Group 1 - The biggest surprise in the industry during the second quarter was the slower growth of volumes observed [1] - Commercial demand for surgical procedures was weaker in the first quarter and did not improve significantly in the second quarter as anticipated [1] - An update on volume growth characterization is needed to inform expectations for the remainder of the year [1]

Financial Data and Key Metrics Changes - The company experienced softer than expected volume growth in the first half of the year, with adjusted admissions year-to-date at about 1% and guidance for the full year adjusted to 0% to 1% [11][12][54] - A $70 million miss in the second quarter was factored into the guidance for the back half of the year, along with additional headwinds from divestitures and Medicaid supplemental funds [13][54] - The company reported a slight negative free cash flow as of June 30, which is an improvement over historical performance [54] Business Line Data and Key Metrics Changes - There was strength in Medicare Advantage, while commercial space showed softness, particularly in elective procedures [6][8] - Inpatient volumes were stronger, indicating that essential care needs are being met despite elective procedure deferrals [10] Market Data and Key Metrics Changes - Consumer confidence hit a low in the middle of the second quarter but showed signs of improvement in June, which may influence future volume growth [8][9] - The exchange business constitutes less than 5% of net revenue, indicating limited exposure to potential subsidy changes [25][27] Company Strategy and Development Direction - The company aims to achieve mid-teens EBITDA margins over the next few years, focusing on volume recovery and divestitures to improve cash flow [53][54] - There is an ongoing effort to insource labor to improve quality and reduce costs, particularly in emergency departments and hospitalist services [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about volume recovery, suggesting that current softness is transitory and linked to consumer behavior and economic uncertainties [5][9] - The company is actively managing costs and exploring efficiencies through technology investments to mitigate the impact of denials and improve revenue cycle management [43][44] Other Important Information - The company has completed technology implementations under Project Empower, which is expected to yield cost savings and operational efficiencies [55][56] - There are ongoing discussions regarding potential divestitures, with some inbound interest noted, although no specific deals are currently in progress [47][48] Q&A Session Summary Question: What are the expectations for volume growth in the second half of the year? - Management has guided for continued softness in volumes, reflecting the trends observed in the second quarter [11][12] Question: How is the company managing labor costs? - Labor costs are being managed effectively, with a focus on reducing contract labor and improving in-house staffing [17][18] Question: What is the outlook for Medicaid supplemental payments? - There are still opportunities for additional funding mechanisms in some states, with ongoing plans submitted for approval [31][32] Question: How is the company addressing the issue of denials? - Denials have remained stable, primarily concentrated in the Medicare Advantage space, with no relief expected from payers [36][39] Question: What is the company's strategy regarding capital expenditures? - The focus is shifting towards outpatient access points and lower-cost projects, with plans for acquiring clinics and developing ambulatory surgical centers [62][63]

Core Viewpoint - Community Health Systems, Inc. (CYH) is a stock worth holding due to increasing occupancy rates, revenue per admission, and efforts to streamline operations, positioning the company for steady growth amid rising healthcare demand from an aging U.S. population [1][2] Growth Drivers - The company is focusing on high-return markets to capture rising healthcare demand, with occupancy rates improving to 52.5% in 2024 and averaging 53.4% in the first half of 2025, expected to reach 54.8% by year-end [3] - Revenue per adjusted admission is increasing, which helps to offset softer admission volumes, while the company is divesting non-core assets, including a $260 million sale of Florida hospitals to AdventHealth [4] - The cash flow situation is projected to strengthen, with net operating cash flow forecasted between $600 million and $700 million for 2025, up from $480 million last year [5] Financial Estimates - Analysts predict a significant earnings rebound, with a 67% improvement in 2025 from a loss of $0.34 per share last year, followed by a 45.6% gain in 2026; revenue estimates are $12.4 billion for 2025 and $12.7 billion for 2026 [6] Stock Performance - Despite a 6.4% decline year-to-date, CYH's valuation remains attractive, trading at a forward 12-month price-to-sales ratio of 0.03X, significantly below the industry average of 0.83X, and carries a Value Score of A [7] Key Concerns - The company's balance sheet shows weakness, with cash and cash equivalents of $456 million against long-term debt of $10.8 billion, resulting in a net debt-to-EBITDA ratio of 8.3%, higher than the industry average of 3.3% [9] - Profitability is also a concern, with a return on invested capital of 6.5% compared to the industry's 13.4%, although a systematic and strategic plan is expected to drive long-term growth [9] Comparisons with Peers - Other better-ranked stocks in the medical space include Tenet Healthcare Corporation (THC) with a Zacks Rank 1 (Strong Buy) and Encompass Health Corporation (EHC) with a Zacks Rank 2 (Buy) [10] - Tenet Healthcare is projected to have a 30.8% year-over-year increase in earnings for 2025, while Encompass Health is expected to see an 18.3% year-over-year growth in earnings [12]

Group 1 - Community Health Systems (NYSE: CYH) reported Q2 2025 earnings, leading to a significant stock sell-off of nearly 30%, with shares trading around $2.75, resulting in a market capitalization of approximately $385 million [1] - The investing group Haggerston BioHealth provides insights into the biotech, pharma, and healthcare sectors, offering catalysts, buy and sell ratings, product sales forecasts, and detailed financial analyses [1] - Analyst Edmund Ingham has extensive experience in biotech consulting, having covered over 1,000 companies in the healthcare and pharma sectors [1]

