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Benchmarking of Top Hospitals in the United States June 2013

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CAGR and Y-o-Y Revenue Growth Revenue Growth (Y-o-Y, %)

Gentiva Health

(4.8%)

Minimum (4.4%)

Universal Health

Select Medical

HCA

Lifepoint Hospitals

2.5%

5.2%

11.2%

12.1%

3.0%

5.3%

Tenet

Healthsouth

Community Health Systems

8.6% Average

Health Management

Vanguard Health

16.3%

21.5%

11.9%

14.4%

17.2%

Kindred

Mednax

Davita Healthcare

Maximum

Revenue CAGR (2009-2012), %

Tenet

0.4%

Minimum

Community Health Systems

Lifepoint Hospitals

2.5%

4.6%

3.2% 3.8% HCA

Select Medical

Davita Healthcare

9.6% 10.2%

9.6% Average

Healthsouth

Universal Health

Kindred

13.1%

12.1% Mednax

Vanguard Health

13.9%

13.5% Health Management

23.1%

14.1%

Maximum

Gentiva Health

Gentiva Health Services and Community Health Systems are struggling with revenue growth

Vanguard Health acquired 13 hospitals in 2011, which provided a boost to its revenue growth during last few years

Source: Company Reports, Thomson One Banker and Sutherland Research Š 2013 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

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Operating Expenses to Sales Ratio (%) Operating Expenses to Sales Ratio (%)

2010

Mednax

Davita Healthcare

Healthsouth

77.7%

82.8%

84.7%

Gentiva Health

HCA

88.4% 89.8% Average

2011

Healthsouth

77.3%

81.3%

Davita Healthcare

83.3%

2012

Mednax

78.2% 78.6%

Minimum

HCA

Universal

85.9%

Davita Healthcare

HCA

83.3%

80.6% Healthsouth

Vanguard Health

86.4%

84.3% Lifepoint Hospitals

94.6%

Select Medical

88.6%

86.8% Average

Kindred

98.1%

91.4%

Maximum Community Health

Universal

Select Medical

88.0% 89.1%

88.0% 88.6% Average

Minimum

Universal

Select Medical

86.6% 87.7% 89.2% 90.1%

Minimum

Mednax

Lifepoint Hospitals

Community

Vanguard Health

92.1%

95.4% 96.3%

90.6% Lifepoint Hospitals

Kindred

Maximum Gentiva Health

Community Health

91.7%

91.3%

Vanguard Health

Mednax, Healthsouth and Davita have been managing their operating cost consistently better than their peers

Kindred, Vanguard and Community Health have the highest operating cost to sales ratio all through

Kindred

95.3% 96.5%

Maximum

Gentiva Health

Source: Company Reports, Thomson One Banker and Sutherland Research Š 2013 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

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Operating Cash Flow to Sales (%) Operating Cash Flow to Sales (%)

Community Health Systems This ratio indicates the ability of a company to translate its sales into cash. A higher and growing value is a good indicator of cash with the company

Davita Healthcare

2011

Gentiva Health Services

6.6% 4.9% 7.2%

19.7% 17.6% 17.8%

17.0% 20.1% 22.1%

Healthsouth

2012

Health Management Association

Most of the hospitals have hovered around the comparable levels in 2011 and 2012

Lifepoint Hospitals

8.6% 10.8% 9.2%

5.4% 4.5% 5.0% 2010

11.1% 11.0% 6.8%

21.3% 23.2% 23.2% 9.2% 10.2% 10.7%

14.6% 14.4% 13.9%

14.9% 17.5% 16.6%

8.4% 9.0% 10.1%

Kindred

11.0% 14.8% 12.2%

Universal Health Services

Tenet Healthcare

19.3% 23.2% 23.7%

HCA Holdings

Vanguard Health

Increase in revenue and decline in operating cash resulted in decline in the ratio for Vanguard in 2012 from the previous year

