false000110810900011081092024-02-202024-02-20

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 20, 2024

 

 

COMMUNITY HEALTH SYSTEMS, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware			001-15925	13-3893191
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
4000 Meridian Boulevard
Franklin, Tennessee				37067
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 615 465-7000

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $.01 par value		CYH		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

 

 

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The information contained in this Current Report on Form 8-K (including the exhibits hereto) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.

Item 2.02 Results of Operations and Financial Condition.

On February 20, 2024, Community Health Systems, Inc. (the “Company”) announced operating results for the fourth quarter and year ended December 31, 2023. A copy of the press release making this announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 2.02.

Item 7.01 Regulation FD Disclosure.

The press release referred to in Item 2.02 above also includes the Company’s 2024 annual earnings guidance. The 2024 guidance is based on the Company’s historical operating performance, current trends and other assumptions the Company believes are reasonable at this time as set forth on pages 16, 17, 18, 19 and 20 of the press release. A copy of the press release making this announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 7.01.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following exhibits are furnished herewith:

Exhibit Number		Description
99.1		Community Health Systems, Inc. Press Release, dated February 20, 2024.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			COMMUNITY HEALTH SYSTEMS, INC.
Date:	February 20, 2024	By:	/s/ Tim L. Hingtgen
			Tim L. Hingtgen Chief Executive Officer and Director (principal executive officer)

 

		By:	/s/ Kevin J. Hammons
			Kevin J. Hammons President and Chief Financial Officer (principal financial officer)

 

		By:	/s/ Jason K. Johnson
			Jason K. Johnson Senior Vice President and Chief Accounting Officer (principal accounting officer)

 

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	Exhibit Number
	99.1

 

Investor Contact:	Kevin Hammons
	President and
	Chief Financial Officer
	(615) 465-7000

 

COMMUNITY HEALTH SYSTEMS, INC. ANNOUNCES FOURTH QUARTER

AND YEAR ENDED DECEMBER 31, 2023 RESULTS

 

 

FRANKLIN, Tenn. (February 20, 2024) – Community Health Systems, Inc. (NYSE: CYH) (the “Company”) today announced financial and operating results for the three months and year ended December 31, 2023.

 

Commenting on the results, Tim L. Hingtgen, chief executive officer of Community Health Systems, Inc., said, "Operational and financial results improved in 2023 as patient demand for our services increased, resulting in growth in same-store admissions, adjusted admissions, surgeries and ER visits. Our staff recruitment and retention initiatives generated solid gains in the number of bedside nurses and other patient care positions in our hospitals, which significantly reduced contract labor utilization. We also experienced growth that is directly attributable to our investments in facility expansions, physician recruitment and service line development. We expect this progress and momentum to continue in 2024.”

 

The following highlights the financial and operating results for the three months ended December 31, 2023.

 

 

Three Months Ended December 31, 2023

 

Net operating revenues for the three months ended December 31, 2023, totaled $3.181 billion, a 1.2 percent increase compared to $3.142 billion for the same period in 2022. On a same-store basis, net operating revenues increased 4.1 percent for the three months ended December 31, 2023, compared to the same period in 2022. Net operating revenues for the three months ended December 31, 2023, reflect a 0.7 percent increase in admissions and a 1.9 percent increase in adjusted admissions, compared to the same period in 2022. On a same-store basis, admissions increased 1.9 percent and adjusted admissions increased 3.6 percent for the three months ended December 31, 2023, compared to the same period in 2022.

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Net income attributable to Community Health Systems, Inc. stockholders was $46 million, or $0.35 per share (diluted), for the three months ended December 31, 2023, compared to $414 million, or $3.18 per share (diluted), for the same period in 2022. Excluding the adjusting items as presented in the table in footnote (e) on page 15, net loss attributable to Community Health Systems, Inc. stockholders was $(0.41) per share (diluted) for the three months ended December 31, 2023, compared to net income of $1.50 per share (diluted) for the same period in 2022. Pandemic relief funds did not materially impact net income attributable to Community Health Systems, Inc. stockholders during the three months ended December 31, 2023 and 2022.

 

Adjusted EBITDA for the three months ended December 31, 2023, was $386 million compared to $404 million for the same period in 2022. Pandemic relief funds did not materially impact Adjusted EBITDA during the three months ended December 31, 2023 and 2022.

 

The decrease in net income attributable to Community Health Systems, Inc. stockholders and the decrease in Adjusted EBITDA for the three months ended December 31, 2023, compared to the same period in 2022, are primarily due to higher costs for supplemental reimbursement programs, increased rates for outsourced medical specialists, and higher costs for professional liability insurance, partially offset by stronger inpatient volumes, increased reimbursement rates and reduced expense for contract labor.

