[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)

Industry Overview - The Zacks Medical-Hospital industry includes for-profit hospital companies providing various healthcare services, such as acute care, rehabilitation, and psychiatric services [3] - Revenue generation is influenced by inpatient occupancy levels, medical services ordered by physicians, and outpatient procedure volumes [3] - Payments for services come from government programs like Medicare and Medicaid, managed care plans, private insurers, and directly from patients [3] Key Trends - Rising patient demand is noted, particularly with an increase in elective procedures, while the 65+ population is projected to grow from 17.3% in 2022 to 22.8% by 2050 [4] - Health spending is expected to reach $5.3 trillion by 2025, but there is a shift from inpatient to outpatient and home-based services, leading to underused hospital beds [4] - Labor shortages, higher wages, and supply chain disruptions are squeezing hospital margins, prompting providers to adopt automation and refine staffing models [5] - Hospitals are investing in AI, automation, and real-time analytics to improve care delivery and operational efficiency [6] Consolidation and M&A Activity - Consolidation through mergers and acquisitions is a key strategy for hospitals to scale operations and increase market share in a fragmented market [2] - Post-pandemic, M&A activity has rebounded as hospitals seek efficiency and financial resilience, driven by economic recovery and regulatory clarity [7] Financial Performance and Outlook - The Zacks Medical-Hospital industry currently holds a Zacks Industry Rank of 181, placing it in the bottom 26% of nearly 250 Zacks industries, indicating challenging near-term prospects [8] - Aggregate earnings estimates for the industry have decreased by 0.2% since February-end, reflecting a negative outlook for earnings growth [9] - The industry has gained 4.2% over the past year, underperforming the S&P 500's 13.1% but outperforming the broader Medical sector's decline of 17.6% [11] Current Valuation - The industry trades at a trailing 12-month EV/EBITDA ratio of 7.84X, compared to the S&P 500's 17.79X and the sector's 9.72X [14] - Over the past five years, the industry's EV/EBITDA ratio has ranged from a high of 9.55X to a low of 6.45X, with a median of 8.03X [14] Notable Companies - **HCA Healthcare**: Positioned to benefit from rising patient volumes, with a projected 15% year-over-year EPS growth for 2025 and a 5.7% revenue increase [18] - **Tenet Healthcare Corporation**: Strong revenue growth driven by its Ambulatory Care and Hospital segments, with projected revenue of $20.9 billion for 2025 [22] - **Universal Health Services**: Growth supported by rising patient days and network expansion, with projected EPS growth of 17% for 2025 [26] - **Community Health Systems**: Benefiting from higher occupancy rates and a growing telehealth focus, with projected EPS growth of 69.9% for 2025 [31]

Core Viewpoint - Community Health Systems (CYH) shares have increased by approximately 29.2% since the last earnings report, outperforming the S&P 500, raising questions about the sustainability of this positive trend leading up to the next earnings release [1] Group 1: Earnings and Estimates - The consensus estimate for Community Health Systems has decreased by 23.33% over the past month, indicating a downward trend in estimates [2] - The most recent earnings report is crucial for understanding the catalysts affecting the stock's performance [1] Group 2: VGM Scores - Community Health Systems has a strong Growth Score of A, but a lower Momentum Score of D, while also receiving an A grade for value, placing it in the top 20% for this investment strategy [3] - The aggregate VGM Score for the stock is A, which is significant for investors not focused on a single strategy [3] Group 3: Outlook - The overall trend for estimates has been downward, suggesting a potential decline in stock performance [4] - Community Health Systems holds a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [4]

