Vanguard Reports Second Quarter Results NASHVILLE, Tenn. – February 11, 2008 -- Vanguard Health Systems, Inc. (“Vanguard”) today announced results for the second quarter ended December 31, 2007. Total revenues for the quarter ended December 31, 2007 were $686.0 million, an increase of $47.7 million or 7.5% from the prior year quarter. Patient service revenues and health plan premium revenues increased $38.3 million and $9.4 million, respectively, from the prior year quarter. The quarter over quarter increase in patient service revenues was primarily attributable to a 1.5% increase in hospital adjusted discharges from continuing operations and a 4.7% increase in patient revenue per adjusted hospital discharge from continuing operations during the current year quarter compared to the prior year quarter. The quarter over quarter increase in health plan premium revenues was primarily attributable to an increase in average membership in our managed Medicaid health plan in Phoenix, Arizona during the current year quarter compared to the prior year quarter. For the quarter ended December 31, 2007, Vanguard’s loss from continuing operations decreased to $0.6 million from $114.8 million during the prior year quarter. The decrease primarily resulted from the $123.8 million ($110.5 million, net of tax benefit) impairment charge recorded during the prior year quarter to write down the goodwill related to Vanguard’s Chicago hospitals to fair value as previously disclosed. Salaries and benefits as a percentage of total revenues decreased from 41.6% during the prior year quarter to 40.8% during the current year quarter as a result of decreased contract labor expense as a percentage of total revenues and the quarter over quarter increase in health plan premium revenues that do not result in significantly higher salaries and benefits. Supplies as a percentage of total revenues decreased to 15.6% during the current year quarter compared to 16.5% during the prior year quarter primarily as a result of certain of our corporate supply chain initiatives. The combined provision for doubtful accounts and charity care as a percentage of patient service revenues was 12.2% for both the current year and prior year quarters. Net income for the quarter ended December 31, 2007 was $0.5 million compared to a net loss of $118.7 million during the prior year quarter. Adjusted EBITDA was $68.2 million for the quarter ended December 31, 2007, an increase of $9.6 million or 16.4% from the prior year quarter. A reconciliation of Adjusted EBITDA to net income (loss) as determined in accordance with generally accepted accounting principles for the quarters ended December 31, 2006 and 2007 is included in the attached supplemental financial information. The consolidated operating results for the quarter ended December 31, 2007 reflect a 0.4% increase in discharges from continuing operations and a 1.5% increase in hospital adjusted discharges from continuing operations compared to the prior year quarter. Emergency room visits from continuing operations increased 2.5% quarter over quarter. Outpatient surgeries from continuing operations decreased 3.3% quarter over quarter primarily due to the elimination of certain unprofitable service lines and intense competition from outpatient facilities and other hospitals. Total revenues for the six months ended December 31, 2007 were $1,348.5 million, an increase of $91.9 million or 7.3% from the prior year period. Patient service revenues and health plan premium revenues increased $73.8 million and $18.1 million, respectively, from the prior year period. Patient service revenues for the six months ended December 31, 2007 were positively impacted by a 1.3% increase in
hospital adjusted discharges from continuing operations and a 5.1% increase in patient revenue per adjusted hospital discharge from continuing operations compared to the prior year period. Health plan premium revenues increased 9.1% period over period primarily due to an increase in average membership in our managed Medicaid health plan in Phoenix, Arizona. For the six months ended December 31, 2007, Vanguard’s loss from continuing operations decreased to $10.6 million compared to $134.0 million during the prior year period. The prior year period loss from continuing operations primarily resulted from the impairment charge previously discussed. Salaries and benefits as a percentage of total revenues and supplies as a percentage of total revenues both decreased period over period. The combined provision for doubtful accounts and charity care as a percentage of patient service revenues increased from 12.2% for the prior year period to 12.5% for the current year period primarily due to our implementation of a new allowance for bad debts policy effective July 1, 2007 that more quickly recognizes uncollectible accounts associated with uninsured or underinsured patients. Net loss for the six months ended December 31, 2007 was $6.4 million compared to a net loss of $126.4 million during the prior year period. Adjusted EBITDA was $125.0 million for the six months ended December 31, 2007, an increase of $12.4 million or 11.0% from the prior year period. A reconciliation of Adjusted EBITDA to net loss as determined in accordance with generally accepted accounting principles for the six-month periods ended December 31, 2006 and 2007 is included in the attached supplemental financial information. The consolidated operating results for the six months ended December 31, 2007 reflect a 0.8% increase in discharges from continuing operations and a 1.3% increase in hospital adjusted discharges from continuing operations compared to the prior year period. Emergency room visits from continuing operations increased 3.0% period over period. Outpatient surgeries