Community Health Systems, Inc. (NYSE:CYH) Q4 2020 Earnings Conference Call February 18, 2021 11:00 AM ET Company Participants Ross Comeaux - Vice President of Investor Relations Tim Hingtgen - President & Chief Operating Officer Kevin Hammons - Executive Vice President & Chief Financial Officer Lynn Simon - President of Clinical Operations & Chief Medical Officer Conference Call Participants Frank Morgan - RBC Capital Markets Josh Raskin - Nephron Research Brian Tanquilut - Jefferies Ralph Giacobbe - Citi K ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-15925 COMMUNITY HEALTH SYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 13-3893191 (State or other juris ...

39th Annual J.P. Morgan Healthcare Conference January 14, 2021 1 Disclaimer Statement 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 expected operating results, ...

Financial Data and Key Metrics Changes - Net revenue for the third quarter was approximately $3.1 billion, up 2.9% on a same-store year-over-year basis [17][49] - Adjusted EBITDA was $431 million, an increase of 11% compared to the previous year, with an adjusted EBITDA margin of 13.8%, up 180 basis points year-over-year [18][49] - Cash flows provided by operations were $393 million for the third quarter, compared to a negative $74 million during the same period in 2019 [51] Business Line Data and Key Metrics Changes - Admissions decreased by 6.2%, adjusted admissions were down 11.5%, and surgeries were down 5.8% [37] - Emergency room visits declined by 18.4%, primarily due to lower acuity patients not presenting [38] - Despite the decline in volumes, higher acuity and improved contract rates contributed to net revenue growth [37] Market Data and Key Metrics Changes - The company experienced a sequential improvement in admissions, surgeries, and ER business compared to the second quarter [15][36] - COVID-19 patient counts increased during the quarter, with approximately 8,000 confirmed cases in July, 6,000 in August, and 4,000 in September [25] - The company managed to maintain operations during significant hurricanes, which caused minor disruptions [33] Company Strategy and Development Direction - The company is focused on reshaping its portfolio into a stronger group of hospitals and healthcare systems, with divestitures nearing completion [19][41] - Investments in high-return capital expenditures are being accelerated to strengthen services and increase access points [20][44] - The company aims to leverage its strategic margin improvement program for long-term growth and margin expansion opportunities [43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong strategies and a capable team to navigate challenges [12][47] - The company is continuously monitoring COVID-19 cases and is prepared to adjust operations as necessary [27][75] - Management highlighted the importance of maintaining safety protocols and effective patient care during the pandemic [30][31] Other Important Information - The company did not recognize any provider relief funds from the CARES Act during the quarter, with approximately $719 million received so far in 2020 [57] - The company has reduced its total debt and lowered its debt-to-EBITDA ratio through EBITDA growth and debt repayment [18][64] - The company has approximately $1.8 billion in cash on the balance sheet, with no outstanding borrowings [55][56] Q&A Session Summary Question: On margins and recovery pace - Management indicated that margin improvements are expected to be sustainable due to effective labor cost management and ongoing margin improvement initiatives [68][69] Question: COVID patient utilization and trends - Management noted that while there were surges in COVID cases, they did not require significant curtailment of elective procedures, and they are monitoring the situation closely [72][75] Question: Long-term population shifts and ER strategy - Management acknowledged potential population shifts but emphasized that their current markets remain stable, and they are focused on increasing market share [78][83] Question: Cash availability for deployment - Management highlighted uncertainties around COVID but expressed confidence in positive free cash flow moving forward, providing flexibility for future investments [88] Question: Characteristics of COVID inpatients - Approximately 45% of COVID cases were inpatient admissions, with a higher prevalence of Medicare Advantage patients among those hospitalized [90] Question: Labor trends and ER volumes - Management reported an increase in contract labor usage due to COVID surges but noted successful negotiations with staffing vendors to manage costs [95][98] Question: Prioritization of procedures - Management collaborates closely with medical staff to prioritize and reschedule procedures, focusing on both high-acuity and preventive care [104][110]