Summary of Community Health Systems (CYH) Conference Call Industry Overview - The discussion primarily revolves around the healthcare industry, specifically focusing on Community Health Systems (CYH) and its operational and financial outlook amidst changing policies and market dynamics. Key Points and Arguments Policy Changes and DPP Programs - Recent legislative changes are expected to have a neutral to slightly positive impact on DPP (Delivery System Reform Incentive Payment) programs, with no significant pullback anticipated [4][5][9] - The company expects existing DPP programs to continue operating as they are, with potential new programs being introduced in the future [4][5] - Work requirements may lead to increased employment coverage, positively affecting staffing [6] Operational Performance - Q1 was impacted by flu season and a decline in elective surgeries, particularly among commercially insured patients, attributed to economic decisions [10][11] - Inpatient volumes remained strong, but elective surgeries saw a decline, particularly among patients with high copays and deductibles [10][11][12] - Consumer sentiment has not improved significantly, which may lead to a pullback in procedures early in the year, but a rush for care is expected as patients meet their deductibles later [12][13] Labor and Cost Management - Average hourly wages increased by approximately 3.5% in Q1, but overall salaries and wages as a percentage of net revenue did not increase due to productivity gains [17][18] - The company has implemented efficiency initiatives through a new ERP system, improving scheduling and labor management, which has positively impacted nurse retention rates [19][20][21] - Turnover rates for nurses are in the high teens, showing improvement compared to previous years [21] Professional Fees and Supply Costs - Professional fees, particularly for anesthesia and radiology, are expected to increase by 8-12% for the year, with Q1 seeing a 9% increase [26][27] - The company has not experienced tariff-related cost increases and has protections in place through GPO contracts [31][32] - The ERP system enhances visibility and efficiency in purchasing, allowing for better management of supply costs [33] Development and Capital Allocation - The company is expanding its footprint through acquisitions, including 10 urgent care centers in Tucson and plans for additional ASCs (Ambulatory Surgery Centers) [35][36] - Approximately half of the capital will be allocated to growth initiatives, focusing on outpatient services rather than large inpatient projects [36][37] Capital Structure and Leverage - The company exited the year with a leverage ratio of 7.4 times, which improved to 7.1 times after refinancing $700 million in bonds [44][45] - Future divestitures and DPP program approvals are expected to further reduce leverage, potentially reaching the mid-six times by year-end [45][46] Market Dynamics and Future Outlook - The company is in the later stages of its private divestiture program, evaluating market dynamics for potential future sales or acquisitions [50][51] - The focus is on optimizing operations and investments based on changing market conditions and future performance potential [52] Additional Important Insights - The company has seen improvements in nurse recruitment efforts, leveraging its geographic footprint in favorable states for attracting talent [23][24] - There is ongoing exploration of technology solutions in radiology to mitigate cost increases [28] - The approval process for DPP programs in Tennessee is expected to progress positively following recent administrative changes [47][48]

Shares of Community Health Systems, Inc. (CYH) have risen 8.2% since it reported first-quarter 2025 results on April 23. The quarterly results benefited from increased same-store admissions, patient days and occupancy rate. However, the upside was partially offset by elevated salaries and benefits expenses.CYH incurred a first-quarter 2025 adjusted loss of 3 cents per share, which beat the Zacks Consensus Estimate of a loss of 10 cents. Also, the bottom line narrowed from the prior-year loss of 14 cents per ...

Larry Ellison, co-founder and executive chairman of Oracle Corp., speaks during the Oracle OpenWorld 2018 conference in San Francisco, California, U.S., on Monday, Oct. 22, 2018. The outage began on April 23, after engineers conducting maintenance work mistakenly deleted critical storage connected to a key database, a CHS spokesperson said in a statement. The outage was resolved on Monday, and was not related to a cyberattack or other security incident. Oracle engineers mistakenly triggered a five-day softw ...