[Part I. Financial Information](index=2&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements present the company's financial position, results of operations, and cash flows [Condensed Consolidated Statements of Income (Loss)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) - Net income attributable to stockholders **significantly improved** for the three and six months ended June 30, 2025, turning a prior-year loss into a substantial profit[9](index=9&type=chunk) Key Income Statement Metrics | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net operating revenues | $3,133 | $3,140 | $6,292 | $6,279 | | Income from operations | $512 | $238 | $795 | $468 | | Net income | $320 | $26 | $345 | $20 | | Net income (loss) attributable to Community Health Systems, Inc. stockholders | $282 | $(13) | $269 | $(55) | | Basic EPS | $2.11 | $(0.10) | $2.02 | $(0.42) | | Diluted EPS | $2.09 | $(0.10) | $2.01 | $(0.42) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) - Comprehensive income attributable to stockholders showed a **significant turnaround** from a loss in 2024 to a substantial gain in 2025 for both reporting periods[11](index=11&type=chunk) Comprehensive Income Summary | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $320 | $26 | $345 | $20 | | Other comprehensive income | $2 | $3 | $5 | $2 | | Comprehensive income | $322 | $29 | $350 | $22 | | Comprehensive income (loss) attributable to Community Health Systems, Inc. stockholders | $284 | $(10) | $274 | $(53) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) - Total assets and liabilities decreased, while cash and cash equivalents **increased significantly** and the total stockholders' deficit improved[14](index=14&type=chunk) Balance Sheet Summary | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $456 | $37 | | Total current assets | $3,659 | $3,301 | | Property and equipment, net | $4,657 | $4,776 | | Goodwill | $3,604 | $3,789 | | Total assets | $13,641 | $14,054 | | Total current liabilities | $2,295 | $2,345 | | Long-term debt | $10,840 | $11,432 | | Total liabilities | $14,739 | $15,371 | | Total stockholders' deficit | $(1,412) | $(1,676) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) - Cash from investing activities improved substantially due to hospital dispositions, while financing activities reflected significant debt repayments[16](index=16&type=chunk) Cash Flow Summary | Metric (in millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $208 | $197 | | Net cash provided by (used in) investing activities | $786 | $(207) | | Net cash (used in) provided by financing activities | $(575) | $11 | | Net change in cash and cash equivalents | $419 | $1 | | Cash and cash equivalents at end of period | $456 | $39 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations for the financial statements, covering accounting policies, divestitures, debt, and other key disclosures [Note 1. Basis of Presentation and Significant Accounting Policies](index=7&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) - Corporate office costs **decreased** to **$69 million** in Q2 2025 and **$138 million** YTD, primarily due to non-recurring adjustments in 2024[20](index=20&type=chunk) - Charity care services (at standard charges) were estimated at **$334 million** for Q2 2025 and **$642 million** YTD, with a net gain of **$263 million** from divestitures recorded YTD[29](index=29&type=chunk)[30](index=30&type=chunk) Net Operating Revenues by Payor | Payor (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Medicare | $542 | $563 | $1,132 | $1,159 | | Medicare Managed Care | $547 | $560 | $1,150 | $1,139 | | Medicaid | $545 | $465 | $1,022 | $906 | | Managed Care and other third-party payors | $1,481 | $1,501 | $2,950 | $2,980 | | Self-pay | $18 | $51 | $38 | $95 | | Total | $3,133 | $3,140 | $6,292 | $6,279 | [Note 2. Accounting for Stock-Based Compensation](index=9&type=section&id=Note%202.%20Accounting%20for%20Stock-Based%20Compensation) - Total unrecognized stock-based compensation expense was **$21 million** at June 30, 2025, to be recognized over a weighted-average period of 23 months[36](index=36&type=chunk) - Stock options outstanding at June 30, 2025, totaled **4,929,000 shares** with a weighted-average exercise price of **$5.72**[41](index=41&type=chunk) - Unvested restricted stock and RSUs at June 30, 2025, totaled **6,332,081 shares** and **2,069,837 shares**, respectively[43](index=43&type=chunk)[44](index=44&type=chunk) [Note 3. Acquisitions and Divestitures](index=13&type=section&id=Note%203.%20Acquisitions%20and%20Divestitures) - Acquired operating assets of physician practices and clinics for **less than $1 million** during the first half of 2025[48](index=48&type=chunk) - Divested **six hospitals** or ownership interests in hospitals during the first half of 2025[49](index=49&type=chunk) - Additional cash consideration is contingent upon approval of supplemental reimbursement programs related to a 2024 divestiture[49](index=49&type=chunk) [Note 4. Goodwill](index=16&type=section&id=Note%204.%20Goodwill) - The goodwill balance at June 30, 2025, was **$3,604 million**, down from **$3,789 million** at year-end 2024[50](index=50&type=chunk) - Goodwill allocated to divested or held-for-sale hospitals amounted to **$(187) million** during the first half of 2025[50](index=50&type=chunk) - The last annual goodwill impairment evaluation in Q4 2024 indicated **no impairment**[51](index=51&type=chunk) [Note 5. Income Taxes](index=16&type=section&id=Note%205.%20Income%20Taxes) - The provision for income taxes **increased** to **$118 million** for Q2 2025 and **$160 million** YTD[57](index=57&type=chunk) - Effective tax rates were **26.9%** for Q2 2025 and **31.7%** YTD, influenced by non-deductible goodwill from divestitures[57](index=57&type=chunk) - Unrecognized tax benefit was **$44 million** at June 30, 2025, with a newly enacted federal bill's financial impact currently not determinable[54](index=54&type=chunk)[58](index=58&type=chunk) [Note 6. Long-Term Debt](index=17&type=section&id=Note%206.%20Long-Term%20Debt) - Total long-term debt **decreased** from **$11,432 million** at year-end 2024 to **$10,840 million** at June 30, 2025[60](index=60&type=chunk) - Issued **$700 million** of 10.750% Senior Secured Notes due 2033 and completed a tender offer for **$584 million** of 6⅞% Senior Unsecured Notes due 2028, resulting in a **$138 million gain**[60](index=60&type=chunk)[64](index=64&type=chunk) - The ABL Facility has **$305 million** outstanding and **$483 million** of additional borrowing capacity at June 30, 2025[65](index=65&type=chunk)[66](index=66&type=chunk) [Note 7. Fair Value of Financial Instruments](index=21&type=section&id=Note%207.%20Fair%20Value%20of%20Financial%20Instruments) Fair Value of Debt Instruments | Debt Instrument (in millions) | Carrying Amount (June 30, 2025) | Estimated Fair Value (June 30, 2025) | Carrying Amount (Dec 31, 2024) | Estimated Fair Value (Dec 31, 2024) | | :--- | :--- | :--- | :--- | :--- | | 8% Senior Secured Notes due 2027 | $— | $— | $696 | $700 | | 5⅝% Senior Secured Notes due 2027 | $1,730 | $1,731 | $1,722 | $1,686 | | 6⅞% Senior Notes due 2028 | $42 | $35 | $622 | $457 | | 6% Senior Secured Notes due 2029 | $628 | $620 | $626 | $577 | | 5¼% Senior Secured Notes due 2030 | $1,473 | $1,361 | $1,468 | $1,261 | | 4¾% Senior Secured Notes due 2031 | $1,055 | $901 | $1,054 | $822 | | 10⅞% Senior Secured Notes due 2032 | $2,212 | $2,359 | $2,212 | $2,299 | | 10¾% Senior Secured Notes due 2033 | $698 | $721 | $— | $— | | 6⅞% Junior-Priority Secured Notes due 2029 | $1,182 | $993 | $1,175 | $940 | | 6⅛% Junior-Priority Secured Notes due 2030 | $1,179 | $909 | $1,175 | $842 | | ABL Facility and other debt | $325 | $325 | $359 | $359 | [Note 8. Fair Value](index=22&type=section&id=Note%208.%20Fair%20Value) Fair Value Hierarchy for Assets (June 30, 2025) | Asset (in millions) | June 30, 2025 Total | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Investments in equity securities | $79 | $79 | $— | $— | | Available-for-sale debt securities | $215 | $— | $215 | $— | | Trading securities | $5 | $— | $5 | $— | | **Total assets** | **$299** | **$79** | **$220** | **$—** | Fair Value Hierarchy for Assets (December 31, 2024) | Asset (in millions) | December 31, 2024 Total | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Investments in equity securities | $69 | $69 | $— | $— | | Available-for-sale debt securities | $192 | $— | $192 | $— | | Trading securities | $5 | $— | $5 | $— | | **Total assets** | **$266** | **$69** | **$197** | **$—** | [Note 9. Leases](index=24&type=section&id=Note%209.