HMO

1991 1990
EV/EBITDA Multiple
Average EV/EBITDA 9.24 7.75
Average 8.50

P/E Multiple
Average PE 15.13 12.00
Average 13.57

Hospitals

1991 1990
EV/EBITDA Multiple
Average EV/EBITDA 6.14 6.70
Average 6.42

P/E Multiple
Average PE 13.55 13.75
Average 13.65
 HMO
1991
Revenues 2,601
EBITDA 84.16
Depreciation & Amoritization 28.20
Interest expense -56.59
Income before income taxes 112.55
Provision for income taxes 40.52
Net Income 72.03

Using EV/EBITDA Multiple

Enterprise Value 715.07 715071984.54
Number of Shares 158206059
Debt 141.62
Market Capitalisation 573.45 573447662.12
Share Price ($) 3.62

Using P/E Multiple

Market Capitalisation 977.24 977240446.18
Share Price ($) 6.18
 Hospitals
1991
Revenues 4,000
EBITDA 760.84
Depreciation & Amoritization 227.80
Interest expense 90.59
Income before income taxes 442.45
Provision for income taxes 159.28
Net Income 283.17

Using EV/EBITDA Multiple

Enterprise Value 4884.89 ###
Number of Shares 158206059
Debt 704.38
Market Capitalisation 4180.51 ###
Share Price ($) 26.42

Using P/E Multiple

Market Capitalisation 3865.24 ###
Share Price ($) 24.43
Exhibit 4 Consolidated Financial Statements ($ millions)

Years Ended August 31,

1991 1990 1989

Assets
Current Assets:
Cash and Cash equivalents 74 100 105
Marketable Securities 87 55 79
Accounts receivable 789 680 616
Inventories 104 91 81
Other 115 129 134
1,169 1,055 1,015

Property and Equipment, at cost:

Land 230 207 177
Buildings 2,136 1,928 1,760
Equipment 1,576 1,379 1,211
Construction in progress 99 90 58
4,041 3,604 3,206
Accumulated Depreciation 1,468 1,326 1,155
2,573 2,278 2,051
Investments of health plan and insurance
subsidiaries 523 453 462
Other 162 150 168
Total Assets 4,427 3,936 3,696

Liabilities and Stockholders' Equity

Current Liabilities:
Trade accounts payable 175 147 115
Salaries, wages & other compensation 139 100 96
Other accrued expenses 335 266 229
Unearned premium revenues 83 64 -
Medical claims reserves 272 246 195
Income taxes 81 117 106
Long-term debt due within one year 20 35 35
1,105 975 776
Long-term debt 826 717 1,140
Other liabilities 487 494 453
Common Stock, $0.1667 par value;
Common
200,000,000stockholders' equity: issued and
shares authorized;
outstanding:
158,206,059 shares (1991);
156,469,806 shares (1990);
147,658,278 shares (1989) 26 26 26
Capital in excess of par value 481 449 234
Other (3) (5) (11)
Retained earnings 1,505 1,280 1,078
2,009 1,750 1,327
Total Liabilities and Stockholder's Equity 4,427 3,936 3,696

Revenues 5,865 4,852 4,088

Operating expenses 4,794 3,848 3,218

Provision for doubtful accounts 226 226 184
Depreciation & Amoritization 256 231 209
Interest expense 97 111 139
Interest income (63) (63) (61)
5,310 4,353 3,689

Income before income taxes 555 499 399

Provision for income taxes 200 180 143

Income beforeloss
Extraordinary extraordinary item
on early extinguishment 355 319 256
of debt, net of income tax benefit $5 - (9) -

Net Income 355 310 256

Source: Company Annual Reports

Exhibit 5 Major Publicly Traded Health Maintenance Organizations

1991 1990 1989

Pacificare Health Systems
Runs group health plans with 726,500 enrollees.

Beta = 1.20
Assets ($mil) 322 232 194
Long-Term Debt ($mil) 2.3 0.3 2.3
Net Worth ($mil) 100 75 44
Operating Revenues ($mil) 1,242 976 650
EBITDA($mil) 36 19 11
Net Income (Loss) ($mil) 26 17 11
Earnings per share ($) 2.2 1.4 0.96
Dividends per Share ($) nil nil nil
Common Stock Price Range ($) High/Low 42.6/14.6 27.6/12.0 30.4/6.2
Average PE Ratio 11.4 12.7 12.7
Average Shares Outstanding (mil) 11.39 11.38 10.75
Share Price 25.1 17.8 12.2
Market Cap 285.7 202.3 131.1
Enterprise Value 288.0 202.6 133.4
EV/EBITDA 8.0 10.7 12.1

United Healthcare
Runs group health plans with 1,300,000 enrollees.

Beta = 1.30
Assets ($mil) 574 293 237
Long-Term Debt ($mil) 3.4 7.0 58.3
Net Worth ($mil) 319 126 60
Operating Revenues ($mil) 847 605 412
EBITDA ($mil) 129 66 33
Net Income (Loss) ($mil) 75 34 14
Earnings per Share ($) 2.40 1.20 0.61
Dividends per Share ($) 0.02 0.02 nil
Common Stock Price Range ($) High/Low 78.3/20.0 24.0/7.9 12.6/4.1
Average PE Ratio 19.5 12.5 150
Average Shares Outstanding (mil) 31.47 27.10 19.35
Share Price 46.8 15.0 91.5
Market Cap 1472.8 406.5 1770.5
Enterprise Value 1476.2 413.5 1828.8
EV/EBITDA 11.4 6.3 55.4

U.S. Healthcare
Runs group health plans with 1,240,000 enrollees.