Industry Overview - The Zacks Medical-Hospital industry consists of for-profit hospital companies providing various healthcare services, including acute care, rehabilitation, and psychiatric care [3] - Revenue generation is influenced by inpatient occupancy levels, medical services ordered, and outpatient procedure volumes [3] - Payments for services come from government programs like Medicare and Medicaid, managed care plans, private insurers, and directly from patients [3] Key Trends Shaping the Hospital Industry - Growing patient volumes are driven by the resumption of elective procedures post-pandemic, with the 65+ age group projected to increase from 17.3% in 2022 to 22.8% by 2050 [4] - Health spending is expected to reach $5.3 trillion by 2025, indicating strong demand for healthcare services [4] - Rising costs are a concern, but programs like the Affordable Care Act are anticipated to support continued growth [4] Managing Cost Pressures - Hospitals are facing rising expenses due to increased patient volumes and higher supply, labor, and benefit costs [5] - Strategies to counter these pressures include improving labor productivity, adopting cost-saving technologies, and enhancing operational efficiency [5] - Stabilizing patient volumes and renegotiated supplier contracts are expected to strengthen cost control [5] Embracing the Digital Shift - The healthcare sector is accelerating the adoption of AI, automation, and real-time analytics to enhance patient care and streamline operations [6] - Telehealth and telemedicine have become essential components of modern healthcare delivery, especially post-pandemic [6] Rising M&A Activity - Mergers and acquisitions are a key growth catalyst, with the industry expected to see continued deal activity driven by capacity expansion and efficiency goals [7] - Economic stabilization is likely to boost confidence in consolidation efforts within the fragmented industry [7] Zacks Industry Rank Shows Promise - The Zacks Medical-Hospital industry currently holds a Zacks Industry Rank of 27, placing it in the top 11% of nearly 250 Zacks industries [9] - Positive earnings outlook and revisions indicate optimism about the industry's growth potential [10] Industry Performance - The Zacks Medical-Hospital industry has outperformed the Zacks Medical sector and the S&P 500, gaining 3% year-to-date compared to the sector's 3.3% decline and the S&P 500's 6.4% fall [12] Industry's Current Valuation - The industry trades at a trailing 12-month EV/EBITDA ratio of 7.48X, significantly lower than the S&P 500's 16.31X and the sector's 10.48X [15] - Over the past five years, the industry has seen an EV/EBITDA range of 6.16X to 9.55X, with a median of 7.99X [15] Company Highlights - **Universal Health Services**: Focuses on acute care hospitals and outpatient centers, with growth driven by rising patient days and an expanding care network [18] - **Tenet Healthcare Corporation**: Operates a broad network of hospitals, with strong revenue growth in its Ambulatory Care segment [22] - **HCA Healthcare**: Positioned for growth with rising patient volumes and expansion into telemedicine [26] - **Community Health Systems**: Focuses on telehealth and hospital acquisitions to enhance specialty services and improve cost efficiency [28]

Financial Data and Key Metrics Changes - In Q1 2025, same-store admissions increased by 4%, same-store adjusted admissions rose by 2.6%, and same-store net operating revenues grew by 3.1% [8][22] - Adjusted EBITDA for Q1 was $376 million, slightly down from $378 million in the prior year, with a margin of 11.9% compared to 12% previously [22][23] - Net debt to trailing adjusted EBITDA improved to 7.1 times from 7.4 times at year-end 2024 and 7.9 times at year-end 2023 [21] Business Line Data and Key Metrics Changes - Same-store surgeries decreased by 3%, while emergency department visits increased by 2.4% [22] - Same-store net revenue per adjusted admission increased by 0.5% year-over-year, driven by rate growth from commercial plans and Medicare updates, but offset by unfavorable shifts in payer and acuity mix [22] Market Data and Key Metrics Changes - The company experienced strong demand for healthcare services, particularly due to a heavier flu season compared to the previous year [8] - The divestiture of ShorePoint Health System and Lake Norman Regional Medical Center generated total gross proceeds of $544 million, with an additional expected $460 million from the sale of Cedar Park Regional Medical Center [18][19] Company Strategy and Development Direction - The company is focused on delivering high-quality care, operational expertise, and financial discipline [12] - Strategic initiatives include the acquisition of urgent care centers and investments in ambulatory services, aiming to balance acute care with outpatient services [13][14] - The company plans to use divestiture proceeds to reduce debt and improve leverage, targeting over $1 billion in divestiture proceeds [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged uncertainties in the healthcare environment, particularly regarding potential changes from Washington [15] - The company remains optimistic about future growth opportunities and is closely monitoring consumer behavior related to co-pays and deductibles [32] Other Important Information - The company is implementing an enterprise modernization initiative, Project Empower, to generate savings and insights into operations [24] - The financial guidance for 2025 remains unchanged, with expectations for potential additional divestitures and approval of directed payment programs that could add $100 to $125 million to annual EBITDA [25][90] Q&A Session Summary Question: Volume performance and cost structure management - Management noted strong EMS volumes and growth in trauma, with a focus on managing costs despite flu-related impacts [31][38] Question: Balance sheet and cash flow guidance - Proceeds from recent divestitures will be used for debt reduction, and cash flow guidance remains on track [45] Question: Updates on DPP programs - Management indicated that there has been no significant news on Tennessee and New Mexico DPP programs, but recent approvals in other states suggest progress [49] Question: Public exchanges volume and growth - Revenue from public exchanges is less than 6% of total net revenue, but growth is being observed [54] Question: Payer behavior and denials - Denials and downgrades are stable across all regions and service lines, with no specific trends identified [71] Question: Medical specialist fees - Anesthesiology remains the primary area of cost pressure, with a guided increase of 8 to 12% in medical specialist fees [79][80]