%20Leases) - Total operating lease cost was **$74 million** for Q2 2025 and **$142 million** YTD[81](index=81&type=chunk) - Operating lease right-of-use assets were **$599 million** at June 30, 2025, down from **$623 million** at year-end 2024[81](index=81&type=chunk) - Cash paid for operating leases was **$82 million** YTD, down from **$91 million** in the prior-year period[82](index=82&type=chunk) [Note 10. Stockholders' Deficit](index=25&type=section&id=Note%2010.%20Stockholders'%20Deficit) - Total stockholders' deficit **improved** from **$(1,676) million** at year-end 2024 to **$(1,412) million** at June 30, 2025[87](index=87&type=chunk) - The Company has approximately **$300 million** of capacity for permitted dividends and/or share repurchases as of June 30, 2025[85](index=85&type=chunk)[227](index=227&type=chunk) [Note 11. Earnings Per Share](index=28&type=section&id=Note%2011.%20Earnings%20Per%20Share) - Weighted-average basic shares outstanding for Q2 2025 were **133,763,733**[89](index=89&type=chunk) - Dilutive securities added **1,119,248 shares** for Q2 2025 and **852,131 shares** YTD to the diluted share count[89](index=89&type=chunk) - Dilutive securities were not considered for prior-year periods due to a net loss, making their effect antidilutive[89](index=89&type=chunk) [Note 12. Segment Information](index=28&type=section&id=Note%2012.%20Segment%20Information) - The Company operates as a **single reportable segment**: hospital operations[92](index=92&type=chunk) - Net income for the segment was **$320 million** for Q2 2025 and **$345 million** YTD[95](index=95&type=chunk) [Note 13. Contingencies](index=29&type=section&id=Note%2013.%20Contingencies) - Liability for probable contingencies was **$17 million** at June 30, 2025[99](index=99&type=chunk) - Management does not believe that loss contingencies will have a **material adverse effect** on the consolidated financial position or liquidity[96](index=96&type=chunk) [Note 14. Subsequent Events](index=30&type=section&id=Note%2014.%20Subsequent%20Events) - On July 22, 2025, the Company agreed to sell select ambulatory outreach laboratory services to Labcorp for **$195 million**[101](index=101&type=chunk)[108](index=108&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, condition, and future outlook, highlighting key operational and strategic developments [Acquisition and Divestiture Activity](index=31&type=section&id=Acquisition%20and%20Divestiture%20Activity) - Acquired operating assets of certain physician practices and clinics for **less than $1 million** in the first half of 2025[105](index=105&type=chunk) - Divested six hospitals or ownership interests, generating approximately **$1.0 billion** in net proceeds[106](index=106&type=chunk)[108](index=108&type=chunk) - Agreed to sell ambulatory outreach laboratory services to Labcorp for **$195 million** subsequent to the quarter end[108](index=108&type=chunk) [Overview of Operating Results](index=32&type=section&id=Overview%20of%20Operating%20Results) - Net operating revenues decreased slightly, but **increased 6.5%** on a same-store basis for Q2 2025[110](index=110&type=chunk)[138](index=138&type=chunk) - Net income was **$320 million** for Q2 2025, driven by gains from early debt extinguishment and hospital divestitures[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - Consolidated inpatient admissions decreased, but **same-store inpatient admissions increased 0.3%** in Q2 2025[111](index=111&type=chunk)[115](index=115&type=chunk)[135](index=135&type=chunk) [Overview of Legislative and Other Governmental Developments](index=33&type=section&id=Overview%20of%20Legislative%20and%20Other%20Governmental%20Developments) - U.S. Supreme Court decisions and federal elections **increase regulatory uncertainty** and legal challenges to healthcare regulations[116](index=116&type=chunk) - The 2025 Reconciliation Bill is expected to **decrease access to health insurance** and result in significant cuts to federal healthcare spending, particularly Medicaid[117](index=117&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - Changes to Medicaid financing, mandated Medicare spending reductions, and 340B program adjustments are expected to **adversely impact results**[120](index=120&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) [Sources of Revenue](index=37&type=section&id=Sources%20of%20Revenue) - CMS increased Medicare inpatient payment rates by approximately **2.9%** for federal fiscal year 2025[130](index=130&type=chunk) - The 2025 Reconciliation Bill is expected to **decrease access to health insurance** and result in significant cuts to federal healthcare spending, impacting revenues[128](index=128&type=chunk) Revenue by Payor Source | Payor | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Medicare | 17.3% | 17.9% | 18.0% | 18.5% | | Medicare Managed Care | 17.4% | 17.8% | 18.3% | 18.1% | | Medicaid | 17.4% | 14.8% | 16.2% | 14.4% | | Managed Care and other third-party payors | 47.3% | 47.9% | 46.9% | 47.5% | | Self-pay | 0.6% | 1.6% | 0.6% | 1.5% | | Total | 100.0% | 100.0% | 100.0% | 100.0% | [Results of Operations](index=39&type=section&id=Results%20of%20Operations) - For Q2 2025, net income attributable to stockholders was **$282 million**, a significant improvement from a **$(13) million** loss, driven by a **$239 million** net gain on business sales and a **$138 million** gain on debt extinguishment[9](index=9&type=chunk)[135](index=135&type=chunk)[138](index=138&type=chunk)[141](index=141&type=chunk)[143](index=143&type=chunk)[146](index=146&type=chunk) - For the six months ended June 30, 2025, net income attributable to stockholders was **$269 million**, compared to a **$(55) million** loss, with same-store net operating revenues increasing by **5.0%**[9](index=9&type=chunk)[135](index=135&type=chunk)[147](index=147&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk)[156](index=156&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) - Net cash from operating activities increased to **$208 million** YTD, while investing activities provided **$786 million**, primarily from **$1.0 billion** in proceeds from hospital dispositions[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - Net working capital **increased by $408 million** to **$1.4 billion** at June 30, 2025[160](index=160&type=chunk) - The Company had **$483 million** of borrowing capacity under its ABL Facility and expects total capital expenditures of **$350 million to $400 million** in 2025[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[173](index=173&type=chunk) [Critical Accounting Policies](index=48&type=section&id=Critical%20Accounting%20Policies) - A **1% difference** in estimated reimbursement could change net income by **$98 million** and net accounts receivable by **$126 million** for the first half of 2025[178](index=178&type=chunk)[179](index=179&type=chunk) - A **1% difference** in estimated patient accounts receivable collection could change net income by **$36 million** and net accounts receivable by **$47 million** for the first half of 2025[183](index=183&type=chunk)[186](index=186&type=chunk) - Goodwill of **$3.6 billion** is evaluated annually for impairment, and a **1% change** in professional liability claim assumptions could impact reserves by **$5 million to $10 