[January 30, 2013]

Vanguard Health Systems Reports Second Quarter Fiscal 2013 Results

Vanguard Health Systems, Inc. (NYSE: VHS) today announced financial and operating results for its second fiscal quarter of 2013.

Second Quarter Fiscal 2013 Key Metrics (all percentage changes compare Q2 FY2013 to Q2 FY2012):

Consolidated and Same Store:

• Net income attributable to Vanguard Health Systems, Inc. stockholders was $12.2 million, or $0.14 per diluted share, compared to net income of $15.7 million, or $0.20 per diluted share, during the prior year period
• Adjusted EBITDA was $137.8 million
• Patient revenue per adjusted discharge increased 1.5 percent
• Discharges decreased 1.4 percent
• Adjusted discharges increased 1.4 percent

Year to Date Fiscal 2013 Key Metrics (all percentage changes compare six months FY2013 to six months FY2012):

Consolidated:

• Net income attributable to Vanguard Health Systems, Inc. stockholders was $26.1 million, or $0.31 per diluted share, compared to a net loss of $6.0 million, or $(0.08) per diluted share, during the prior year period
• Adjusted EBITDA increased 4.9 percent to $271.0 million

Same Store:

• Patient revenue per adjusted discharge increased 2.3 percent
• Discharges decreased 1.8 percent
• Adjusted discharges decreased 0.2 percent

A reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to net income (loss) attributable to Vanguard Health Systems, Inc. stockholders for the quarters and six-month periods ending December 31, 2011 and 2012 is included in this release.

Second Quarter Analysis

Consolidated total revenues increased $37.7 million during the second quarter of fiscal 2013 compared to the prior year period. Net patient service revenues increased $33.2 million as a result of a 1.4 percent increase in adjusted discharges and a 1.5 percent increase in patient revenue per adjusted discharge. Emergency room visits increased 6.0 percent and observation cases increased 8.0 percent. Health plan premium revenues increased slightly during the second quarter of fiscal 2013 compared to the prior year period. Uncompensated care as a percentage of net patient revenues (prior to uncompensated care deductions) was 21.3 percent during the second quarter of fiscal 2013 compared to 20.0 percent during the prior year period primarily due to an increase in uninsured discharges as a percentage of total discharges.

Fiscal Year to Date Analysis

Consolidated total revenues increased $72.1 million during the six months ended December 31, 2012 compared to the prior year period, primarily due to the acquisition of Valley Baptist Health System in September 2011. Same store net patient service revenues increased 1.6 percent during the six months ended December 31, 2012 resulting from a 2.3 percent increase in patient revenue per adjusted discharge combined with a 0.2 percent decrease in adjusted discharges. Same store emergency room visits increased 3.8 percent and same store observation cases increased 9.1 percent during the six months ended December 31, 2012 compared to the prior year period. Health plan premium revenues, on a same store basis, decreased 10.4 percent during the six months ended December 31, 2012 compared to the prior year period. Phoenix Health Plan's revenues were negatively impacted by a combination of program changes adopted by Arizona Health Care Cost Containment System ("AHCCCS") beginning April 1, 2011 and continuing during our fiscal year 2012, including capitation payment rate decreases, program eligibility restrictions and health plan profitability limitations for certain member groups.

Same store uncompensated care as a percentage of net patient revenues (prior to uncompensated care deductions) was 20.2 percent during the six months ended December 31, 2012 compared to 18.0 percent during the prior year period primarily due to an increase in uninsured discharges as a percentage of total discharges.

Balance Sheet and Cash Flows

As of December 31, 2012, we had cash of $357.8 million and total debt of $2,703.2 million.

Cash flows from operating activities improved by $81.1 million during the six months ended December 31, 2012 compared to the prior year period. Changes in net operating assets and liabilities negatively impacted operating cash flows by $92.9 million during the six months ended December 31, 2012 compared to a negative impact of $172.2 million during the prior year period. We made $98.2 million of interest and income tax payments during the six months ended December 31, 2012, which was $16.6 million higher than these payments during the prior year period.

Capital expenditures increased 36.4 percent to $187.2 million during the six months ended December 31, 2012 compared to the prior year period due to increased spending related to the Detroit Medical Center specified capital project commitments and the start of construction of a new hospital in New Braunfels, Texas.

Outlook for Fiscal Year 2013

We are confirming our previously issued fiscal year 2013 outlook for ranges of projected Adjusted EBITDA, projected net income attributable to Vanguard Health Systems, Inc. stockholders, projected diluted earnings per share and projected capital expenditures.

Earnings Conference Call

We will host a conference call at 11:00 a.m. EST on January 31, 2013. All interested parties are invited to access a live webcast of the conference call on the Investor Relations Section of our website at http://vanguardhealth.com. If you are unable to participate during the live webcast, the webcast will be available on a replay basis for 90 days.