Financial Performance - Net operating revenues increased from $3.140 billion for the three months ended March 31, 2024, to $3.159 billion for the same period in 2025, representing a growth of approximately 0.6%[110] - The company reported a net income of $25 million for the three months ended March 31, 2025, compared to a net loss of $(6) million for the same period in 2024[111] - Same-store net operating revenues increased by $94 million, or 3.1%, during the three months ended March 31, 2025, compared to the same period in 2024[134] - Net income was 0.8% of net operating revenues for the three months ended March 31, 2025, compared to a net loss of (0.2)% for the same period in 2024[142] - Operating expenses as a percentage of net operating revenues decreased from 92.6% in Q1 2024 to 91.0% in Q1 2025[135] Admissions and Services - Consolidated inpatient admissions decreased by 1.0% for the three months ended March 31, 2025, while same-store inpatient admissions increased by 4.0% during the same period[111] - Inpatient admissions decreased by 1.0% and adjusted admissions decreased by 2.3% during the three months ended March 31, 2025, compared to the same period in 2024[134] - Charity care services accounted for approximately 9.7% of net operating revenues for the three months ended March 31, 2025, compared to 10.1% for the same period in 2024[112] Cash Flow and Investments - Net cash provided by operating activities increased by $24 million to approximately $120 million for the three months ended March 31, 2025[144] - Net cash provided by investing activities was approximately $444 million for the three months ended March 31, 2025, compared to net cash used in investing activities of approximately $99 million for the same period in 2024[145] - Net cash used in financing activities was approximately $170 million for the three months ended March 31, 2025, a change of $183 million compared to net cash provided by financing activities of approximately $13 million for the same period in 2024[146] Debt and Financing - Approximately $29 million of the company's outstanding debt of approximately $11.3 billion is due within the next 12 months[153] - As of March 31, 2025, outstanding borrowings under the ABL Facility were $200 million, with approximately $651 million of additional borrowing capacity available[149] - The provision for income taxes increased to $42 million for the three months ended March 31, 2025, compared to $28 million for the same period in 2024[141] Divestitures and Acquisitions - The company divested two hospitals in Florida and sold a 50% ownership interest in a hospital in Mississippi, which represented annual net operating revenues of approximately $359 million in 2024, receiving total net proceeds of approximately $276 million[105] - The company completed the sale of Lake Norman Regional Medical Center for approximately $284 million on March 31, 2025[107] - The company has entered into definitive agreements to sell its 50% interest in Merit Health Madison and an 80% interest in Cedar Park Regional Medical Center for a total purchase price of $460 million, subject to adjustments[108] - The company is considering divesting additional hospitals and non-hospital businesses that are less complementary to its business strategy[109] Risks and Challenges - The company faces significant risks and uncertainties that may cause actual results to differ materially from forward-looking statements, including economic conditions, regulatory changes, and geopolitical instability[190] - The company is impacted by high interest rates and inflationary pressures, which could affect its financial performance and operational costs[190] - Changes in healthcare public policy and funding for Medicare and Medicaid programs could significantly affect the company's operations and revenue[190] - The company is experiencing challenges in hiring and retaining qualified medical personnel, leading to increased labor expenses due to competitive market conditions[192] - Ongoing economic conditions, including inflationary pressures and elevated interest rates, may negatively affect the company's liquidity in the future[154] Accounts Receivable and Collections - Patient accounts receivable from hospitals represent approximately 98% of total consolidated accounts receivable, with days revenue outstanding at 56 days as of March 31, 2025[170] - The company expects to collect less than 4% of the amounts being pursued by outside collection agencies, which totaled approximately $1.5 billion at March 31, 2025[168] - Total gross accounts receivable was approximately $17.5 billion as of March 31, 2025, compared to $17.3 billion as of December 31, 2024[171] - Insured receivables accounted for 73.3% of total gross accounts receivable as of March 31, 2025, up from 72.4% as of December 31, 2024[172] - The estimated implicit price concessions for self-pay accounts receivable were approximately 90% at both March 31, 2025, and December 31, 2024[172] Technology and Integration - The company is focused on integrating acquired hospitals and outpatient facilities to realize expected benefits, including growth in patient service revenues[192] - The company is exploring the development and adoption of emerging technologies, including artificial intelligence and machine learning, to enhance its services[192] Regulatory and Compliance - The company is subject to risks associated with cybersecurity threats and data privacy compliance, which could impact its operations[192] - The company is evaluating the impact of ASU 2023-09 on its consolidated financial statements, effective for annual periods beginning after December 15, 2024[187] Goodwill and Tax Positions - Goodwill recorded was approximately $3.8 billion as of March 31, 2025, with no impairment identified during the last evaluation[173] - The total amount of unrecognized tax benefits that would impact the effective tax rate, if recognized, was $43 million at March 31, 2025[185] - A total of $6 million of interest and penalties is included in the liability for uncertain tax positions at March 31, 2025[185]