million**[190](index=190&type=chunk)[191](index=191&type=chunk)[193](index=193&type=chunk)[197](index=197&type=chunk)[199](index=199&type=chunk) [Recent Accounting Pronouncements](index=55&type=section&id=Recent%20Accounting%20Pronouncements) - The Company is evaluating the impact of ASU 2023-09, which improves income tax disclosures, effective for annual periods after December 15, 2024[206](index=206&type=chunk)[207](index=207&type=chunk) [Forward-Looking Statements](index=56&type=section&id=Forward-Looking%20Statements) - Key risks include economic conditions, healthcare policy changes, substantial indebtedness, legal proceedings, and payor reimbursement policies[209](index=209&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes in market risk disclosures occurred during the quarter compared to the 2024 Form 10-K - There were **no material changes** in market risk disclosures during the three months ended June 30, 2025, compared to the 2024 Form 10-K[212](index=212&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective, with no material changes in internal control over financial reporting - Disclosure controls and procedures were **effective** as of June 30, 2025[213](index=213&type=chunk) - There were **no material changes** in internal control over financial reporting during the three months ended June 30, 2025[214](index=214&type=chunk) [Part II. Other Information](index=44&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company discloses ongoing legal, regulatory, and governmental proceedings and their potential financial impact - The Company is subject to inquiries from various government entities regarding **Medicare/Medicaid issues**[216](index=216&type=chunk) - The Department of Justice is conducting a **criminal investigation** into a former medical director at a subsidiary hospital[219](index=219&type=chunk) - The Company received favorable rulings in the *Tower Health v. CHS* case, while a motion to dismiss was partially granted in the *Golden v. CHS* case related to the Quorum Health spin-off[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) No material changes were reported to the risk factors previously disclosed in the 2024 Form 10-K - There were **no material changes** to risk factors previously disclosed in the 2024 Form 10-K[223](index=223&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company withheld shares for tax obligations and has capacity for stock repurchases under debt covenants - **9,716 shares** of common stock were withheld to satisfy tax obligations related to restricted stock awards during Q2 2025[225](index=225&type=chunk) - There were **no publicly announced share repurchase programs** during Q2 2025[226](index=226&type=chunk) - The Company has approximately **$300 million** capacity for permitted dividends and/or stock repurchases as of June 30, 2025[227](index=227&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - There were **no defaults** upon senior securities[228](index=228&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[229](index=229&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) No other material information was reported during the quarter, including any new trading arrangements by directors or officers - **No other material information** was reported[230](index=230&type=chunk) - No director or officer adopted or terminated any "Rule 10b5-1 trading arrangement" or "non-Rule 10b-5 trading arrangement"[230](index=230&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q - Various exhibits were filed, including purchase agreements, indentures for senior secured notes, and required certifications[233](index=233&type=chunk) [Signatures](index=48&type=section&id=Signatures) The report is duly signed by the company's executive officers - The report was signed by the CEO, President & CFO, and SVP & Chief Accounting Officer on July 24, 2025[235](index=235&type=chunk)[236](index=236&type=chunk)

Core Insights - Community Health Systems, Inc. (CYH) reported a second-quarter 2025 adjusted loss of $0.05 per share, missing the Zacks Consensus Estimate of earnings of $0.05, but improved from a loss of $0.17 per share in the prior year [1][11] - Net operating revenues decreased by 0.2% year over year to $3.1 billion, surpassing the consensus mark by 3% [1][11] Operational Performance - The hospital count for Community Health was 70, down from 78 a year ago [3] - Patient days fell by 9.4% year over year, while the average length of stay decreased by 2.3% to 4.2 days [3] - The occupancy rate increased to 50.8% from 50% in the prior year [3] - Adjusted admissions declined by 8.3% year over year, with same-store adjusted admissions down by 0.7% [4][11] Financial Metrics - Total operating expenses decreased by 9.7% year over year to $2.6 billion, below the estimate of $2.7 billion [5] - Net interest expenses were $214 million, a decrease of 0.9% year over year, but higher than the estimate of $205.7 million [5] - Net income for the quarter was $320 million, significantly up from $26 million in the prior year [6] - Adjusted EBITDA declined by 1.8% year over year to $380 million, exceeding the estimate of $365.7 million [6] Divestitures and Assets - In 2025, the company divested ownership interests in several hospitals, including a 50% stake in two hospitals and full ownership of three others [7] - As of June 30, 2025, cash and cash equivalents stood at $456 million, up from $37 million at the end of 2024 [8] - Total assets decreased to $13.6 billion from $14.1 billion at the end of 2024, while long-term debt fell to $10.8 billion from $11.4 billion [8] Guidance for 2025 - The company anticipates net operating revenues between $12.3 billion and $12.6 billion for 2025, compared to $12.63 billion in 2024 [12] - Adjusted EBITDA is expected to be in the range of $1.45 billion to $1.55 billion, slightly lower than the 2024 level of $1.54 billion [12] - Net loss per share is projected to be between $0.40 and $0.10 in 2025 [12] - Estimated net cash from operating activities is between $600 million and $700 million, with capital expenditures anticipated in the range of $350 million to $400 million [13]

Financial Data and Key Metrics Changes - In the second quarter, same store net revenue increased by 6.5% year over year, primarily driven by rate growth and recognition of revenue under Medicaid state directed payment programs in New Mexico and Tennessee [9][15][16] - Adjusted EBITDA for the second quarter was $380 million compared to $387 million in the prior year, with a margin of 12.1% versus 12.3% in the prior year [16][17] - Cash flows from operations were reported at $87 million for the second quarter and $282 million year to date, with free cash flows for the second quarter being marginally positive [17][18] Business Line Data and Key Metrics Changes - Inpatient admissions increased by 0.3% year over year, while adjusted admissions declined by 0.7%, with same store surgeries down by 2.5% and emergency department visits down by 1.9% [9][15][16] - The company has over 200 providers scheduled to commence in the second half of 2025, indicating a focus on expanding service lines and capacity [10][11] Market Data and Key Metrics Changes - The company noted a decline in consumer confidence, which has affected demand for healthcare services, particularly elective surgical procedures [13][25] - The company is experiencing a softer demand for elective surgeries, particularly in the commercial book, which has led to a loss of operating leverage [13][14] Company Strategy and Development