 

Year Ended December 31, 2023

 

Net operating revenues for the year ended December 31, 2023, totaled $12.490 billion, a 2.3 percent increase compared to $12.211 billion for the same period in 2022. On a same-store basis, net operating revenues increased 4.8 percent for the year ended December 31, 2023, compared to the same period in 2022. Net operating revenues for the year ended December 31, 2023, reflect a 0.3 percent increase in admissions and a 1.7 percent increase in adjusted admissions, compared to the same period in 2022. On a same-store basis, admissions increased 3.5 percent and adjusted admissions increased 5.3 percent for the year ended December 31, 2023, compared to the same period in 2022.

 

Net loss attributable to Community Health Systems, Inc. stockholders was $(133) million, or $(1.02) per share (diluted), for the year ended December 31, 2023, compared to net income of $46 million, or $0.35 per share (diluted), for the same period in 2022. Excluding the adjusting items as presented in the table in footnote (e) on page 15, net loss attributable to Community Health Systems, Inc. stockholders was $(1.39) per share (diluted) for the year ended December 31, 2023, compared to $(1.38) per share (diluted) for the same period in 2022. During the year ended December 31, 2023, pandemic relief funds did not materially impact net loss attributable to Community Health Systems, Inc. stockholders. During the year ended December 31, 2022, pandemic relief funds had a positive impact on net loss attributable to Community Health Systems, Inc. stockholders (both on a consolidated and adjusted basis) of approximately $133 million, or $1.02 on a per share (diluted) basis.

 

Adjusted EBITDA for the year ended December 31, 2023, was $1.453 billion compared to $1.466 billion for the same period in 2022. During the year ended December 31, 2023, pandemic relief funds did not materially impact Adjusted EBITDA. During the year ended December 31, 2022, pandemic relief funds had a positive impact on Adjusted EBITDA of approximately $173 million.

 

The increase in net (loss) income attributable to Community Health Systems, Inc. stockholders and the decrease in Adjusted EBITDA for the year ended December 31, 2023, compared to the same period in 2022, are primarily due to unfavorable changes in payor mix, a reduction in pandemic relief funds recognized, increased salaries and benefits expense, higher costs for professional liability insurance, and increased rates for outsourced medical specialists, partially offset by stronger inpatient and outpatient volumes, increased reimbursement rates, higher acuity, an increase in non-patient revenue and reduced expense for contract labor.

 

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Financing Activity

 

During the three months ended December 31, 2023, the Company extinguished approximately $402 million principal amount of notes through a combination of open market purchases, and privately negotiated repurchases with a limited number of holders. Additionally, the Company completed a private offering of $1.000 billion principal amount of 10.875% Senior Secured Notes due 2032 on December 22, 2023 and used the net proceeds, together with cash on hand, to purchase $985 million aggregate principal amount of its 8.000% Senior Secured Notes due 2026 through a tender offer which was funded on December 28, 2023. Together, these transactions resulted in the recognition of a pre-tax gain from early extinguishment of debt of approximately $72 million during the three months ended December 31, 2023.

 

Other

 

During 2023, the Company completed the divestiture of eight hospitals and the sale of a majority interest in another hospital. On January 1, 2023, the Company completed the divestiture of one hospital (in respect of which the Company received proceeds at a preliminary closing on December 31, 2022). On April 1, 2023, the Company completed the divestiture of one hospital. On July 1, 2023, the Company completed the divestiture of one hospital. On September 1, 2023, the Company completed the sale of a majority interest in one hospital. On November 1, 2023, the Company completed the divestiture of two hospitals. On December 1, 2023, the Company completed the divestiture of three hospitals.

 

Financial and statistical data for 2023 and 2022 presented in this press release includes the operating results of divested or closed businesses for the periods prior to the consummation of the respective divestiture or closure. Same-store operating results and statistical information include operating results of businesses operated in the comparable current year and prior year periods and exclude businesses divested or closed in 2023 and 2022.