Beta = 1.25
Assets ($mil) 758 613 414
Long-Term Debt ($mil) 0 0 0
Net Worth ($mil) 347 234 164
Operating Revenues ($mil) 1,709 1,330 1,000
EBITDA ($mil) 258 130 53
Net Income (Loss) ($mil) 151 78 28
Earnings per Share ($) 2.09 1.08 0.40
Dividends per Share ($) 0.24 0.16 0.10
Common Stock Price Range ($) High/Low 45.8/15.9 19.9/6.4 10.3/3.5
Average PE Ratio 14.5 10.8 18.9
Average Shares Outstanding (mil) 70.54 70.43 69.27
Share Price 30.3 11.7 7.6
Market Cap 2137.7 821.5 523.7
Enterprise Value 2137.7 821.5 523.7
EV/EBITDA 8.3 6.3 9.9

Source: Value Line; Company Annual Reports

 1991 1990
Average EV/EBITDA 9.24 7.75
Average 8.50

Average PE 15.13 12.00

Average 13.57
Exhibit 6 Major Publicly Traded Hospital Companies1

1991 1990 1989

Columbia Hospitals 2

Runs 11 general hospitals with 2,643 licensed beds and 2 psychiatric hospitals with 172 beds

Beta = na
Assets ($mil) 485 322
Long-Term Debt ($mil) 230 172
Net Worth ($mil) 118 41
Operating Revenues ($mil) 499 290
EBITDA($mil) 81 46
Net Income (Loss) ($mil) 15 10
Earnings per Share ($) 0.90 0.83
Dividends per Share ($) nil nil
Common Stock Price Range ($) High/Low 18.8/9.8 15.5/10.0
Average PE Ratio 14.1 14.5
Average Shares Outstanding (mil) 16.54 11.82
Share Price 12.7 12.0
Market Cap 209.9 142.3
Enterprise Value 439.9 314.3
EV/EBITDA 5.4 6.8

Community Psychiatric Centers

Runs 50 psychiatric hospitals with 5,044 licensed beds.

Beta= 1.20
Assets ($mil) 570 552 475
Long-Term Debt ($mil) 27 29 30
Net Worth ($mil) 484 461 387
Operating Revenues ($mil) 397 382 331
EBITDA($mil) 84 83 72
Net Income (Loss) ($mil) 45 83 72
Earnings per Share ($) 1.51 1.80 1.56
Dividends per Share ($) 0.36 0.36 0.36
Common Stock Price Range ($) High/Low 40.0/10.6 30.6/19.8 35.0/22.3
Average PE Ratio 18.7 14.2 18.8
Average Shares Outstanding (mil) 46.19 46.63 46.82
Share Price 28.2 25.6 29.3
Market Cap 1304.3 1191.9 1373.1
Enterprise Value 1331.3 1220.9 1403.1
EV/EBITDA 15.8 14.7 19.5

National Medical Enterprises

Runs 35 general hospitals with 6,559 beds, 32 rehabilitation hospitals with 2,704 beds, and 82
psychiatric hospitals and related facilities with 6,588 beds.

Beta = 1.15
Assets ($mil) 4,060 3,807 3,877
Long-Term Debt ($mil) 1,140 1,361 1,671
Net Worth ($mil) 1,762 1,257 1,101
Operating Revenues ($mil) 3,806 3,935 3,676
EBITDA ($mil) 741 681 582
Net Income (Loss) ($mil) 277 242 192
Earnings per Share ($) 1.73 1.52 1.29
Dividends per Share ($) 0.40 0.36 0.34
Common Stock Price Range ($) High/Low 25.8/12.6 20.1/14.6 19.5/10.7
Average PE Ratio 13.0 13.0 9.4
Average Shares Outstanding (mil) 174.76 157.78 148.74
Share Price 22.5 19.8 12.1
Market Cap 3930.4 3117.7 1803.6
Enterprise Value 5070.4 4478.7 3474.6
EV/EBITDA 6.8 6.6 6.0

1
In 1992, the two largest (other than Humana) publicly-traded hospital companies in the U.S. were HealthTrust, Inc. and
Hospital Corporation of America. HealthTrust went public in 1991, and HCA in 1992. Due to their brief trading histories, they
are not represented in this table.
2
Columbia Hospitals went public in May 1990.
Source: Value Line; Company Annual Reports
 1991 1990
Average EV/EBITDA 6.14 6.70
Average 6.42

Average PE 13.55 13.75

Average 13.65
Exhibit 10 Fiscal Year 1991 Business Segment Information ($ millions)

Hospitals
Assets:
Hospitals 3,540 0.834315
Health Plans 703 0.165685
Corporate 184 153.51
4,427
Total 3693.51
0.83

Long-term Debt (including debt currently payable):

Hospitals 102
Health Plans 22
Corporate 722 602.38
846
Total 704.38
0.83
Revenues:
Hospitals
Inpatient 3,046
Outpatient 954
4,000

Health Plans 2,233

Hospital revenues paid by Humana health plans (368)
5,865
EBITDA:
Hospitals 904 0.900398
Health Plans 100 0.099602
Corporate (159) -143.16
845
Total 760.84

Depreciation and Amoritization:

Hospitals 210 0.889831
Health Plans 26 0.110169
Corporate 20 17.80
256

Total 227.80

Net Interest Expense:

Hospitals 193
Health Plans -36
Corporate -123 -102.41
34
Total 90.59

Additions to Property and Equipment:

Hospitals 396
Health Plans 113
Corporate 77 64.24
586
Total 460.24

a
Includes $169 million in interest on intercompany debt owed to Corporate.
Source: Company documents and annual reports
HMO

30.49

733.49
0.17

119.62

141.62
0.17

-15.84

84.16

2.20

28.20

-20.59

-56.59

12.76
125.76