Direction - The company is focused on expanding its physical capacity and service lines, with ongoing recruitment of primary care and specialty physicians [10][11] - Recent service line and capacity expansions in key markets are expected to ramp up and gain market share, with new outpatient access points set to open [11] - The company completed the divestiture of Cedar Park Regional Medical Center for $436 million and is working on improving its leverage profile through successful debt refinancing [11][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that past development and capital investment strategies have positioned the company well to capture patient demand once consumer confidence returns [9][10] - The company anticipates that the impacts from the recently signed budget reconciliation for the One Big Beautiful Bill Act will phase in beginning in 2027, projecting a cumulative reduction in EBITDA of approximately $300 to $350 million over the next thirteen years [19][20] - Management is taking a conservative approach to the underlying business given the impact from macro factors observed in the second quarter [22] Other Important Information - The CEO announced plans to retire in September, with the President and CFO expected to take over leadership [5][8] - The company is actively pursuing legislative and administrative fixes to mitigate the impacts of the One Big Beautiful Bill Act [20][21] Q&A Session Summary Question: Volume expectations and dynamics - Management noted a decline in consumer confidence affecting volumes, with a revised guidance for adjusted admissions for the year now expected to be 0% to 1% [25][26] Question: Updates on state directed payment programs - Management provided updates on pending DPP programs in Indiana and Florida, expecting material benefits from these programs once approved [30][31] Question: Run rate for EBITDA going forward - Management indicated that the real run rate for EBITDA is likely in the range of $360 million to $375 million, considering the current volume trends [36] Question: Impact of the One Big Beautiful Bill Act - Management explained the complexities of estimating the impact of the bill, emphasizing ongoing lobbying efforts to address potential funding cuts [19][20][92] Question: Medicare volume trends - Management reported no significant changes in the Medicare book of business, indicating that this segment is less impacted by consumer confidence issues [76] Question: Differences in volume trends compared to peers - Management suggested that geographic differences and types of markets may contribute to the volume discrepancies observed compared to peers [80][81]

July 23, 2025 Earnings Presentation – 2nd Quarter, 2025 Disclaimer Statement By The Numbers This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties. All statements in this presentation other than statements of historical fact, including statements regarding projections, expected ...

Group 1: Earnings Performance - Community Health Systems reported a quarterly loss of $0.05 per share, matching the Zacks Consensus Estimate, compared to a loss of $0.17 per share a year ago, indicating an earnings surprise of -200.00% [1] - The company posted revenues of $3.13 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.00%, although this represents a slight decline from year-ago revenues of $3.14 billion [2] - Over the last four quarters, Community Health Systems has surpassed consensus EPS estimates just once, but has topped consensus revenue estimates four times [2] Group 2: Stock Performance and Outlook - Community Health Systems shares have increased by approximately 28.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.3% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is -$0.24 on revenues of $2.97 billion, and -$0.31 on revenues of $12.32 billion for the current fiscal year [7] Group 3: Industry Context - The Medical - Hospital industry, to which Community Health Systems belongs, is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that tracking these revisions can be beneficial for investors [5] - The favorable estimate revisions trend prior to the earnings release has resulted in a Zacks Rank 2 (Buy) for Community Health Systems, indicating expected outperformance in the near future [6]

[Executive Summary & Q2 2025 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q2%202025%20Highlights) This section summarizes Q2 2025 performance, featuring CEO commentary on strategic progress and key financial highlights including a significant net income turnaround and strategic financing activities [CEO Commentary](index=1&type=section&id=CEO%20Commentary) Tim L. Hingtgen, CEO, stated that the Company is making good progress on high-priority strategic initiatives like growth projects and physician recruitment, expressing confidence in the long-term trajectory - The Company continues to make good progress with its **high priority strategic initiatives** such as investments into **growth projects** and **physician recruitment**[3](index=3&type=chunk) - We remain **confident** that the organization is on the **right trajectory** for the long term[3](index=3&type=chunk) [Q2 2025 Financial & Operating Highlights](index=1&type=section&id=Q2%202025%20Financial%20%26%20Operating%20Highlights) For Q2 2025, net operating revenues slightly decreased by 0.2% to $3.133 billion, but same-store revenues increased by 6.5%. The company reported a significant turnaround in net income, reaching $282 million ($2.09 diluted EPS) from a net loss in Q2 2024. Adjusted EBITDA was $380 million, a slight decrease. Financing activities included a $700 million senior secured notes offering and a $584 million tender offer for unsecured notes Q2 2025 Key Financial Highlights | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :-------------------------------- | :----------------- | :----------------- | :--------- | | Net Operating Revenues | $3,133 | $3,140 | -0.2% | | Net Income Attributable to CYH Stockholders | $282 | $(13) | 2269.2% | | Diluted EPS | $2.09 | $(0.10) | 2190.0% | | Adjusted EBITDA | $380 | $387 | -1.8% | | Net Cash Provided by Operating Activities | $87 | $101 | -13.9% | - Completed the offering of **$700 million** principal amount of **10.750% Senior Secured Notes due 2033** and used the proceeds to redeem all remaining outstanding **8.000% Senior Secured Notes due 2027** and to pay related fees and expenses[4](index=4&type=chunk) - In addition, **$584 million** principal amount of outstanding **6.875% Senior Unsecured Notes due 2028** were redeemed via a tender offer using cash on hand of **$438 million**[4](index=4&type=chunk) - On a same-store basis, admissions increased **0.3 percent** while adjusted admissions decreased **0.7 percent**, compared to the same period in 2024[4](index=4&type=chunk) [Detailed Financial and Operating Results](index=2&type=section&id=Detailed%20Financial%20and%20Operating%20Results) This section provides a detailed analysis of the company's financial and operating performance for Q2 and H1 2025, including consolidated statements, operating metrics, balance sheets, and cash flows [Three Months Ended June 30, 2025 (Q2 2025)](index=2&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20(Q2%202025)) Detailed analysis of Q2 2025 financial performance, including revenue, net income, and Adjusted EBITDA, along with key operational metrics and their year-over-year changes. The company saw a significant increase in net income driven by non-operating