Part I. Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited condensed consolidated financial statements for Community Health Systems, Inc. for the three and nine months ended September 30, 2020, and 2019 are presented [Condensed Consolidated Statements of Income (Loss)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Loss%29) Community Health Systems, Inc. reported significant improvements in net income for both the three and nine months ended September 30, 2020, driven by a gain on early debt extinguishment and pandemic relief funds Condensed Consolidated Statements of Income (Loss) (in millions) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Net operating revenues** | $3.1B | $3.2B | $8.7B | $9.9B | | **Income from operations** | $285M | $184M | $690M | $486M | | **(Gain) loss from early extinguishment of debt** | $(115)M | — | $(111)M | $31M | | **Net income (loss)** | $128M | $2M | $254M | $(244)M | | **Net income (loss) attributable to CHS, Inc. stockholders** | $112M | $(17)M | $200M | $(302)M | | **Diluted EPS attributable to CHS, Inc. common stockholders** | $0.97 | $(0.15) | $1.74 | $(2.66) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$16.5 billion** as of September 30, 2020, primarily due to a surge in cash, while total liabilities also rose, largely from Medicare accelerated payments Condensed Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $1.8B | $216M | | **Total current assets** | $4.7B | $3.4B | | **Total assets** | $16.5B | $15.6B | | **Total current liabilities** | $3.6B | $2.3B | | **Long-term debt** | $12.9B | $13.4B | | **Total liabilities** | $18.0B | $17.2B | | **Total stockholders' deficit** | $(1.96)B | $(2.14)B | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities surged to **$2.1 billion** for the nine months ended September 30, 2020, primarily due to Medicare accelerated payments and pandemic relief funds Cash Flow Summary (Nine Months Ended Sep 30, in millions) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $2.1B | $191M | | **Net cash provided by (used in) investing activities** | $9M | $(103)M | | **Net cash used in financing activities** | $(504)M | $(127)M | | **Net change in cash and cash equivalents** | $1.6B | $(39)M | | **Cash and cash equivalents at end of period** | $1.8B | $157M | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Detailed notes explain accounting policies, the significant financial impact of COVID-19 including CARES Act funds and Medicare accelerated payments, acquisitions, divestitures, goodwill impairment, and long-term debt structure - During the nine months ended September 30, 2020, the company received approximately **$719 million** in payments from the Public Health and Social Services Emergency Fund (PHSSEF) and other programs. Of this, **$448 million** was recognized as a reduction in operating costs and expenses[40](index=40&type=chunk) - The company received approximately **$1.2 billion** in Medicare accelerated payments in April 2020. As of September 30, 2020, about **$1.1 billion** remains outstanding and is recorded in accrued liabilities[45](index=45&type=chunk)[46](index=46&type=chunk) - During the nine months ended September 30, 2020, the company completed the divestiture of eight hospitals, receiving total net proceeds of approximately **$393 million**[179](index=179&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the material impact of the COVID-19 pandemic on patient volumes and operating results, alongside portfolio rationalization, government stimulus, and critical accounting policies [Executive Overview](index=35&type=section&id=Executive%20Overview) The company continues its portfolio rationalization and deleveraging strategy, with COVID-19 materially affecting operations and patient volumes, despite a rise in net income for Q3 2020 - As of September 30, 2020, the company owned or leased **93 hospitals**[169](index=169&type=chunk) - The COVID-19 pandemic led to a substantial reduction in elective surgeries, physician office visits, and emergency room volumes starting in March 2020. While volumes have improved from their lows, they have not returned to pre-pandemic levels[173](index=173&type=chunk) - During the nine months ended September 30, 2020, the company completed the divestiture of eight hospitals for total net proceeds of approximately **$393 million**[179](index=179&type=chunk) [Legislative Overview](index=40&type=section&id=Legislative%20Overview) This section details the impact of healthcare legislation, primarily the Affordable Care Act and recent COVID-19 relief measures like the CARES and PPPHCE Acts - The CARES and PPPHCE Acts authorized **$175 billion** in funding for healthcare providers through the PHSSEF. The company received approximately **$719 million** from these and other programs in the first nine