Core Viewpoint - Community Health Systems, Inc. will host a conference call to discuss its third quarter 2025 financial and operating results on October 24, 2025 [2]. Group 1: Conference Call Details - The company will issue a press release with its results on October 23, 2025, after market close [2]. - The conference call is scheduled for 10:00 a.m. Central Time, 11:00 a.m. Eastern Time on October 24, 2025 [2]. - A live webcast of the conference call will be available online, with a replay accessible for approximately 30 days [3]. Group 2: Participation Information - Participants can join the live call by dialing 1-833-630-1961 for domestic calls or 1-412-317-1842 for international calls [4]. - A telephonic replay will be available until October 30, 2025, using the number 1-877-344-7529 and entering the confirmation number 9596131 [4]. Group 3: Company Overview - Community Health Systems, Inc. is one of the largest healthcare companies in the U.S., operating in 36 markets across 14 states [5]. - The company owns or leases 70 affiliated hospitals with over 10,000 beds and operates more than 1,000 care sites, including various healthcare facilities [5]. - The headquarters is located in Franklin, Tennessee, and the company's shares are traded on the New York Stock Exchange under the symbol "CYH" [5].

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]

Financial Performance - Net Operating Revenues for the three months ended June 30, 2025, were $3,133 million, a decrease of 0.2% compared to $3,140 million in 2024[9] - Adjusted EBITDA for the three months ended June 30, 2025, was $380 million, a decrease of 1.8% compared to $387 million in 2024[9] - Net loss per share, excluding adjustments, was $(0.05) for the three months ended June 30, 2025, compared to $(0.17) in 2024[9] - Net Operating Revenues for the six months ended June 30, 2025, were $6,292 million, an increase of 0.2% compared to $6,279 million in 2024[9] - Adjusted EBITDA for the six months ended June 30, 2025, was $756 million, a decrease of 1.2% compared to $765 million in 2024[9] - Net loss per share, excluding adjustments, was $(0.08) for the six months ended June 30, 2025, compared to $(0.31) in 2024[9] Operational Metrics - Consolidated Net Operating Revenue decreased by 0.2%, while Same Store Net Operating Revenue increased by 6.5% for 2Q 2025 compared to 2Q 2024[12] - Consolidated Admissions decreased by 7.4%, while Same Store Admissions increased by 0.3% for 2Q 2025 compared to 2Q 2024[12] Capital Structure - Total Debt as of June 30, 2025, was $10,863 million, compared to $11,452 million as of December 31, 2024[22] Guidance - The company projects Net operating revenues between $12,300 million and $12,600 million for 2025[26] - The company projects Adjusted EBITDA between $1,450 million and $1,550 million for 2025[26]

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]