gains, despite a slight decrease in consolidated revenues and Adjusted EBITDA [Consolidated Financial Performance](index=2&type=section&id=Q2%202025%20Consolidated%20Financial%20Performance) This section details the consolidated financial performance for Q2 2025, showing a significant increase in net income primarily due to non-operating gains, despite a slight decrease in Adjusted EBITDA Condensed Consolidated Statements of Income (Loss) - Three Months Ended June 30 | Metric | 2025 (Millions) | % of Net Operating Revenues (2025) | 2024 (Millions) | % of Net Operating Revenues (2024) | | :------------------------------------------------ | :---------------- | :--------------------------------- | :---------------- | :--------------------------------- | | Net operating revenues | $3,133 | 100.0% | $3,140 | 100.0% | | Total operating expenses | $2,621 | 83.7% | $2,902 | 92.4% | | Income from operations | $512 | 16.3% | $238 | 7.6% | | Interest expense, net | $214 | 6.8% | $216 | 6.9% | | Gain from early extinguishment of debt | $(138) | (4.4)% | $(26) | (0.8)% | | Net income attributable to Community Health Systems, Inc. stockholders | $282 | 9.0% | $(13) | (0.4)% | | Basic EPS | $2.11 | | $(0.10) | | | Diluted EPS | $2.09 | | $(0.10) | | - Net income attributable to Community Health Systems, Inc. stockholders for the three months ended June 30, 2025, increased when compared to the net loss for the same period in 2024, primarily due to period-over-period increases in **impairment and (gain) loss on the sale of businesses** and **gain from early extinguishment of debt**, partially offset by an increase in the provision for income taxes and the factors that contributed to a decrease in Adjusted EBITDA[7](index=7&type=chunk) - The decrease in Adjusted EBITDA for the three months ended June 30, 2025, compared to the same period in 2024, is primarily attributable to **lower outpatient volumes**, **lower acuity** and **unfavorable changes in payor mix**, partially offset by **increased reimbursement rates**, a **higher net benefit from supplemental reimbursement programs** and **increased non-patient revenue**[7](index=7&type=chunk) [Operating Metrics (Same-Store & Consolidated)](index=1&type=section&id=Q2%202025%20Operating%20Metrics) This section presents key operating metrics for Q2 2025, including consolidated and same-store admissions, adjusted admissions, occupancy rates, and net operating revenues Selected Operating Data - Three Months Ended June 30 | Metric | 2025 Consolidated | 2024 Consolidated | % Change Consolidated | 2025 Same-Store | 2024 Same-Store | % Change Same-Store | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | :---------------- | :---------------- | :-------------------- | | Number of hospitals (at end of period) | 70 | 78 | | 70 | 70 | | | Licensed beds (at end of period) | 10,478 | 11,868 | | 10,478 | 10,548 | | | Admissions | 97,902 | 105,748 | -7.4% | 97,799 | 97,514 | 0.3% | | Adjusted admissions | 223,083 | 243,343 | -8.3% | 222,673 | 224,323 | -0.7% | | Occupancy rate (average beds in service) | 50.8% | 50.0% | | 50.8% | 50.9% | | | Net operating revenues | $3,133 | $3,140 | -0.2% | $3,125 | $2,935 | 6.5% | [Six Months Ended June 30, 2025 (H1 2025)](index=2&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20(H1%202025)) Comprehensive review of H1 2025 financial and operating results, highlighting a slight increase in net operating revenues and a significant turnaround to net income from a prior-year net loss. Adjusted EBITDA saw a minor decrease, influenced by lower acuity and increased patient claim denials, partially offset by improved reimbursement rates [Consolidated Financial Performance](index=2&type=section&id=H1%202025%20Consolidated%20Financial%20Performance) This section details the consolidated financial performance for H1 2025, showing a turnaround to net income primarily due to non-operating gains, despite a slight decrease in Adjusted EBITDA Condensed Consolidated Statements of Income (Loss) - Six Months Ended June 30 | Metric | 2025 (Millions) | % of Net Operating Revenues (2025) | 2024 (Millions) | % of Net Operating Revenues (2024) | | :------------------------------------------------ | :---------------- | :--------------------------------- | :---------------- | :--------------------------------- | | Net operating revenues | $6,292 | 100.0% | $6,279 | 100.0% | | Total operating expenses | $5,497 | 87.4% | $5,811 | 92.5% | | Income from operations | $795 | 12.6% | $468 | 7.5% | | Interest expense, net | $432 | 6.9% | $426 | 6.9% | | Gain from early extinguishment of debt | $(138) | (2.2)% | $(26) | (0.4)% | | Net income attributable to Community Health Systems, Inc. stockholders | $269 | 4.3% | $(55) | (0.9)% | | Basic EPS | $2.02 | | $(0.42) | | | Diluted EPS | $2.01 | | $(0.42) | | - Net income attributable to Community Health Systems, Inc. stockholders for the six months ended June 30, 2025, increased when compared to the net loss for the same period in 2024, primarily due to period-over-period increases in **impairment and (gain) loss on the sale of businesses** and **gain from early extinguishment of debt**, partially offset by an increase in the provision for income taxes and the factors that contributed to a decrease in Adjusted EBITDA[11](index=11&type=chunk) - The decrease in Adjusted EBITDA for the six months ended June 30, 2025, compared to the same period in 2024, is primarily attributable to **lower acuity**, **increased patient claim denials** and **increased costs for outsourced medical specialists**, partially offset by **increased reimbursement rates**, **higher non-patient revenue**, a **higher net benefit from supplemental reimbursement programs** and **reduced expense for contract labor**[11](index=11&type=chunk) [Operating Metrics (Same-Store & Consolidated)](index=2&type=section&id=H1%202025%20Operating%20Metrics) This section presents key operating metrics for H1 2025, including consolidated and same-store admissions, adjusted admissions, occupancy rates, and net operating revenues Selected Operating Data - Six Months Ended June 30 | Metric | 2025 Consolidated | 2024 Consolidated | % Change Consolidated | 2025 Same-Store | 2024 Same-Store | % Change Same-Store | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | :---------------- | :---------------- | :-------------------- | | Number of hospitals (at end of period) | 70 | 78 | | 70 | 70 | | | Licensed beds (at end of period) | 10,478 | 11,868 | | 10,478 | 10,548 | | | Admissions | 203,839 | 212,803 | -4.2% | 200,222 | 195,815 | 2.3% | | Adjusted admissions | 453,779 | 479,280 | -5.3% | 445,099 | 440,518 | 1.0% | | Occupancy rate (average beds in service) | 54.4% | 52.0% | | 53.4% | 52.9% | | | Net operating revenues | $6,292 | $6,279 | 0.2% | $6,161 | $5,869 | 5.0% | [Condensed Consolidated Balance Sheets](index=11&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased to $13,641 million from $14,054 million at December 31, 2024. Cash and cash equivalents significantly increased to $456 million from $37 million. Long-term debt decreased to $10,840 million from $11,432 million, contributing to a reduction in total liabilities and an improvement in stockholders' deficit Condensed Consolidated Balance Sheets (Selected Items) | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------------------------------- | :------------------------- | :--------------------------- | | Cash and cash equivalents | $456 | $37 | | Total current assets | $3,659 | $3,301 | | Property