分组1 - Community Health Systems reported quarterly earnings of $1.27 per share, significantly beating the Zacks Consensus Estimate of a loss of $0.32 per share, representing an earnings surprise of +496.88% [1] - The company posted revenues of $3.09 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.22%, with year-ago revenues also at $3.09 billion [2] - The stock has added about 8% since the beginning of the year, underperforming the S&P 500's gain of 13.9% [3] 分组2 - The earnings outlook for Community Health Systems is mixed, with the current consensus EPS estimate for the coming quarter at $0.07 on $3.16 billion in revenues, and -$0.34 on $12.45 billion in revenues for the current fiscal year [7] - The Medical - Hospital industry, to which Community Health Systems belongs, is currently in the bottom 15% of the Zacks industries, indicating potential challenges ahead [8] - Universal Health Services, another company in the same industry, is expected to report quarterly earnings of $4.56 per share, reflecting a year-over-year change of +22.9% [9]

Financial Performance - Net operating revenues for Q3 2025 totaled $3.087 billion, a 0.1% decrease from $3.090 billion in Q3 2024, but a 6.0% increase on a same-store basis [4] - Net income attributable to Community Health Systems, Inc. stockholders was $130 million, or $0.96 per share (diluted), compared to a net loss of $(391) million, or $(2.95) per share (diluted), for the same period in 2024 [5] - Adjusted EBITDA for Q3 2025 was $376 million, up from $347 million in Q3 2024, reflecting an increase in non-patient revenue [7] - For the nine months ended September 30, 2025, net operating revenues totaled $9.379 billion, a 0.1% increase compared to $9.369 billion for the same period in 2024 [9] - Net income attributable to Community Health Systems, Inc. stockholders for the nine months ended September 30, 2025, was $399 million, or $2.97 per share (diluted), compared to a net loss of $(446) million, or $(3.38) per share (diluted), for the same period in 2024 [10] - Adjusted EBITDA for the nine months ended September 30, 2025, was $1.131 billion, compared to $1.112 billion for the same period in 2024 [11] - Net income attributable to Community Health Systems, Inc. stockholders for Q3 2025 was $130 million, a significant improvement from a loss of $391 million in Q3 2024, representing a 133.2% increase [41] - Adjusted EBITDA for Q3 2025 was $376 million, up 8.4% from $347 million in Q3 2024, with an adjusted EBITDA margin of 12.2% [41] Operational Metrics - Total operating expenses for Q3 2025 were $2,844 million, down from $3,295 million in Q3 2024, resulting in a more favorable operating expense ratio [32] - The number of hospitals at the end of Q3 2025 was 70, down from 77 in Q3 2024, indicating a strategic reduction in capacity [41] - Admissions decreased by 6.6% to 97,648 in Q3 2025 compared to 104,593 in Q3 2024, reflecting a decline in patient volume [41] - The average length of stay for patients remained stable at 4.2 days in both Q3 2025 and Q3 2024 [41] - The occupancy rate for average beds in service was 49.7% in Q3 2025, a slight decrease from 49.8% in Q3 2024 [41] - The number of admissions decreased by 5.0% to 301,487 in 2025 from 317,396 in 2024 [44] - The average occupancy rate for beds in service increased to 52.8% in 2025 from 51.9% in 2024 [44] Cash Flow and Debt - Net cash provided by operating activities for Q3 2025 was $70 million, an increase of 4.5% from $67 million in Q3 2024 [41] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $277 million, up 4.9% from $264 million in 2024 [49] - Cash and cash equivalents at the end of the period increased to $123 million in 2025 from $37 million in 2024 [47] - Long-term debt decreased to $10,589 million in 2025 from $11,432 million in 2024 [47] - The company completed an offering of $1.790 billion principal amount of 9.750% Senior Secured Notes due 2034, using proceeds to redeem $1.743 billion of its 5.625% Senior Secured Notes due 2027 [14] Strategic Initiatives - The company divested its 50% ownership interest in two hospitals and its 80% ownership interest in one hospital during 2025 [15] - A definitive agreement was made with Labcorp for the acquisition of select assets of the ambulatory outreach business for a total purchase price of $195 million [16] - The company aims to realize anticipated cost savings from current strategic and operational cost-saving initiatives [71] Future Projections - The company projects net operating revenues for 2025 to be between $12.4 billion and $12.6 billion [61] - The projected Adjusted EBITDA for 2025 is estimated to be between $1.5 billion and $1.55 billion [61] - Net income per share (diluted) for 2025 is projected to range from $0.80 to $0.90 [61] - The weighted-average diluted shares outstanding for 2025 are projected to be approximately 135 million [64] - Interest expense for 2025 is estimated to be between $870 million and $880 million [62] - The company expects depreciation and amortization to be approximately 3.4% of net operating revenues for 2025 [62] Risks and Challenges - The company faces risks associated with substantial indebtedness, leverage, and debt service obligations, including the ability to refinance such indebtedness on acceptable terms [69] - Changes in federal and state Medicaid programs may affect the structure and funding, impacting the company's operations [69] - The company is impacted by competitive labor market conditions, affecting the ability to hire and retain qualified medical personnel [69] - The company is subject to risks from cybersecurity threats, including breaches and loss of data [69] - The company may experience adverse impacts from legal, regulatory, and governmental proceedings, including investigations and audits [69] - The company is concentrated in a small number of states, which may pose revenue risks [71] - The consolidated operating results for the three and nine months ended September 30, 2025, are not necessarily indicative of future results [70] - The company cautions that projections for calendar year 2025 are based on currently available information and undertakes no obligation to revise or update any forward-looking statements [70]

