Sjc Home Health Services Inc.

“The system, ch, sjh, home health, and infirmary are generally exempt from federal and state income taxes under section 501(c)(3) of the internal revenue code. Only net income from activities designated as unrelated to the exempt purposes of ch, sjh, home health, and infirmary are subject to federal and state unrelated business income tax. Geechee is organized as a single member llc owned by system and is treated as a disregarded entity for tax purposes. The system applies accounting policies that prescribe when to recognize and how to measure the financial statement effects of income tax positions taken or expected to be taken on its income tax returns. These rules require management to evaluate the likelihood that, upon examination by the relevant taxing jurisdictions, those income tax positions would be sustained. Based on that evaluation, the system only recognizes the maximum benefit of each income tax position that is more than 50% likely of being sustained. To the extent that all or a portion of the benefits of an income tax position are not recognized, a liability would be recognized for the unrecognized benefits, along with any interest and penalties that would result from disallowance of the position. Should any such penalties and interest be incurred, they would be recognized as operating expenses. Based on the results of management's evaluation, no liability is recognized in the accompanying combined balance sheets for unrecognized income tax positions. Further, no interest or penalties have been accrued or charged to expense as of june 30, 2014 and 2013 or for the years then ended. The system's tax returns are subject to possible examination by the taxing authorities. For federal income tax purposes, the tax returns essentially remain open for possible examination for a period of three years after the respective filing deadlines of those returns. Sjcv, sjcmg, properties and health services have generally incurred operating losses for tax purposes and have not recorded a current or deferred tax provision due to significant net operating loss (nol) carryforwards which would be utilized to offset any potential tax liabilities generated from future taxable income. At june 30, 2014, nol carryforwards expiring through 2034 amounted to approximately 76,000,000 and are available for the offset of future taxable income. Name abbreviations are listed below: system - st. Joseph's/candler health system, inc. Ch - candler hospital, inc. Sjh - st. Joseph's hospital, inc. Home health - sjc home health services, inc. Infirmary - georgia infirmary, inc. Sjcv - sjc ventures, inc. Sjcmg - sjc medical group, inc. Properties - sjc properties, inc. Health services - sjc health services, inc.”

“Parts xi, xii - reconciliations are completed using the combining statements of excess revenues (expenses) located in the audited financial statements of st. Joseph's/candler health system,inc.”