from continuing operations decreased 4.6% period over period. Cash flows from operating activities were $68.8 million for the six months ended December 31, 2007, an increase of $60.8 million from the prior year period. The increase was primarily attributable to the improved operating results during the six months ended December 31, 2007 and a decrease in payments of accounts payable and other liabilities during the current year period compared to the prior year period. “In light of the many challenges facing our industry, we are pleased with the early progress we have made with our service expansion and cost management initiatives,” commented Charles N. Martin, Jr., Chairman and Chief Executive Officer. “We continue to build the infrastructure for our company-wide quality of care mission through capital improvements, process refinement, nurse retention and physician relations initiatives in order to improve the healthcare experience for our patients from the time of admission to discharge.” Vanguard will host a conference call for investors at 11:00 am EST on February 12, 2008. All interested investors are invited to access a live audio broadcast of the call, via webcast. The live webcast can be accessed on the home page of Vanguard’s Web site at www.vanguardhealth.com by clicking on Second Quarter Webcast or at http://visualwebcaster.com/event.asp?id=45180. If you are unable to participate during the live webcast, the call will be available on a replay basis on Vanguard’s Web site www.vanguardhealth.com. To access the replay, click on Second Quarter Webcast on Vanguard’s home page or later on the Latest News link on the Investor Relations page of www.vanguardhealth.com. Vanguard owns and operates 15 acute care hospitals and complementary facilities and services in Chicago, Illinois; Phoenix, Arizona; San Antonio, Texas; and Massachusetts. Vanguard’s strategy is to develop locally branded, comprehensive healthcare delivery networks in urban markets. Vanguard will
pursue acquisitions where there are opportunities to partner with leading delivery systems in new urban markets. Upon acquiring a facility or network of facilities, Vanguard implements strategic and operational improvement initiatives including expanding services, strengthening relationships with physicians and managed care organizations, recruiting new physicians and upgrading information systems and other capital equipment. These strategies improve quality and network coverage in a cost effective and accessible manner for the communities we serve. This press release contains forward-looking statements within the meaning of the federal securities laws, which are intended to be covered by the safe harbors created thereby. These forward-looking statements include all statements that are not historical statements of fact and those statements regarding Vanguard’s intent, belief or expectations. Do not rely on any forward-looking statements as such statements are subject to numerous factors, risks and uncertainties that could cause Vanguard’s actual outcomes, results, performance or achievements to be materially different from those projected. These factors, risks and uncertainties include, among others, Vanguard’s high degree of leverage and interest rate risk; Vanguard’s ability to incur substantially more debt; operating and financial restrictions in Vanguard’s debt agreements; Vanguard’s ability to successfully implement its business strategies; Vanguard’s ability to successfully integrate its recent and any future acquisitions; the highly competitive nature of the healthcare business; governmental regulation of the industry including Medicare and Medicaid reimbursement levels; changes in Federal, state or local regulation affecting the healthcare industry; the possible enactment of Federal or state healthcare reform; pressures to contain costs by managed care organizations and other insurers and Vanguard’s ability to negotiate acceptable terms with these third party payers; the ability to attract and retain qualified management and personnel, including physicians and nurses; claims and legal actions relating to professional liabilities or other matters; changes in general economic conditions; Vanguard’s exposure to the increased amounts of and collection risks associated with uninsured accounts and the co-pay and deductible portions of insured accounts; Vanguard’s ability to maintain or increase patient membership and control costs of its managed healthcare plans; the availability and terms of capital to fund the expansion of Vanguard’s business; the geographic concentration of Vanguard’s operations; the technological and pharmaceutical improvements that increase the cost of providing healthcare services or reduce the demand for such services; the timeliness of reimbursement payments received under government programs; the potential adverse impact of known and unknown government investigations; and those factors, risks and uncertainties detailed in Vanguard’s filings from time to time with the Securities and Exchange Commission, including, among others, Vanguard’s Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q. Although Vanguard believes that the assumptions underlying the forward-looking statements contained in this press release are reasonable, any of these assumptions could prove to be inaccurate, and, therefore, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, you should not regard the inclusion of such information as a representation by Vanguard that its objectives and plans anticipated by the forward-looking statements will occur or be achieved, or if any of them do, what impact they will have on Vanguard’s results of operations and financial condition. Vanguard undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. | 
