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MAGELLAN HEALTH SERVICES, INC AND CONSOLIDATED SUBSIDIARIES
COMBINED WITH UNCONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERENCE DIVIDENDS
(Dollars in thousands)

			1996			1997			1998			1999			2000			Nine months ended 6/30/2001
EARNINGS:
Income (loss) from continuing operations before income taxes, minority interest, and extraordinary items			$	(71,645	)	$	(56,163	)	$	(8,931	)	$	37,457		$	17,698		$	66,120
Less:
	Equity in (earnings) / loss from unconsolidated subsidiaries			2,005			5,567			(12,795	)		(20,442	)		(9,792	)		(33,236	)
Income (loss) from continuing operations before income taxes, minority interest, extraordinary items and equity in (earnings) / loss of unconsolidated subsidiaries				(69,640	)		(50,596	)		(21,726	)		17,015			7,906			32,884
Add:
	Interest expense			58,548			55,482			87,290			104,156			106,711			79,663
	Portion of rents representative of interest factor			1,797			2,586			7,859			10,765			11,349			7,760
	Cash distributions from unconsolidated subsidiaries			—			—			11,441			21,970			14,324			35,399
													—			—			—
		Total fixed charges		60,345			58,068			106,590			136,891			132,384			122,822
Total earnings			$	(9,295	)	$	7,472		$	84,864		$	153,906		$	140,290		$	155,706
FIXED CHARGES AND PREFERENCE DIVIDENDS:
Interest expense			$	58,548		$	55,482		$	87,290		$	104,156		$	106,711		$	79,663
Portion of rents representative of interest factor				1,797			2,586			7,859			10,765			11,349			7,760
Capitalized interest				—			—			513			673			—			—
Less:
	Fixed charges of certain unconsolidated subsidiaries												—			—			—
Total fixed charges before preference dividends				60,345			58,068			95,662			115,594			118,060			87,423
Preferred dividend requirement				—			—			—			—			3,802			3,747
	Effective tax rate (1)			N/A			N/A			N/A			N/A			50.8	%		50.5	%
Preferred dividend factor on pre-tax basis				—			—			—			—			7,731			7,564
Combined fixed charges and preference dividends			$	60,345		$	58,068		$	95,662		$	115,594		$	125,790		$	94,987
Ratio of earnings (dollar amount of deficiency) to fixed charges			$	(69,640	)	$	(50,596	)	$	(10,798	)		1.3			1.1			1.6

(1)

Represents income from continuing operations before provision for income taxes divided by income from continuing operations, which adjusts dividends on preferred stock to a pre-tax basis.

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MAGELLAN HEALTH SERVICES, INC AND CONSOLIDATED SUBSIDIARIES COMBINED WITH UNCONSOLIDATED SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERENCE DIVIDENDS (Dollars in thousands)