Healthspring 8-K/A Entry into a Material Definitive Agreement

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     On October 1, 2007, the Company completed the acquisition of all of the outstanding capital stock of Leon Medical Centers Health Plans, Inc. (“LMC Health Plans”) pursuant to the terms of the Stock Purchase Agreement, dated as of August 9, 2007 (the “Stock Purchase Agreement”), by and among the Company, NewQuest, LMC Health Plans, and the stockholders of LMC Health Plans. LMC Health Plans is a Miami, Florida-based Medicare Advantage HMO with approximately 26,000 members. Pursuant to the Stock Purchase Agreement, NewQuest acquired LMC Health Plans for $355.0 million in cash and 2,666,667 shares of the Company’s common stock, $.01 par value per share, which share consideration has been deposited in escrow and will be released to the sellers if Leon Medical Centers, Inc. (“LMC”) completes the construction of two additional medical centers in accordance with the timeframes set forth in the purchase agreement.

     The Company’s available cash on hand together with borrowings of $300 million in term loans under a new $400.0 million, five-year credit agreement, entered into on October 1, 2007, were used to fund the Acquisition as well as transaction expenses related thereto.

     The unaudited pro forma condensed combined financial statements give effect to the acquisition of LMC Health Plans by the Company as if the acquisition had occurred on January 1, 2006 and January 1, 2007 for purposes of the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2006 and the six months ended June 30, 2007, respectively. The unaudited pro forma condensed combined financial statements give effect to the acquisition of LMC Health Plans by the Company as if the acquisition had occurred on June 30, 2007 for purposes of the unaudited pro forma condensed combined balance sheet as of June 30, 2007.

     The Company will account for the Acquisition using the purchase method of accounting. As such, the Company will record the assets (including identifiable intangible assets) and liabilities of LMC Health Plans at their estimated fair value as of the completion of the acquisition. The difference between the purchase price and the estimated fair value of LMC Health Plans net assets and liabilities will result in goodwill. The 2,666,667 shares of contingent consideration deposited into escrow as part of the acquisition consideration (discussed above) are not included in the purchase price shown in the unaudited pro forma balance sheet as such shares will not be recorded as additional purchase price unless and until such time that the Company concludes that it is determinable beyond a reasonable doubt that the share release conditions will be met.

     Because these unaudited pro forma condensed combined financial statements have been prepared based on preliminary estimates of fair values, the actual amounts recorded as of the completion of the Company’s fair value assessment may differ materially from the information presented in this unaudited pro forma condensed combined financial information. The impact of any integration activities incurred by the Company in post-acquisition periods could also cause material differences from the information presented below.

     The unaudited pro forma information should be read in conjunction with the historical consolidated financial statements of the Company which have been previously filed with the Securities and Exchange Commission and the historical financial statements of LMC Health Plans included in the Current Report on Form 8-K/A of which the statements are a part.

     This information is for illustrative purposes only. The Company and LMC Health Plans would likely have performed differently had they actually been combined as of the dates presented. You should not rely on this information as being indicative of future consolidated results after the acquisition.

HealthSpring, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2007
(in thousands)

				LMC
	HealthSpring			Health Plans		Pro Forma
	Historical			Historical		Adjustments			Pro Forma
Assets
Current Assets:
Cash and cash equivalents	$	540,359		$	88,857	$	(68,620	)(1)	$	560,596
Accounts receivable, net of allowance for doubtful accounts		44,559			6,294		—			50,853
Investment securities available for sale		6,769			—		—			6,769
Current portion of investment securities held to maturity		10,359			—		—			10,359
Deferred income tax asset		3,448			85		—			3,533
Prepaid expenses and other assets		7,172			942		—			8,114
Total current assets		612,666			96,178		(68,620	)		640,224
Investment securities held to maturity, less current portion		25,166			—		—			25,166
Property and equipment, net		13,689			2,026		—			15,715
Goodwill		341,469			—		233,257	(2)		574,726
Intangible assets, net		73,156			—		169,300	(3)		242,456
Other		6,125			—		10,600	(4)
		—			—		(702	)(9)		16,023
Restricted investments		8,066			378		—			8,444
Total assets	$	1,080,337		$	98,582	$	343,835		$	1,522,754
Liabilities and Stockholders’ Equity
Current Liabilities:
Medical claims liability	$	129,470		$	20,186	$	—		$	149,656
Current portion of long term debt		—			—		15,000	(5)		15,000
Accounts payable, accrued expenses and other		16,399			1,231		(2,140	)(8)		15,490
Deferred revenue		114,887			33,945		—			148,832
Funds held for the benefit of members		139,323			3,781		—			143,104
Risk corridor payable to CMS		33,111			5,074		—			38,185
Current income taxes payable		—			13,232		2,140	(8)		15,101
		—			—		(271	)(9)
Total current liabilities		433,190			77,449		14,729			525,368
Long-term debt, less current portion		—			—		285,000	(5)		285,000
Deferred tax liability		25,669			322		65,307	(6)		91,298
Other long-term liabilities		3,212			41		—			3,253
Total liabilities		462,071			77,812		365,036			904,919
Stockholders’ Equity:
Common stock		576			—		—			576
Additional paid in capital		490,102			9,008		(9,008	)(7)		490,102
Retained earnings		127,651			11,762		(11,762	)(7)
		—			—		(431	)(9)		127,220
Treasury stock		(63	)		—		—			(63	)
Total stockholders’ equity		618,266			20,770		(21,201	)		617,835
Total liabilities and stockholders’ equity	$	1,080,337		$	98,582	$	343,835		$	1,522,754