and equipment, net | $4,657 | $4,776 | | Goodwill | $3,604 | $3,789 | | Total assets | $13,641 | $14,054 | | Total current liabilities | $2,295 | $2,345 | | Long-term debt | $10,840 | $11,432 | | Total liabilities | $14,739 | $15,371 | | Total Community Health Systems, Inc. stockholders' deficit | $(1,631) | $(1,914) | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities increased to $208 million from $197 million in the prior year. Investing activities generated a significant net cash inflow of $786 million, primarily due to proceeds from disposition of hospitals and other ancillary operations. Financing activities resulted in a net cash outflow of $575 million, mainly due to repayments of long-term indebtedness Condensed Consolidated Statements of Cash Flows (Selected Items) | Metric | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net cash provided by operating activities | $208 | $197 | | Net cash provided by (used in) investing activities | $786 | $(207) | | Net cash (used in) provided by financing activities | $(575) | $11 | | Net change in cash and cash equivalents | $419 | $1 | | Cash and cash equivalents at end of period | $456 | $39 | - Proceeds from disposition of hospitals and other ancillary operations: **$1,013 million** (2025) vs. **$0** (2024)[46](index=46&type=chunk) [Strategic and Financing Activities](index=3&type=section&id=Strategic%20and%20Financing%20Activities) This section outlines the company's strategic financial maneuvers, including significant debt refinancing and various hospital and ambulatory outreach laboratory services divestitures [Financing Activity](index=3&type=section&id=Financing%20Activity) During Q2 2025, the Company issued $700 million of 10.750% Senior Secured Notes due 2033 to redeem existing 8.000% Senior Secured Notes due 2027. Additionally, a tender offer redeemed $584 million of 6.875% Senior Unsecured Notes due 2028 using $438 million cash on hand, resulting in a net pre-tax gain from early extinguishment of debt of approximately $138 million - During the three months ended June 30, 2025, the Company completed an offering of **$700 million** principal amount of **10.750% Senior Secured Notes due 2033**, and used the proceeds to redeem all of the remaining **8.000% Senior Secured Notes due 2027**, and pay related fees and expenses[13](index=13&type=chunk) - In addition, the Company completed a tender offer for **$584 million** principal amount of its outstanding **6.875% Senior Unsecured Notes due 2028** using cash on hand of **$438 million**[13](index=13&type=chunk) - These transactions resulted in the recognition of a net pre-tax gain from early extinguishment of debt of approximately **$138 million** during the three months ended June 30, 2025[13](index=13&type=chunk) [Divestitures and Other Strategic Transactions](index=3&type=section&id=Divestitures%20and%20Other%20Strategic%20Transactions) In 2025, the Company divested its 50% ownership in two hospitals, its 80% ownership in one hospital, and three other hospitals. Furthermore, on July 22, 2025, the Company entered into a definitive agreement with Labcorp to sell select assets and assume certain leases of its ambulatory outreach laboratory services in 13 states for a total purchase price of $195 million - During 2025, through the date of this press release, the Company has divested (i) its **50% ownership interest in two hospitals** (one of which was completed on February 1, 2025, and the other of which was completed on May 1, 2025), (ii) its **80% ownership interest in one hospital** (which was completed on June 30, 2025), and (iii) **three other hospitals** (two of which were completed on March 1, 2025, and one of which was completed on April 1, 2025)[14](index=14&type=chunk) - On July 22, 2025, the Company entered into a definitive agreement with Laboratory Corporation of America Holdings ("Labcorp"), pursuant to which Labcorp will acquire select assets and assume certain leases of the ambulatory outreach laboratory services of the Company's subsidiaries in 13 states, including certain patient service centers and in-office phlebotomy locations[15](index=15&type=chunk) - The total purchase price payable to the Company at the closing of this transaction is **$195 million**, subject to certain purchase price adjustments[15](index=15&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles key non-GAAP financial measures, including Adjusted EBITDA and Adjusted Net Loss Per Share, providing insights into their calculation and management's use [Adjusted EBITDA Definition and Reconciliation](index=3&type=section&id=Adjusted%20EBITDA%20Definition%20and%20Reconciliation) Adjusted EBITDA is a non-GAAP measure defined as EBITDA adjusted for noncontrolling interests, loss/gain from early extinguishment of debt, impairment/gain/loss on sale of businesses, business transformation costs, legal matters, employee termination benefits, and changes in professional liability claims accrual. It is used by management to assess operating performance and resource allocation, and for executive compensation, as it aligns with how management assesses results and is comparable to metrics in debt covenants - Adjusted EBITDA, also a non-GAAP financial measure, is EBITDA adjusted to add back **net income attributable to noncontrolling interests** and to exclude **loss (gain) from early extinguishment of debt**, **impairment and (gain) loss on sale of businesses**, **expense from third-party consulting costs associated with significant process and systems redesign across multiple functions** (the "Business Transformation Costs") as part of the Company's previously disclosed multi-year initiative to modernize and consolidate technology platforms and associated processes, **expense related to government and other legal matters and related costs**, **expense related to employee termination benefits and other restructuring charges**, and the impact of a **change in estimate to increase the professional liability claims accrual** recorded during the third quarter of 2024[49](index=49&type=chunk) - Adjusted EBITDA is a key measure used by management to assess the **operating performance** of the Company's hospital operations and to make decisions on the **allocation of resources**[49](index=49&type=chunk) Reconciliation of Adjusted EBITDA to Net Income (Loss) Attributable to Community Health Systems, Inc. Stockholders | Metric | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :------------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net income (loss) attributable to Community Health Systems, Inc. stockholders | $282 | $(13) | $269 | $(55) | | Adjustments: | | | | | | Provision for income taxes | 118 | 24 | 160 | 52 | | Depreciation and amortization | 105 | 125 | 211 | 241 | | Net income attributable to noncontrolling interests | 38 | 39 | 76 | 75 | | Interest expense, net | 214 | 216 | 432 | 426 | | Gain from early extinguishment of debt | (138) | (26) | (138) | (26) | | Impairment and (gain) loss on sale of businesses, net | (239) | 10 | (263) | 27 | | Expense from business transformation costs | - | 12 | 9 | 25 | | **Adjusted EBITDA** | **$380** | **$387** | **$756** | **$765** | [Adjusted Net Loss Per Share Definition and Reconciliation](index=3&type=section&id=Adjusted%20Net%20Loss%20Per%20Share%20Definition%20and%20Reconciliation) Adjusted net loss attributable to Community Health Systems, Inc. stockholders per share (diluted) is a non-GAAP measure that adjusts reported diluted EPS for