Sierra Health Services, Inc. A Managed Care Company

1. Sierra Health Services, Inc.A Managed Care Company Updated 10/25/06

2. Cautionary Statement Statements in this presentation and verbal statements made by representatives of Sierra that are not historical facts are forward-looking and based on management’s projections, assumptions and estimates; actual results may vary materially. Forward-looking statements are subject to certain risks and uncertainties, which include but are not limited to: • potential adverse changes in government regulations, contracts and programs, including the Medicare Advantage program, the Medicare Prescription Drug Plan and any potential reconciliation issues, Medicaid and legislative proposals to eliminate or reduce ERISA pre-emption of state laws that would increase potential managed care litigation exposure; • competitive forces that may affect pricing, enrollment, renewals and benefit levels; • unpredictable medical costs, malpractice exposure, reinsurance costs, changes in provider contracts and inflation; • impact of economic conditions; • changes in healthcare reserves; and • the amount of actual proceeds to be realized from the note receivable related to the sale of the workers’ compensation insurance operation. Further factors concerning financial risks and results may be found in documents filed with the Securities and Exchange Commission and which are incorporated herein by reference. Consequently, all of the forward-looking statements made in this presentation or verbally by representatives of Sierra are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Sierra will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Sierra or its business or operations. Sierra assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.

3. Disclosure Statement This presentation includes the following non-Generally Accepted Accounting Principle (GAAP) measures • Medical care ratio excluding PDP • Days in claims payable excluding PDP • Cash flow adjusted for timing of CMS payments which under SEC Regulation G we are required to reconcile with GAAP.

4. Nevada Health Insurance Demographics (1) U.S. Census Bureau (2004) -Total Nevada Population = 2,390,000 (2) Nevada State Health Division, HMO Industry Profile 6/30/06

5. HMO Membership (in thousands) 9.9% CAGR 388 365 330 292 272

6. Commercial HMO Sales Growth September 30, 2006 Commercial HMO Members: 273,600 2006 Las Vegas Membership Growth: 18,300 • Expect 8-9% Net Commercial Growth in 2006 • Over 8% YTD through October • Expect 3-5% Net Commercial Growth in 2007 • +66% HMO Market Share in Nevada(1) • 78% HMO Market Share in Las Vegas(1) • Only 18% HMO Penetration Statewide(1) (1) Nevada State Health Division, HMO Industry Profile 6/30/06

7. Health Plan of NevadaMembership Characteristics(1) September 30, 2006 Commercial Employer Type Mix Commercial Employer Group Size (1) Based on number of subscribers in each category

8. NevadaCommercial Market Share (HMO)(1) (1) Nevada State Health Division, HMO Industry Profile June 30, 2004, 2005 and 2006

9. Commercial Costs • 2007 Projected Cost Trends • Contracted Hospitals 3 - 6% (1) • Physician 4 - 5% • Pharmacy 5 - 9% • Overall 5 - 7% (1) (1) Does not include any impact from increased costs related to non-contracted hospitals

10. Commercial Pricing • 2007 Projected Rate Increases • HMO 3 – 5% • POS 5 – 7% • PPO 7 – 9% • Overall 5 – 7%(1) (1) Includes benefit reductions (buydowns) which increase the expected yield by approximately 1%

11. Medicare Sales Growth Medicare Advantage (1) Members: 58,700 (9/30/06) • Expect 4% or Better Net Medicare Growth for 2006 • Expect 3-5% Net Medicare Growth for 2007 • Approximately 7% yield increase for 2006 • Approximately 1% yield increase for 2007 • Approximately 64% Medicare Market Share Statewide and Las Vegas (2) • Only 32% Medicare HMO Penetration Statewide (2) (1) Medicare Advantage includes both HMO and PPO Members (2) Nevada State Health Division, HMO Industry Profile 6/30/06

12. Nevada Medicare Market Share (HMO)(1) (1) Nevada State Health Division, HMO Industry Profile June 30, 2004, 2005 and 2006

13. Medicare Costs • 2007 Projected Cost Trends • ContractedHospitals 3 - 6% (1) • Physician 3 - 4% • Pharmacy 6 - 8% • Overall 3 - 5% (1) (1) Does not include any impact from increased costs related to non-contracted hospitals

14. Prescription Drug Plan – Part D 2006 • Marketing/Enrollment • 183,300 members September 2006 • Auto-enrollment provider in all 10 states • Income of approximately $6 million for the nine months ended September 30, 2006 • Expect pre-tax income of $4- $7 million for the remaining quarter of 2006 • Cash shortfall of approximately $5 million per month during 2006 • Final reconciliation and payment expected Q3 2007

15. Prescription Drug Plan – Part D 2007 • Stand-alone PDP • 30 states and the District of Columbia • Auto-enrollment provider in AZ, CA(1), CO, ID, NV(1), OR, UT, WA • Limited marketing effort • Year over year earnings expected to be flat (1) Will not receive new auto-enrollees for 2007