Select Medical Holdings

Mednax

Gentiva Health recovered to slightly higher levels in 2012 from those of 2010 after declining in 2011

Source: Company Reports, Thomson One Banker and Sutherland Research Š 2013 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

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Margin Comparison (GP, EBIT and Net Income) Margin Comparison (GP, EBIT and Net Income) GP Margin

EBIT Margin

98.3%

94.3% 91.3%

89.8% 77.6%

Net Margin

80.3%

79.3%

78.8%

Kindred and Gentiva Health lag all other hospitals both at the operating profit and net income level

66.7% 48.0% 46.9% 40.3%

27.7% 14.1% 8.3%

8.2%

15.6%

19.7% 12.0%

9.1%

1.9%

10.2%

8.2%

4.4% 4.9%

2.0%

1.7%

8.7%

6.5% 2.4%

5.8%

21.5%

0.9%

11.1%

13.3%

4.3%

4.5%

1.6%

-0.7%

HCA

Community Health

Tenet Healthcare

Davita Healthcare

Universal Health Services

Health Management

Kindred

Vanguard Health

Lifepoint Hospitals

Mednax

Healthsouth

Gentiva Health Services

Universal Health Services and HealthSouth seem to be having better profitability

Source: Company Reports, Thomson One Banker and Sutherland Research Š 2013 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

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Employee Productivity

2010

Lifepoint Hospitals

2011

Select Medical Holdings

Healthsouth

371.0 121.5 117.3

Vanguard Health

86.9 92.1 157.0

Kindred

92.3 97.4 98.6

145.6 131.6 121.1

Universal Health Health Management Services Association

87.7 126.8 145.5

142.9 143.0 167.1

112.0 161.3 167.1

176.6 170.3 153.3

162.6 153.4 154.1

Community Tenet Davita Health Healthcare Healthcare Systems

107.4 71.0 79.2

HCA Holdings

149.3 154.8 135.7

158.2 149.2 161.8

470.0 482.3 504.6

Revenue per Employee (‘000 USD)

Mednax

Gentiva Health Services

Mednax is a specialty services hospital, which may be the reason for its higher employee productivity

2012

2010

Kindred

2011

Lifepoint Hospitals

Select Medical Holdings

Healthsouth

543.6 103.4 103.5

185.4 190.0 168.7

84.6 117.6 115.3 Vanguard Health

73.6 75.6 149.3

Universal Health Health Management Services Association

55.4 53.2 54.3

137.2 147.9 158.4

151.5 164.8 178.3

222.3 216.9 300.0

139.1 140.2 147.1

Community Tenet Davita Health Healthcare Healthcare Systems

105.1 96.3 92.4

HCA Holdings

168.9 172.8 173.0

123.1 135.2 137.6

683.3 690.1 764.0

Asset per Employee (‘000 USD)

Mednax

Gentiva Health Services

2012

Source: Company Reports, Thomson One Banker and Sutherland Research © 2013 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

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Revenue, Revenue Growth and EBIT Revenue (Bn USD), Revenue growth and EBIT (%) 30%

25%

Y-o-Y Revenue growth (FY 12 over 11)

Though Mednax is much smaller than other hospitals, it is performing better than most of them

Vanguard Health 5.9 Health Management Association 6.8

20%

Davita Healthcare 8.2

15% Kindred 6.2

10%

Lifepoint Hospitals 3.4 Select Medical Holdings 2.9

Mednax 1.8

Healthsouth 2.1

5% Tenet Healthcare 9.1

Universal Health Services 7.7

0%

Community Health Systems 13.0

-5%

-10% -5%

Gentiva Health and Community Health seem to be the most troubled of the lot

HCA Holdings 33.0

Gentiva Health Services 1.7 0%

5%

10%

15%

20%

25%

30%

EBIT Margin, FY 2012, % Source: Company Reports, Thomson One Banker and Sutherland Research Š 2013 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

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Thank You

Š 2013 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

www.sutherlandglobal.com July 25, 2013

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