 

Information About Non-GAAP Financial Measures

 

This press release presents Adjusted EBITDA, a non-GAAP financial measure, which 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 related to the Business Transformation Costs (as defined in footnote (c) to the Financial Highlights, Financial Statements and Selected Operating Data below), gain on sale of equity interests in Macon Healthcare, LLC as completed during the third quarter of 2021, expense related to government and other legal matters and related costs, income during the fourth quarter of 2021 associated with the settlement of litigation for the recovery of amounts of certain professional liability claims settled in 2020 covered by third-party insurance policies, expense related to employee termination benefits and other restructuring charges, the impact of a change in estimate to increase the professional liability claims accrual recorded during the fourth quarter of 2022 with respect to claims incurred in prior years related to divested locations and the gain on sale by HealthTrust Purchasing Group, L.P. (“HealthTrust”) of a majority interest in CoreTrust Holdings, LLC (“CoreTrust”) completed during the fourth quarter of 2022. For information regarding why the Company believes Adjusted EBITDA provides useful information to investors, and for a reconciliation of Adjusted EBITDA to net income (loss) attributable to Community Health Systems, Inc. stockholders, see footnote (c) to the Financial Highlights, Financial Statements and Selected Operating Data below.

 

Additionally, this press release presents adjusted net (loss) income 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. For information regarding why the Company believes this non-GAAP financial measure provides useful information to investors, and for a reconciliation of this non-GAAP financial measure to net income (loss) attributable to Community Health Systems, Inc. stockholders per share (diluted), see footnote (e) to the Financial Highlights, Financial Statements and Selected Operating Data below.

 

 

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The non-GAAP financial measures set forth above are not measurements of financial performance under U.S. GAAP, and should not be considered in isolation or as a substitute for any financial measure calculated in accordance with U.S. GAAP. Additionally, the calculation of these non-GAAP financial measures may not be comparable to similarly titled measures disclosed by other companies.

 

Included on pages 16, 17, 18, 19 and 20 of this press release are tables setting forth the Company’s 2024 annual earnings guidance. The 2024 guidance is based on the Company’s historical operating performance, current trends and other assumptions the Company believes are reasonable at this time as more specifically discussed below.

 

About Community Health Systems, Inc.

 

Community Health Systems, Inc. is one of the nation’s largest healthcare companies. The Company’s affiliates are leading providers of healthcare services, developing and operating healthcare delivery systems in 40 distinct markets across 15 states. As of February 20, 2024, the Company’s subsidiaries own or lease 71 affiliated hospitals with approximately 12,000 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.

 

The Company’s headquarters are located in Franklin, Tennessee, a suburb south of Nashville. Shares in Community Health Systems, Inc. are traded on the New York Stock Exchange under the symbol “CYH.” More information about the Company can be found on its website at www.chs.net.

 

Community Health Systems, Inc. will hold a conference call on Wednesday, February 21, 2024 at 10:00 a.m. Central, 11:00 a.m. Eastern, to review financial and operating results for the fourth quarter and year ended December 31, 2023. Investors will have the opportunity to listen to a live internet broadcast of the conference call by clicking on the Investor Relations link of the Company’s website at www.chs.net. For those who cannot listen to the live broadcast, a replay will be available shortly after the call and will continue to be available for approximately 30 days. Copies of this press release and conference call slide show, as well as the Company’s Current Report on Form 8-K (including this press release), will be available on the Company’s website at www.chs.net.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Financial Highlights (a)(b)

(In millions, except per share amounts)

(Unaudited)

 

	Three Months Ended											Year Ended
	December 31,											December 31,
	2023					2022						2023					2022
Net operating revenues	$		3,181			$		3,142				$		12,490			$		12,211
Net income (f)			85					446						16					179
Net income (loss) attributable to Community Health    Systems, Inc. stockholders			46					414						(133	)				46
Adjusted EBITDA (c)			386					404						1,453					1,466
Net cash provided by operating activities			90					9						210					300
Earnings (loss) per share attributable to Community    Health Systems, Inc. stockholders:
Basic (f)	$		0.35			$		3.21				$		(1.02	)		$		0.35
Diluted (e), (f)			0.35					3.18						(1.02	)				0.35
Weighted-average number of shares outstanding (d):
Basic			131					129						130					129
Diluted			132					130						130					130

 

For footnotes, see pages 13, 14 and 15.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income (a)(b)

(In millions, except per share amounts)

(Unaudited)

 