We own and operate 28 acute care and specialty hospitals and complementary facilities and services in metropolitan Chicago, Illinois; metropolitan Detroit, Michigan; metropolitan Phoenix, Arizona; San Antonio, Texas; Harlingen and Brownsville, Texas; and Worcester and metropolitan Boston, Massachusetts. Our strategy is to develop locally branded, comprehensive health care delivery networks in urban markets.

Cautionary Statement about Forward-Looking Information

This press release contains "forward-looking statements" within the meaning of the federal securities laws that are intended to be covered by safe harbors created thereby. Forward-looking statements are those statements that are based upon management's plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information. These statements are based upon estimates and assumptions made by our management that, although believed to be reasonable, are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. When used in this press release, the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts," "continues" or future or conditional verbs, such as "will," "should," "could" or "may," and variations of such words or similar expressions are intended to identify forward-looking statements. These factors, risks and uncertainties include, among others, the following: our high degree of leverage and interest rate risk; our ability to incur substantially more debt; operating and financial restrictions in our debt agreements; our ability to generate cash necessary to service our debt; weakened economic conditions and volatile capital markets; potential adverse impact of pre-payment and post-payment claims reviews by governmental agencies; our ability to grow our business and successfully implement our business strategies, including growing our ambulatory care services platform; our ability to successfully integrate hospitals or ambulatory care facilities acquired in the future or to recognize expected synergies from such acquisitions; potential acquisitions could be costly, unsuccessful or subject us to unexpected liabilities; conflicts of interest that may arise as a result of our control by a small number of stockholders; the highly competitive nature of the health care industry; the geographic concentration of our operations; governmental regulation of the health care industry, including Medicare and Medicaid reimbursement levels in general and with respect to the impact of the Budget Control Act of 2011 and other future deficit reduction plans; a reduction or elimination of supplemental Medicare and Medicaid payments on which we depend, including disproportionate share payments, indirect medical education/graduate medical education payments, upper payment limit programs and other similar payments; pressures to contain costs by managed care organizations and other insurers and our ability to negotiate acceptable terms with these third party payers; our ability to attract and retain qualified management and health care professionals, including physicians and nurses; the currently unknown effect on us of the major federal health care reforms enacted by Congress in March 2010, including the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or other potential additional federal or state health care reforms, including that states may opt out of the Medicaid expansion; potential adverse impact of known and unknown governmental investigations and audits; increased compliance costs from further government regulation of the health care industry and our failure to comply, or allegations of our failure to comply, with applicable laws and regulations; our failure to adequately enhance our facilities with technologically advanced equipment; the availability of capital to fund our corporate growth strategy and improvements to our existing facilities; potential lawsuits or other claims asserted against us; our ability to maintain or increase patient membership in and to control the costs of our managed health care plans; failure of AHCCCS to renew its contract with, or award future contracts with similar terms and scope to, Phoenix Health Plan; Phoenix Health Plan's ability to comply with the terms of its contract with AHCCCS; our inability to manage health plan claims expense within our health plans; reductions in the enrollment of our health plans; changes in general economic conditions nationally and regionally in our markets; our exposure to the increased amounts of and collection risks associated with uninsured accounts and the co-pay and deductible portions of insured accounts; dependence on our senior management team and local management personnel; volatility of professional and general liability insurance for us and the physicians who practice at our hospitals and increases in the quantity and severity of professional liability claims; our ability to achieve operating and financial targets and to maintain and increase patient volumes and control the costs of providing services, including salaries and benefits, supplies and other operating expenses; technological and pharmaceutical improvements that increase the cost of providing, or reduce the demand for, health care services and shift demand for inpatient services to outpatient settings; a failure of our information systems; delays in receiving payments for services provided, especially from governmental payers; changes in revenue mix, including changes in Medicaid eligibility criteria and potential declines in the population covered under managed care agreements; costs and compliance risks associated with Section 404 of the Sarbanes-Oxley Act of 2002; material non-cash charges to earnings from impairment of goodwill associated with declines in the fair market value of our reporting units; cash payments that may be necessary to fund an underfunded defined benefit pension plan of the DMC; volatility of materials and labor costs for, or state efforts to regulate, potential construction projects that may be necessary for future growth; our reliance on payments from our subsidiaries, which may be restricted by our credit agreement and the indentures governing our senior notes; changes in accounting practices; our ability to demonstrate meaningful use of certified electronic health record technology and to receive the related Medicare or Medicaid incentive payments; and other risk factors described in our Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.

Our forward-looking statements speak only as of the date made. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of new information, future events or otherwise. You are cautioned not to rely on such forward-looking statements when evaluating the information contained in this press release. In light of significant uncertainties inherent in the forward-looking statements included in this press release, you should not regard the inclusion of such information as a representation by us that the 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 our financial condition, results of operations or cash flows.

We use our company website to provide important information to investors about the company, including the posting of important announcements regarding financial performance and corporate developments.

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