumulated depreciation	(537.7)		(482.8)
Property and equipment, net	1,244.2		1,222.6
Intangible assets, net	43.0		40.5
Investments in subsidiaries
Due from subsidiaries
Other long-term assets	50.0		47.7
Goodwill	312.1		312.1
Total assets	2,175.3		2,173.1
Current liabilities:
Accounts payable	71.9		79.2
Accrued salaries	81.3		81.2
Other current liabilities	71.0		83.2
Current maturities of long-term debt	4.1		4.0
Total current liabilities	228.3		247.6
Long-term debt, net	93.4		95.4
Due to Parent	832.3		847.0
Deferred income taxes
Long-term portion of reserves for self-insurance claims	55.4		57.9
Other long-term liabilities	35.7		34.5
Total liabilities	1,245.1		1,282.4
Redeemable Noncontrolling Interest, Equity, Carrying Amount	93.1		125.0
Total LifePoint Health, Inc. stockholders' equity	794.8		722.4
Noncontrolling interests	42.3		43.3
Total equity	837.1		765.7
Total liabilities and equity	$ 2,175.3		$ 2,173.1

[1] Derived from audited consolidated financial statements.

XML

Guarantor and Non-Guarantor Supplementary Information (Schedule of Condensed Consolidating Statements of Cash Flows) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018		Jun. 30, 2017
Cash flows from operating activities:
Net income (loss)	$ 54.8	$ 46.0	$ 49.5		$ 110.0
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of affiliates
Stock-based compensation	6.5	5.3	14.7		11.9
Depreciation and amortization	81.4	88.7	163.0		176.8
Other non-cash amortization	2.7	3.1	5.3		6.4
Other non-operating (gains) losses, net	(3.2)	(4.5)	69.5		(30.4)
Deferred income taxes	3.4	0.1	(22.1)		(1.0)
Reserve for self-insurance claims, net of payments	0.5	(5.1)	(1.6)		(36.8)
Increase (decrease) in cash from operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable	26.6	21.0	7.3		11.5
Inventories, prepaid expenses and other current assets	20.2	20.3	14.3		20.4
Accounts payable, accrued salaries and other current liabilities	(50.7)	(32.7)	(82.0)		(35.2)
Income taxes payable/receivable	(12.7)	(30.5)	13.6		(22.2)
Other	5.3	(1.1)	3.9		(9.1)
Net cash provided by operating activities	134.8	110.6	235.4		202.3
Cash flows from investing activities:
Purchases of property and equipment	(81.4)	(89.2)	(137.6)		(157.7)
Proceeds from sale of businesses		2.1	1.5		14.9
Other	2.7	0.8	(4.0)		(2.4)
Net cash used in investing activities	(78.7)	(86.3)	(140.1)		(145.2)
Cash flows from financing activities:
Proceeds from borrowings	75.0	60.0	125.0		140.0
Payments of borrowings	(64.4)	(64.4)	(93.8)		(148.8)
Repurchases of common stock	(10.1)	(20.5)	(42.9)		(26.4)
Redemptions of noncontrolling interests and redeemable noncontrolling interests, net of sales	(36.9)	(0.2)	(34.7)		(0.2)
Distributions to noncontrolling interests and redeemable noncontrolling interests	(15.1)	(3.0)	(16.3)		(4.8)
Proceeds from exercise of stock options	0.4	5.9	1.7		15.3
Change in intercompany balances with affiliates, net
Other	(1.3)	3.0	(2.5)		2.6
Net cash used in financing activities	(52.4)	(19.2)	(63.5)		(22.3)
Change in cash and cash equivalents	3.7	5.1	31.8		34.8
Cash and cash equivalents at beginning of period	140.1	125.8	112.0	[1]	96.1
Cash and cash equivalents at end of period	143.8	130.9	143.8		130.9
Eliminations [Member]
Cash flows from operating activities:
Net income (loss)	(80.2)	(77.4)	(110.7)		(179.4)
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of affiliates	80.2	77.4	110.7		179.4
Stock-based compensation
Depreciation and amortization
Other non-cash amortization
Other non-operating (gains) losses, net
Deferred income taxes
Reserve for self-insurance claims, net of payments
Increase (decrease) in cash from operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable
Inventories, prepaid expenses and other current assets
Accounts payable, accrued salaries and other current liabilities
Income taxes payable/receivable
Other
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of property and equipment
Proceeds from sale of businesses
Other
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from borrowings
Payments of borrowings
Repurchases of common stock
Redemptions of noncontrolling interests and redeemable noncontrolling interests, net of sales
Distributions to noncontrolling interests and redeemable noncontrolling interests
Proceeds from exercise of stock options
Change in intercompany balances with affiliates, net
Other
Net cash used in financing activities
Change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Parent Issuer [Member]
Cash flows from operating activities:
Net income (loss)	52.4	42.5	43.6		102.4
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of affiliates	(80.2)	(77.4)	(110.7)		(179.4)
Stock-based compensation	6.5	5.3	14.7		11.9
Depreciation and amortization
Other non-cash amortization	1.2	1.2	2.4		2.4
Other non-operating (gains) losses, net
Deferred income taxes	3.4	0.1	(22.1)		(1.0)
Reserve for self-insurance claims, net of payments
Increase (decrease) in cash from operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable
Inventories, prepaid expenses and other current assets	(0.2)	(0.1)	(0.1)		(0.1)