	Three Months Ended December 31,
	2023										2022
						% of Net										% of Net
						Operating										Operating
	Amount					Revenues					Amount					Revenues
Net operating revenues	$		3,181				100.0		%		$		3,142				100.0		%
Operating costs and expenses:
Salaries and benefits			1,374				43.2		%				1,357				43.2		%
Supplies			509				16.0		%				498				15.8		%
Other operating expenses			849				26.7		%				826				26.4		%
Lease cost and rent			79				2.5		%				82				2.6		%
Pandemic relief funds			-				-		%				(2	)			(0.1	)	%
Depreciation and amortization			121				3.8		%				136				4.3		%
Impairment and (gain) loss on sale of businesses, net (f)			(78	)			(2.5	)	%				17				0.5		%
Total operating costs and expenses			2,854				89.7		%				2,914				92.7		%
Income from operations (f)			327				10.3		%				228				7.3		%
Interest expense, net			209				6.6		%				205				6.6		%
Gain from early extinguishment of debt			(72	)			(2.3	)	%				(180	)			(5.7	)	%
Gain from CoreTrust Transaction			-				-		%				(119	)			(3.8	)	%
Equity in earnings of unconsolidated affiliates			(3	)			(0.1	)	%				(3	)			(0.1	)	%
Income before income taxes			193				6.1		%				325				10.3		%
Provision for (benefit from) income taxes			108				3.4		%				(121	)			(3.9	)	%
Net income (f)			85				2.7		%				446				14.2		%
Less: Net income attributable to noncontrolling interests			39				1.3		%				32				1.0		%
Net income attributable to Community Health Systems,    Inc. stockholders	$		46				1.4		%		$		414				13.2		%
Earnings per share attributable to Community    Health Systems, Inc. stockholders:
Basic (f)	$		0.35								$		3.21
Diluted (e), (f)	$		0.35								$		3.18
Weighted-average number of shares outstanding (d):
Basic			131										129
Diluted			132										130

 

For footnotes, see pages 13, 14 and 15.

 

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of (Loss) Income (a)(b)

(In millions, except per share amounts)

(Unaudited)

 

	Year Ended December 31,
	2023										2022
						% of Net										% of Net
						Operating										Operating
	Amount					Revenues					Amount					Revenues
Net operating revenues	$		12,490				100.0		%		$		12,211				100.0		%
Operating costs and expenses:
Salaries and benefits			5,415				43.4		%				5,330				43.6		%
Supplies			1,993				16.0		%				1,975				16.2		%
Other operating expenses			3,388				27.0		%				3,336				27.3		%
Lease cost and rent			319				2.6		%				317				2.6		%
Pandemic relief funds			-				-		%				(173	)			(1.4	)	%
Depreciation and amortization			505				4.0		%				534				4.4		%
Impairment and (gain) loss on sale of businesses, net (f)			(87	)			(0.7	)	%				71				0.6		%
Total operating costs and expenses			11,533				92.3		%				11,390				93.3		%
Income from operations (f)			957				7.7		%				821				6.7		%
Interest expense, net			830				6.7		%				858				7.0		%
Gain from early extinguishment of debt			(72	)			(0.6	)	%				(253	)			(2.1	)	%
Gain from CoreTrust Transaction			-				-		%				(119	)			(1.0	)	%
Equity in earnings of unconsolidated affiliates			(8	)			(0.1	)	%				(14	)			(0.1	)	%
Income before income taxes			207				1.7		%				349				2.9		%
Provision for income taxes			191				1.6		%				170				1.4		%
Net income (f)			16				0.1		%				179				1.5		%
Less: Net income attributable to noncontrolling interests			149				1.2		%				133				1.1		%
Net (loss) income attributable to Community Health    Systems, Inc. stockholders	$		(133	)			(1.1	)	%		$		46				0.4		%
(Loss) earnings per share attributable to Community Health    Systems, Inc. stockholders:
Basic (f)	$		(1.02	)							$		0.35
Diluted (e), (f)	$		(1.02	)							$		0.35
Weighted-average number of shares outstanding (d):
Basic			130										129
Diluted			130										130

 

For footnotes, see pages 13, 14 and 15.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In millions)

(Unaudited)

 

	Three Months Ended										Year Ended
	December 31,										December 31,
	2023					2022					2023					2022
Net income	$		85			$		446			$		16			$		179
Other comprehensive income (loss), net of income taxes:
Net change in fair value of available-for-sale debt    securities, net of tax			7					2					6					(17	)
Amortization and recognition of unrecognized    pension cost components, net of tax			1					10					1					10
Other comprehensive income (loss)			8					12					7					(7	)
Comprehensive income			93					458					23					172
Less: Comprehensive income attributable to    noncontrolling interests			39					32					149					133
Comprehensive income (loss) attributable to Community    Health Systems, Inc. stockholders	$		54			$		426			$		(126	)		$		39

 

For footnotes, see pages 13, 14 and 15.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Selected Operating Data (a)

(Dollars in millions)

(Unaudited)

 