selected items used in calculating Adjusted EBITDA, such as gains from early extinguishment of debt, impairment/gain/loss on sale of businesses, and business transformation costs. This provides investors with a clearer view of underlying operating performance and facilitates period-over-period comparisons - Additionally, this press release presents **adjusted net loss attributable to Community Health Systems, Inc. stockholders per share (diluted)**, a non-GAAP financial measure, to reflect the impact on net income (loss) attributable to Community Health Systems, Inc. stockholders per share (diluted) from the selected items used in the calculation of Adjusted EBITDA[18](index=18&type=chunk) - The Company believes that the presentation of non-GAAP adjusted net loss attributable to Community Health Systems, Inc. stockholders per share (diluted) presents useful information to investors by highlighting the impact on net income (loss) attributable to Community Health Systems, Inc. stockholders per share (diluted) of selected items used in calculating Adjusted EBITDA which may not reflect the Company's underlying operating performance and assisting in comparing the Company's results of operations between periods[54](index=54&type=chunk) Reconciliation of Net Income (Loss) Per Share (Diluted) to Adjusted Net Loss Per Share (Diluted) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) per share (diluted), as reported | $2.09 | $(0.10) | $2.01 | $(0.42) | | Adjustments: | | | | | | Gain from early extinguishment of debt | $(1.03) | $(0.20) | $(1.03) | $(0.20) | | Impairment and (gain) loss on sale of businesses, net | $(1.12) | $0.06 | $(1.11) | $0.16 | | Expense from business transformation costs | - | $0.07 | $0.05 | $0.15 | | **Net loss per share (diluted), excluding adjustments** | **$(0.05)** | **$(0.17)** | **$(0.08)** | **$(0.31)** | [Company Overview](index=4&type=section&id=About%20Community%20Health%20Systems%2C%20Inc.) Community Health Systems, Inc. is one of the largest healthcare companies in the U.S., operating healthcare delivery systems in 36 markets across 14 states. As of July 23, 2025, its subsidiaries own or lease 70 affiliated hospitals with over 10,000 beds and manage more than 1,000 sites of care, including various outpatient facilities - **Community Health Systems, Inc.** is one of the nation's largest healthcare companies[21](index=21&type=chunk) - The Company's affiliates are leading providers of healthcare services, developing and operating healthcare delivery systems in **36 distinct markets across 14 states**[21](index=21&type=chunk) - As of July 23, 2025, the Company's subsidiaries own or lease **70 affiliated hospitals** with more than **10,000 beds** and operate more than **1,000 sites of care**, including physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers[21](index=21&type=chunk) [2025 Annual Earnings Guidance](index=16&type=section&id=2025%20Annual%20Earnings%20Guidance) This section provides the company's updated 2025 annual earnings guidance, including key financial projections and underlying assumptions for revenue, EBITDA, and cash flow [Key Guidance Figures](index=16&type=section&id=Key%20Guidance%20Figures) The Company updated its 2025 annual earnings guidance, projecting net operating revenues between $12.3 billion and $12.6 billion, Adjusted EBITDA between $1.45 billion and $1.55 billion, and a net loss per share (diluted) between $(0.40) and $(0.10) 2025 Projection Range | Metric | Low (Millions) | High (Millions) | | :-------------------------- | :------------- | :-------------- | | Net operating revenues | $12,300 | $12,600 | | Adjusted EBITDA | $1,450 | $1,550 | | Net loss per share - diluted | $(0.40) | $(0.10) | | Weighted-average diluted shares | 134 | 134 | [Guidance Assumptions and Reconciliation](index=16&type=section&id=Guidance%20Assumptions%20and%20Reconciliation) The 2025 guidance incorporates the effect of completed divestitures but excludes future divestitures, debt refinancing impacts, impairment charges, and certain state Medicaid supplemental reimbursement programs. It assumes depreciation and amortization of approximately 3.4% of net operating revenues, interest expense between $840 million and $860 million, and cash provided by operating activities between $600 million and $700 million - The Company's projections include the effect on net operating revenues and Adjusted EBITDA of completing divestitures for which definitive agreements have been executed and exclude the impact of any future divestitures for which definitive agreement(s) have not yet been executed[58](index=58&type=chunk) - Interest expense is estimated to be between **$840 million** and **$860 million** while cash paid for interest, which excludes the amortization of deferred financing costs, is expected to be **$790 million** to **$800 million**[58](index=58&type=chunk) Reconciliation of Projected 2025 Adjusted EBITDA to Net Loss Attributable to Community Health Systems, Inc. Stockholders | Metric | Low (Millions) | High (Millions) | | :------------------------------------------------ | :------------- | :-------------- | | Net loss attributable to Community Health Systems, Inc. stockholders | $(54) | $(14) | | Adjustments: | | | | Depreciation and amortization | 425 | 435 | | Interest expense, net | 840 | 860 | | Provision for income taxes | 99 | 119 | | Net income attributable to noncontrolling interests | 140 | 150 | | **Adjusted EBITDA** | **$1,450** | **$1,550** | Projected Capital Expenditures and Net Cash from Operating Activities for 2025 | Metric | Guidance (Millions) | | :-------------------------------- | :------------------ | | Capital expenditures | $350 to $400 | | Net cash provided by operating activities | $600 to $700 | [Forward-Looking Statements & Risk Factors](index=19&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) This section serves as a disclaimer for forward-looking statements, emphasizing that actual results may differ materially due to significant regulatory, economic, and competitive uncertainties. It lists numerous factors that could affect future results, including general economic conditions, healthcare policy changes, substantial indebtedness, cybersecurity threats, labor market conditions, and the ability to manage acquisitions and divestitures - All statements in this press release other than statements of historical fact, including statements regarding projections, expected operating results, and other events that depend upon or refer to future events or conditions or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," "thinks," and similar expressions, are **forward-looking statements**[63](index=63&type=chunk) - A number of factors could affect the future results of the Company or the healthcare industry generally and could cause the Company's expected results to differ materially from those expressed in this press release[63](index=63&type=chunk) - These factors include, among other things: **general economic and business conditions**... the impact of **current and future healthcare public policy developments**... risks associated with our **substantial indebtedness, leverage and debt service obligations**... **security breaches, cyber-attacks, loss of data, other cybersecurity threats or incidents**... the impact of **competitive labor market conditions**... our ability to successfully make **acquisitions or complete divestitures**...[64](index=64&type=chunk)[65](index=65&type=chunk)[67](index=67&type=chunk)