HealthSpring, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Income
Six Months Ended June 30, 2007
(in thousands, except share data)

				LMC
	HealthSpring			Health Plans			Pro Forma			Pro
	Historical			Historical			Adjustments			Forma
Revenue:
Premium:
Medicare	$	691,308		$	159,990		$	—		$	851,298
Commercial		25,349			—			—			25,349
Total premium revenue		716,657			159,990			—			876,647
Management and fee revenue		12,085			—			—			12,085
Investment income		11,207			1,487			(1,715	)(10)		10,979
Total revenue		739,949			161,477			(1,715	)		899,711
Operating Expenses:
Medical Expense:
Medicare expense		558,875			130,098			—			688,973
Commercial expense		20,597			—			—			20,597
Total medical expenses		579,472			130,098			—			709,570
Selling, general and administrative		91,152			9,285			—			100,437
Depreciation and amortization		5,836			336			6,000	(3)		12,172
Impairment of intangible assets		4,536			—			—			4,536
Interest expense		232			15			12,793	(11)		13,040
Total operating expenses		681,228			139,734			18,793			839,755
Income before equity in earnings of unconsolidated affiliate, and income taxes		58,721			21,743			(20,508	)		59,956
Equity in earnings of unconsolidated affiliate		118			—			—			118
Income before income taxes		58,839			21,743			(20,508	)		60,074
Income taxes		(20,946	)		(8,182	)		7,911	(12)		(21,217	)
Net income	$	37,893		$	13,561		$	(12,597	)	$	38,857
Net Income per common share:
Basic	$	0.66								$	0.68
Diluted	$	0.66								$	0.68
Weighted average common shares outstanding:
Basic		57,237,611									57,237,611	(13)
Diluted		57,341,519									57,341,519	(13)

HealthSpring, Inc. and Subsidiaries

Unaudited Pro Forma Condensed Combined Statement of Income

Year ended December 31, 2006

(in thousands, except share data)

				LMC
				Health			Pro
	HealthSpring			Plans			Forma			Pro
	Historical			Historical			Adjustments			Forma
Revenue:
Premium:
Medicare	$	1,149,844		$	269,247		$	—		$	1,419,091
Commercial		120,504			—			—			120,504
Total premium revenue		1,270,348			269,247			—			1,539,595
Management and fee revenue		26,688			—			—			26,688
Investment income		11,920			2,425			(3,430	)(10)		10,915
Total revenue		1,308,956			271,672			(3,430	)		1,577,198
Operating Expenses:
Medical Expense:
Medicare expense		900,358			234,021			—			1,134,379
Commercial expense		108,168			—			—			108,168
Total medical expenses		1,008,526			234,021			—			1,242,547
Selling, general and administrative		156,940			18,739			—			175,679
Depreciation and amortization		10,154			629			12,000	(3)		22,783
Interest expense		8,695			124			25,585	(11)		34,404
Total operating expenses		1,184,315			253,513			37,585			1,475,413
Income before equity in earnings of unconsolidated affiliate, minority interest and income taxes		124,641			18,159			(41,015	)		101,785
Equity in earnings of unconsolidated affiliate		309			—			—			309
Income before minority interest and income taxes		124,950			18,159			(41,015	)		102,094
Minority interest		(303	)		—			—			(303	)
Income before income taxes		124,647			18,159			(41,015	)		101,791
Income taxes		(43,811	)		(6,833	)		15,822	(12)		(34,822	)
Net income		80,836			11,326			(25,193	)		66,969
Preferred dividends		(2,021	)		—			—			(2,021	)
Net income available to common stockholders and members	$	78,815		$	11,326		$	(25,193	)	$	64,948
Net Income per common share:
Basic	$	1.44								$	1.19
Diluted	$	1.44								$	1.19
Weighted average common shares outstanding:
Basic		54,617,744									54,617,744	(13)
Diluted		54,720,373									54,720,373	(13)