Core Insights - The Zacks Medical-Hospital industry is facing multiple challenges, including rising labor and supply costs, workforce burnout, regulatory hurdles, and tighter funding, while also dealing with cybersecurity threats. However, technology-driven innovations may lead to future efficiencies and a gradual recovery in patient volumes [1][4][5]. Industry Overview - The industry consists of for-profit hospital companies providing various healthcare services, including acute care, rehabilitation, and psychiatric care. Revenue is influenced by inpatient occupancy, medical services provided, and outpatient procedures. Payments come from government programs, managed care plans, private insurers, and patients directly [2]. Key Trends - There is a rising demand for healthcare services, particularly due to an aging population projected to increase from 56.1 million in 2020 to 73.1 million by 2030. National health spending is expected to reach $5.6 trillion by 2025 and $8.6 trillion by 2033. However, there is a shift towards outpatient and home-based services, leading to excess capacity in many hospitals [3]. Cost Pressures - Hospitals are experiencing margin pressures from labor shortages, rising wages, supply chain disruptions, and increased benefit costs. New tariffs on imported medical devices are expected to further inflate expenses. Providers are adopting automation and optimizing staffing to control costs, while cybersecurity risks are increasing insurance premiums [4]. Technological Advancements - Hospitals are increasingly utilizing AI, automation, and real-time analytics to enhance efficiency and clinical outcomes. Telehealth services, which gained traction during the pandemic, remain crucial for expanding access to healthcare [5]. Mergers and Acquisitions - Post-pandemic M&A activity is on the rise as hospitals seek scale and financial stability. Consolidation is driven by economic recovery and evolving care models, with smaller facilities likely to be acquired by larger systems [6]. Industry Performance - The Zacks Medical-Hospital industry currently holds a Zacks Industry Rank of 201, placing it in the bottom 17% of over 240 Zacks industries, indicating challenging near-term prospects [7][8]. Stock Performance - Over the past year, the industry has underperformed the S&P 500, losing 5.1%, while the S&P 500 gained 16%. However, it outperformed the broader Medical sector, which declined by 13.2% [10]. Current Valuation - The industry trades at a trailing 12-month EV/EBITDA ratio of 8.14X, compared to the S&P 500's 18.43X and the sector's 10.32X. The industry has fluctuated between 6.47X and 9.55X over the past five years [13]. Company Highlights - **HCA Healthcare**: Focuses on general and acute care hospitals, with a projected 2025 EPS of $26.17, indicating a 19.2% year-over-year growth. The company has seen a 26.4% share price increase over the past six months [16][17]. - **Universal Health Services**: Manages acute care hospitals and outpatient centers, with a 2025 EPS estimate of $20.43, reflecting a 23% year-over-year increase. Shares have gained 17.3% in the past six months [20][21]. - **Community Health Systems**: Operates a network of acute care hospitals, with a projected 2025 EPS growth of 67%. The company has seen a 17.8% increase in share price over the past six months [24][26].

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]