months of 2020[213](index=213&type=chunk)[214](index=214&type=chunk) - The company received approximately **$1.2 billion** in Medicare accelerated payments in April 2020, which must be repaid. Repayment terms were amended effective October 1, 2020, to begin one year after issuance[213](index=213&type=chunk)[218](index=218&type=chunk) - HHS guidance on the use of PHSSEF funds, particularly the definition of 'lost revenues,' has evolved, creating uncertainty. An October 22, 2020 notice amended the definition in a manner more favorable to providers than a September 19, 2020 notice[214](index=214&type=chunk)[215](index=215&type=chunk)[217](index=217&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) Net operating revenues decreased for Q3 and the first nine months of 2020 due to divestitures and lower volumes, while net income significantly improved due to debt extinguishment gains and pandemic relief Operating Results Comparison (Three Months Ended Sep 30) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | **Net Operating Revenues** | $3.1B | $3.2B | | **Same-Store Net Op. Rev. Change** | +2.9% | +4.1% | | **Consolidated Admissions Change** | -13.0% | -9.2% | | **Same-Store Admissions Change** | -6.2% | +2.4% | | **Net Income (Loss) Attributable to CHS** | $112M | $(17)M | Operating Results Comparison (Nine Months Ended Sep 30) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | **Net Operating Revenues** | $8.7B | $9.9B | | **Same-Store Net Op. Rev. Change** | -6.3% | +4.3% | | **Consolidated Admissions Change** | -16.6% | -11.4% | | **Same-Store Admissions Change** | -9.8% | +1.7% | | **Net Income (Loss) Attributable to CHS** | $200M | $(302)M | [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity significantly improved due to a surge in net cash from operations, driven by Medicare accelerated payments and PHSSEF funds, with substantial available borrowing capacity - Net cash provided by operating activities increased by **$1.9 billion** for the nine months ended Sep 30, 2020, primarily due to CARES Act relief[256](index=256&type=chunk) CARES Act and Other Relief Funds (as of Sep 30, 2020) | Program | Amount Received/Deferred | | :--- | :--- | | **PHSSEF & State/Local Programs** | ~**$719 million** | | **Medicare Accelerated Payments** | ~**$1.2 billion** | | **Deferred Social Security Taxes** | ~**$91 million** | - In February 2020, the company issued **$1.462 billion** of 6⅝% Senior Secured Notes due 2025 to refinance existing debt. In Q3 2020, it extinguished an additional **$261 million** of notes through open market repurchases, resulting in a **$115 million** gain[273](index=273&type=chunk)[275](index=275&type=chunk) [Critical Accounting Policies](index=53&type=section&id=Critical%20Accounting%20Policies) This section outlines the company's most significant accounting policies, which require considerable judgment and estimation, including revenue recognition, patient accounts receivable, goodwill impairment, and professional liability claims - **Revenue Recognition:** Net operating revenues are recorded at an estimated transaction price, reduced by price concessions for contractual arrangements and patient discounts. The estimation of contractual allowances is a key assumption[292](index=292&type=chunk)[295](index=295&type=chunk) - **Patient Accounts Receivable:** The company estimates implicit price concessions for self-pay accounts based on historical collection experience. As of September 30, 2020, days revenue outstanding was **53 days**, down from **58 days** at year-end 2019[298](index=298&type=chunk)[304](index=304&type=chunk) - **Goodwill:** The company had **$4.2 billion** of goodwill as of September 30, 2020. No impairment was indicated as of the October 31, 2019 measurement date, but management notes an increased risk of future impairment due to reduced headroom from prior impairments and potential volatility from the COVID-19 pandemic[309](index=309&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk) - **Professional Liability Claims:** The company is primarily self-insured for professional liability claims, with retentions up to **$15 million** per claim for policies effective June 1, 2018. It accrues for estimated losses based on historical data and actuarial projections[314](index=314&type=chunk)[320](index=320&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk exposure is to interest rate changes on its variable-rate ABL Facility, though approximately **100%** of its debt is fixed-rate as of September 30, 2020 - The company's last interest rate swap agreement terminated on August 30, 2020[335](index=335&type=chunk) - As of September 30, 2020, approximately **100%** of the company's debt carries a fixed rate of interest[277](index=277&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during Q3 2020 - The CEO and