Accounts payable, accrued salaries and other current liabilities	(29.0)	(28.4)	0.2		0.7
Income taxes payable/receivable	(12.7)	(30.5)	13.6		(22.2)
Other	(0.4)	(0.1)	(1.0)
Net cash provided by operating activities	(59.0)	(87.4)	(59.4)		(85.3)
Cash flows from investing activities:
Purchases of property and equipment
Proceeds from sale of businesses
Other	(0.7)	0.3	(1.4)		(0.2)
Net cash used in investing activities	(0.7)	0.3	(1.4)		(0.2)
Cash flows from financing activities:
Proceeds from borrowings	75.0	60.0	125.0		140.0
Payments of borrowings	(64.4)	(64.4)	(93.8)		(148.8)
Repurchases of common stock	(10.1)	(20.5)	(42.9)		(26.4)
Redemptions of noncontrolling interests and redeemable noncontrolling interests, net of sales
Distributions to noncontrolling interests and redeemable noncontrolling interests
Proceeds from exercise of stock options	0.4	5.9	1.7		15.3
Change in intercompany balances with affiliates, net	58.8	106.4	70.8		105.8
Other		(0.3)			(0.4)
Net cash used in financing activities	59.7	87.1	60.8		85.5
Change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Guarantors [Member]
Cash flows from operating activities:
Net income (loss)	53.0	43.0	52.7		95.3
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of affiliates
Stock-based compensation
Depreciation and amortization	51.5	54.7	104.1		109.4
Other non-cash amortization	1.1	1.4	2.2		3.2
Other non-operating (gains) losses, net		3.4	70.1		2.9
Deferred income taxes
Reserve for self-insurance claims, net of payments	1.5	(2.5)	3.8		(40.9)
Increase (decrease) in cash from operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable	9.0	11.4	(5.2)		(3.3)
Inventories, prepaid expenses and other current assets	(9.2)	(9.5)	1.9		1.0
Accounts payable, accrued salaries and other current liabilities	(9.6)	23.2	(64.5)		(10.7)
Income taxes payable/receivable
Other	(0.1)	2.9	2.7		(0.1)
Net cash provided by operating activities	97.2	128.0	167.8		156.8
Cash flows from investing activities:
Purchases of property and equipment	(33.4)	(30.8)	(54.7)		(58.8)
Proceeds from sale of businesses		2.1	1.5		14.9
Other	(0.1)	(0.3)	(3.1)		(0.6)
Net cash used in investing activities	(33.5)	(29.0)	(56.3)		(44.5)
Cash flows from financing activities:
Proceeds from borrowings
Payments of borrowings
Repurchases of common stock
Redemptions of noncontrolling interests and redeemable noncontrolling interests, net of sales
Distributions to noncontrolling interests and redeemable noncontrolling interests
Proceeds from exercise of stock options
Change in intercompany balances with affiliates, net	(64.7)	(89.1)	(83.0)		(80.0)
Other	0.2	(2.3)	(0.6)		(1.6)
Net cash used in financing activities	(64.5)	(91.4)	(83.6)		(81.6)
Change in cash and cash equivalents	(0.8)	7.6	27.9		30.7
Cash and cash equivalents at beginning of period	50.6	31.6	21.9		8.5
Cash and cash equivalents at end of period	49.8	39.2	49.8		39.2
Non-Guarantors [Member]
Cash flows from operating activities:
Net income (loss)	29.6	37.9	63.9		91.7
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of affiliates
Stock-based compensation
Depreciation and amortization	29.9	34.0	58.9		67.4
Other non-cash amortization	0.4	0.5	0.7		0.8
Other non-operating (gains) losses, net	(3.2)	(7.9)	(0.6)		(33.3)
Deferred income taxes
Reserve for self-insurance claims, net of payments	(1.0)	(2.6)	(5.4)		4.1
Increase (decrease) in cash from operating assets and liabilities, net of effects from acquisitions and divestitures:
Accounts receivable	17.6	9.6	12.5		14.8
Inventories, prepaid expenses and other current assets	29.6	29.9	12.5		19.5
Accounts payable, accrued salaries and other current liabilities	(12.1)	(27.5)	(17.7)		(25.2)
Income taxes payable/receivable
Other	5.8	(3.9)	2.2		(9.0)
Net cash provided by operating activities	96.6	70.0	127.0		130.8
Cash flows from investing activities:
Purchases of property and equipment	(48.0)	(58.4)	(82.9)		(98.9)
Proceeds from sale of businesses
Other	3.5	0.8	0.5		(1.6)
Net cash used in investing activities	(44.5)	(57.6)	(82.4)		(100.5)
Cash flows from financing activities:
Proceeds from borrowings
Payments of borrowings
Repurchases of common stock
Redemptions of noncontrolling interests and redeemable noncontrolling interests, net of sales	(36.9)	(0.2)	(34.7)		(0.2)
Distributions to noncontrolling interests and redeemable noncontrolling interests	(15.1)	(3.0)	(16.3)		(4.8)
Proceeds from exercise of stock options
Change in intercompany balances with affiliates, net	5.9	(17.3)	12.2		(25.8)
Other	(1.5)	5.6	(1.9)		4.6
Net cash used in financing activities	(47.6)	(14.9)	(40.7)		(26.2)
Change in cash and cash equivalents	4.5	(2.5)	3.9		4.1
Cash and cash equivalents at beginning of period	89.5	94.2	90.1		87.6
Cash and cash equivalents at end of period	$ 94.0	$ 91.7	$ 94.0		$ 91.7

[1] Derived from audited consolidated financial statements.

XML

Subsequent Event (Narrative) (Details)	Jul. 22, 2018 $ / shares
Subsequent Event [Member]
Subsequent Event [Line Items]
Outstanding shares at merger, amount per share converted to cash without interest	$ 65.00