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1) Pursuant to the Stock Purchase Agreement, LMC Health Plans stockholders received $355.00 in cash at the consummation of the acquisition. This was partially funded through borrowings of $300.0 million under a new credit facility. The net reduction in cash and cash equivalents of $68.6 million is composed of the following estimated items (dollars in millions):

Cash consideration to LMC Health Plan stockholders of $355.0 million for 100% of all the outstanding shares of LMC Health Plans	$	(355.0	)
Cash transaction costs for transaction costs and financing fees		(13.6	)
Subtotal		(368.6	)
New borrowings to partially fund the acquisition (see Note 5)		300.0
Net reduction in cash and equivalents related to the acquisition transaction	$	(68.6	)

2)	Pro forma adjustment to goodwill and other intangible assets of $402.6 million is a result of the excess of purchase price over LMC Health Plans’ net assets, which are assumed to equal fair value for pro forma purposes, and other purchase accounting adjustments. The purchase price is assumed to be $358.0 million.
	The calculation of purchase price and goodwill and other intangible assets is estimated as follows (dollars in millions):

CASH CONSIDERATION
Cash to be paid to LMC Health Plans stockholders	$	355.0
Estimated transaction costs		3.0
Estimated purchase price	$	358.0

The estimated purchase price of $358.0 million has been preliminarily allocated to acquired tangible and intangible assets and liabilities based upon their estimated fair values as of June 30, 2007 as detailed below (in millions):

Estimated purchase price	$	358.0
LMC Health Plans net tangible assets — June 30, 2007		20.7
Total excess purchase price	$	337.3
Estimated finite-lived intangible assets (as described in Note 3)		(169.3	)
Deferred tax liability for finite-lived intangible assets (as described in Note 6)		65.3
Estimated goodwill	$	233.3

3)	Finite lived intangible assets relating to the LMC Health Plans acquisition have been estimated at approximately $169.3 million, consisting of the provider network and the Medicare member network. The estimated weighted average useful life is approximately 14.25 years and the estimated annual amortization expense is approximately $12.0 million.
4)	Represents deferred financing costs associated with borrowings to finance the acquisition.
5)	Reflects the addition of $300.0 of borrowings under the new senior secured credit facilities (described in the introduction to this audited pro forma) to partially fund the acquisition LMC Health Plans. Of this amount, $15.0 million is due within twelve months from the date of borrowing and is considered a current liability. The balance of $285.0 million in borrowings is shown as a long-term liability.
6)	Reflects $65.3 million related to the recognition of deferred tax liabilities associated with the estimated identifiable intangible assets of $169.3 million as described in Note 3 above.
7)	Represents the elimination of LMC Health Plans equity accounts.
8)	Represents the reclassification of HealthSpring, Inc.’s income taxes payable amounts from other payables to income taxes payable for pro forma presentation purposes.
9)	Represents the write-off of unamortized deferred debt issue costs associated with HealthSpring, Inc.’s old credit facility which terminated effective with entering into the new credit facilities (see Note 5 above).
10)	Represents the use of cash of $68.6 million to finance the transaction (see note 1). The cash requirements are assumed to come from available (unrestricted) cash on hand. The effective interest rate yield used for the foregone interest income is 5.0% based upon estimated current interest rates on HealthSpring’s cash and cash equivalents accounts. The foregone interest income is estimated at $3.4 million for the year ended December 31, 2006 and $1.7 million for the six months ended June 30, 2007.

11)	Represents the estimated interest expense associated with borrowing $300.0 million of variable rate debt to be paid as part of the acquisition consideration (see note 1) with effective interest rates of 7.7% at the date of issuance for the year ended December 31, 2006 and for the six months ended June 30, 2007 (based on LIBOR plus 2.5%). The cost of the unused portion of the revolving credit facility is 0.5%. The associated interest expense for the borrowings described above is estimated at $25.6 million for the year ended December 31, 2006 and $12.8 million for the six months ended June 30, 2007. A 1/8 percentage point change in the LIBOR rate would result in an adjustment to income before income taxes of $0.4 million on an annual basis.
12)	Represents the pro forma tax effect of the pro forma adjustments based upon the estimated income tax rate of 38.6%.
13)	The 2,666,667 shares of contingent consideration will be excluded from the computation of basic and diluted earnings per share until such time that all conditions for their release from escrow have been satisfied. As a result, the shares are excluded from the computation of basic and diluted earnings per share in the unaudited pro forma income statement.