CFO concluded that as of September 30, 2020, the company's disclosure controls and procedures were effective[337](index=337&type=chunk) - No material changes to internal control over financial reporting occurred during the three months ended September 30, 2020[338](index=338&type=chunk) Part II. Other Information [Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal and regulatory proceedings, including shareholder litigation and government investigations, which are not expected to have a material adverse effect on its financial position - **Shareholder Litigation:** A securities class action (*Caleb Padilla v. CHS*) alleges misleading statements artificially inflated stock prices between February 2017 and February 2018. A motion to dismiss is pending[342](index=342&type=chunk) - **Government Investigations:** The DOJ is investigating the company's participation in the Florida Low Income Pool Program, having issued Civil Investigative Demands (CIDs) to eleven affiliated hospitals and the parent company[345](index=345&type=chunk) - **Commercial Litigation:** The company reached a settlement in the *Zwick Partners, LP v. Quorum Health Corporation* case related to the QHC spin-off, which is awaiting final court approval[346](index=346&type=chunk) [Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) This section supplements previously disclosed risk factors, focusing on the ongoing and future impacts of the COVID-19 pandemic, including reduced patient volumes, increased costs, and uncertainty regarding government relief programs - The COVID-19 pandemic is expected to continue to materially affect financial performance, with risks including reduced patient volumes, increased labor and supply costs, and potential workforce disruptions[358](index=358&type=chunk)[367](index=367&type=chunk) - Broad economic factors from the pandemic, such as unemployment, may adversely affect payor mix and the ability to collect patient receivables[365](index=365&type=chunk) - There is a high degree of uncertainty regarding the implementation and impact of the CARES and PPPHCE Acts, and no assurance as to the total amount of assistance the company will ultimately recognize or receive[368](index=368&type=chunk)[371](index=371&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2020, the company withheld shares to satisfy tax obligations on vested restricted stock, with no open market repurchases, and maintained approximately **$200 million** in capacity for dividends or share repurchases - In Q3 2020, **3,263 shares** were withheld to satisfy tax obligations on vested restricted stock; no open market repurchases were made[377](index=377&type=chunk) - As of September 30, 2020, the company had approximately **$200 million** of capacity to pay dividends or repurchase stock under its debt agreements[378](index=378&type=chunk)

Earnings Presentation – 2 nd Quarter, 2020 1 Disclaimer Statement This press release 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 press release other than statements of historical fact, including statements regarding expected operating results, and other events t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 Commission file number 001-15925 COMMUNITY HEALTH SYSTEMS, INC. | --- | --- | --- | |---------------------------------------------------------------------------------------|--------------------------------------------------------|--------------------------------------------------------| | | | | | ...

Community Health Systems, Inc. (NYSE:CYH) Q2 2020 Earnings Conference Call July 29, 2020 11:00 AM ET Company Participants Ross Comeaux – Vice President-Investor Relations Wayne Smith – Chairman and Chief Executive Officer Lynn Simon – President of Clinical Operations and Chief Medical Officer Tim Hingtgen – President and Chief Operating Officer Kevin Hammons – Executive Vice President and Chief Financial Officer Conference Call Participants Josh Raskin – Nephron Research Frank Morgan – RBC Capital Markets R ...

Community Health Systems, Inc. (NYSE:CYH) Q1 2020 Earnings Conference Call April 29, 2020 11:00 AM ET Company Participants Ross Comeaux – Vice President-Investor Relations Wayne Smith – Chairman and Chief Executive Officer Lynn Simon – President-Clinical Operations and Chief Medical Officer Tim Hingtgen – President and Chief Operating Officer Kevin Stockton – Regional President-Western Region Kevin Hammons – Executive Vice President and Chief Financial Officer Conference Call Participants Josh Raskin – Neph ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 Commission file number 001-15925 COMMUNITY HEALTH SYSTEMS, INC. (Exact name of registrant as specified in its charter) | --- | --- | --- | --- | --- | --- | |---------------------------------------------------------------------------------------|-------|---------------|-------- ...