16. Medicaid Medicaid Members: 57,000 (9/30/06) • +50% Medicaid HMO Market Share in Nevada (1) • Expect 4-6% Net Medicaid Growth for 2006 • Expect 3-5% Net Medicaid Growth for 2007 • Expected 2007 rate increase of approximately 2%, consistent with expected medical costs. • Mandatory 2 Plan Market in Nevada • Currently Serving CHiPS, TANF, CHAP • New contract effective 11/1/06 through 6/30/09 with DHCFP option to extend the contract for an additional two years (1) Nevada State Health Division, HMO Industry Profile 6/30/06

17. Nevada Medicaid Market Share (HMO)(1) (1) Nevada State Health Division, HMO Industry Profile June 30, 2004, 2005 and 2006

18. HPN Medicaid Revenue Growth (in millions) 24.2% CAGR

19. Medical Subsidiaries Clinical Overview Medical Subsidiaries Southwest Medical Associates (SMA) Family Healthcare Services (FHS) Family Home Hospice (FHH) Total Home Care of Nevada (THC) Behavioral Healthcare Options (BHO) • Multi-specialty physician group • 250 Providers • Provides care services in patient’s home • Medicare certified home health agency • Hospice servicing terminally ill patients • Medicare certified • Home care products, infusion therapy services, and specialty drugs • DME • Specialized mental health/substance abuse services. • URAC accredited

20. Las Vegas/Marketplace Opportunities • Future Growth Opportunities • Population increase of 4-5% in 2006, now at 1.9 million • Census Bureau Estimate +114% Growth In 25 Years • National average of 1% • Mid Size Account Growth • 65 new and expanded companies in Nevada in 2005 • Collectively employ nearly 2,000 workers • Expected 1 year economic impact of $360 Million • Improving Medical Infrastructure • New Acute Hospitals • New Cancer Research Facility • New Alzheimers Facility

21. Medical Premium Revenue Trends ($ in millions) 14.4% CAGR (1) (1) Includes $43.3 million in PDP revenue

22. Consolidated MCR

23. Consolidated MCRExcluding PDP

24. Consolidated Medical Expenses Twelve Months Ended 9/30/06

25. Consolidated Medical Expenses Excluding PDP (1) Twelve Months Ended 9/30/06 (1) Excludes PDP medical expenses of $135.5 million

26. Operating Income Managed Care and Corporate Operations Segment ($ in millions) 40.2% CAGR

27. Consolidated Pretax Margin Managed Care and Corporate Operations Segment

28. Cash and Investments From Continuing Operations ($ in millions) $382.5 $388.6 $371.0 $337.8 $250.0

29. Total External Debt • From Continuing Operations ($ in millions)

30. Senior Convertible Debentures • $115 MM original issue on March 15, 2003 • 2.25% coupon rate • Converted $71.5 million from May 19, 2005 through September 18, 2006 • Issued 7.8 million shares upon conversion (1) • Expensed approximately $1.5 million in prepaid interest for conversion in 2005 and $180,000 in 2006 • Expensed deferred financing costs of $1.2 million in 2005 and $83,000 in 2006 (1) Adjusted to reflect 2-for-1 stock split effective December 30, 2005

31. Managing Dilution(1) (shares in millions) -4.6% CAGR 68.9 66.2 62.7 (1) Adjusted to reflect 2-for-1 stock split effective December 30, 2005

32. Share Repurchases from 1/1/03 (1) • Repurchased 25.2 million shares as of 10/25/06 • $20.45 average repurchase cost as of 10/25/06 • Current bank agreement allows for unlimited share repurchases • Based on meeting the required leverage ratio • $139.4 million available as of 10/25/06 (1) Adjusted to reflect 2-for-1 stock split effective December 30, 2005

33. 2007 Strategic Objectives • Achieve Commercial Premium Yields of 4 to 6% before benefit buydowns • Achieve Commercial Unit Growth of 3 to 5% • Manage appropriately out of network hospital costs • Implement Medicare Advantage Expansion, including Private Fee-For-Service plan. • Manage an expected increase in consolidated MCR of 100 to 150 bps • Achieve EPS of $2.28 to $2.35

34. Reconciliation of non GAAP measuresMedical care ratio (excluding PDP)(1) (1) The Company believes that reflecting the ratio excluding the effects of the PDP provides a more comparable measure of our medical care ratio to our historical results.

35. Reconciliation of non GAAP measuresDays in claims payable (excluding PDP) (1) The Company believes that reflecting days in claims payable excluding the effects of the PDP provides a more comparable measure to our historical results.

36. Reconciliation of non GAAP measuresCash flow adjusted for timing of CMS payments(1) (1)The Company believes that reflecting three months of CMS payments provides a more useful measure of cash provided by operations during the three-month period.

37. Sierra Health Services, Inc.A Managed Care Company Updated 10/25/06