Financial Data and Key Metrics Changes - In Q1 2025, same store admissions increased by 4%, same store adjusted admissions rose by 2.6%, and net operating revenues on a same store basis grew by 3.1% [5][16] - Adjusted EBITDA for Q1 2025 was $376 million, compared to $378 million in the prior year, with a margin of 11.9% versus 12% in the previous year [16] - Cash flows from operations were $120 million for Q1 2025, up from $96 million in Q1 2024, while free cash flow remained slightly negative but improved over the prior year [19] Business Line Data and Key Metrics Changes - The growth in Q1 was driven by a heavier flu season compared to the previous year, alongside targeted capital investments and operational initiatives [6][10] - Same store surgeries decreased by 3%, while emergency department visits increased by 2.4% [16] - Medical specialist fees increased by approximately 9% year over year, representing 5.1% of net revenues compared to 4.8% in the prior year [18] Market Data and Key Metrics Changes - The company reported strong demand for healthcare services across its core portfolio markets, with notable growth in EMS volumes and cardiac service lines [27] - The payer mix showed a decline in commercial business, particularly in elective procedures, attributed to higher deductible plans and economic uncertainties [75] Company Strategy and Development Direction - The company is focused on delivering high-quality care, operational expertise, and financial discipline as foundational areas for growth in 2025 [8][9] - Strategic initiatives include the acquisition of urgent care centers and investments in ambulatory services, as well as leveraging AI and emerging technologies [10] - The company plans to use divestiture proceeds to reduce debt and improve leverage, with a target of over $1 billion in divestiture proceeds [6][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged uncertainties in the healthcare environment, particularly regarding potential changes from Washington, but remains committed to advocating for policies that strengthen healthcare delivery systems [11] - The company maintains its financial guidance for 2025, despite headwinds from claims denials and medical specialist fees [20][60] Other Important Information - The company completed divestitures of ShorePoint Health System and Lake Norman Regional Medical Center, with total gross proceeds of $544 million recorded in Q1 [12][13] - The company announced a debt refinancing and buyback transaction to further reduce leverage and improve its maturity profile [15] Q&A Session Summary Question: Volume performance and cost structure management - Management noted strong signs of success across the portfolio, with robust EMS volumes and growth in cardiac services, despite some softness in lower acuity surgeries due to the flu [25][27] Question: Balance sheet and cash flow guidance - Management indicated that proceeds from recent divestitures would be used for debt reduction and that cash flow guidance remains on track despite additional divestitures [32][34] Question: Updates on DPP programs - Management reported no significant updates on Tennessee and New Mexico DPP programs but noted positive developments in other states [39][41] Question: Public exchanges volume growth - Management stated that net revenue from public exchanges is less than 6% of total net revenue, with growth observed but still a small portion of overall revenue [42] Question: Payer behavior and denials - Management indicated that denials and downgrades are being observed across all regions and service lines, with no specific trends tied to particular payers [55] Question: Medical specialist fees pressure - Management confirmed that anesthesiology accounts for over 50% of the increase in medical specialist fees, with ongoing efforts to insource services to mitigate costs [64][66]