		Three Months Ended December 31,
		Consolidated												Same-Store
		2023				2022				% Change				2023				2022				% Change
Number of hospitals (at end of period)			71				80								71				71
Licensed beds (at end of period)			11,902				12,832								11,902				11,884
Beds in service (at end of period)			10,234				10,936								10,234				10,081
Admissions			110,874				110,084				0.7	%			105,092				103,101				1.9	%
Adjusted admissions			252,875				248,072				1.9	%			239,707				231,489				3.6	%
Patient days			503,631				506,387								473,380				475,858
Average length of stay (days)			4.5				4.6								4.5				4.6
Occupancy rate (average beds in service)			53.5	%			50.0	%							50.3	%			51.3	%
Net operating revenues		$	3,181			$	3,142				1.2	%		$	3,105			$	2,984				4.1	%
Net inpatient revenues as a % of net operating
revenues			46.0	%			46.3	%							45.7	%			46.5	%
Net outpatient revenues as a % of net operating
revenues			54.0	%			53.7	%							54.3	%			53.5	%
Income from operations (f)		$	327			$	228				43.4	%
Income from operations as a %    of net operating revenues			10.3	%			7.3	%
Depreciation and amortization		$	121			$	136
Equity in earnings of unconsolidated affiliates		$	(3	)		$	(3	)
Net income attributable to Community Health    Systems, Inc. stockholders		$	46			$	414				-88.9	%
Net income attributable to Community Health    Systems, Inc. stockholders as a % of net    operating revenues			1.4	%			13.2	%
Adjusted EBITDA (c)		$	386			$	404				-4.5	%
Adjusted EBITDA as a % of net    operating revenues			12.1	%			12.9	%
Net cash provided by operating activities		$	90			$	9				900.0	%

 

For footnotes, see pages 13, 14 and 15.

 

 

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Selected Operating Data (a)

(Dollars in millions)

(Unaudited)

 

		Year Ended December 31,
		Consolidated												Same-Store
		2023				2022				% Change				2023				2022				% Change
Number of hospitals (at end of period)			71				80								71				71
Licensed beds (at end of period)			11,902				12,832								11,902				11,884
Beds in service (at end of period)			10,234				10,936								10,234				10,081
Admissions			435,913				434,765				0.3	%			413,529				399,355				3.5	%
Adjusted admissions			992,552				975,737				1.7	%			942,074				894,388				5.3	%
Patient days			1,957,536				2,052,864								1,864,128				1,895,988
Average length of stay (days)			4.5				4.7								4.5				4.7
Occupancy rate (average beds in service)			52.4	%			49.2	%							49.9	%			51.5	%
Net operating revenues		$	12,490			$	12,211				2.3	%		$	12,009			$	11,457				4.8	%
Net inpatient revenues as a % of net operating
revenues			46.6	%			46.8	%							46.4	%			46.9	%
Net outpatient revenues as a % of net operating
revenues			53.4	%			53.2	%							53.6	%			53.1	%
Income from operations (f)		$	957			$	821				16.6	%
Income from operations as a % of net    operating revenues			7.7	%			6.7	%
Depreciation and amortization		$	505			$	534
Equity in earnings of unconsolidated affiliates		$	(8	)		$	(14	)
Net (loss) income attributable to Community
Health Systems, Inc. stockholders		$	(133	)		$	46				-389.1	%
Net (loss) income attributable to Community
Health Systems, Inc. stockholders as a %
of net operating revenues			-1.1	%			0.4	%
Adjusted EBITDA (c)		$	1,453			$	1,466				-0.9	%
Adjusted EBITDA as a % of net    operating revenues			11.6	%			12.0	%
Net cash provided by operating activities		$	210			$	300				-30.0	%

 

For footnotes, see pages 13, 14 and 15.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In millions, except share data)

(Unaudited)

 

		December 31, 2023					December 31, 2022
ASSETS
Current assets
Cash and cash equivalents		$		38			$		118
Patient accounts receivable				2,231					2,040
Supplies				328					353
Prepaid income taxes				76					99
Prepaid expenses and taxes				260					237
Other current assets				275					235
Total current assets				3,208					3,082
Property and equipment:
Land and improvements				474					497
Buildings and improvements				5,951					6,038
Equipment and fixtures				3,086					3,104
Property and equipment				9,511					9,639
Less accumulated depreciation and amortization				(4,304	)				(4,274	)
Property and equipment, net				5,207					5,365
Goodwill				3,958					4,166
Deferred income taxes				29					49
Other assets, net of accumulated amortization of $1,494 and $1,392 at December 31,    2023 and 2022, respectively				2,053					2,007
Total assets		$		14,455			$		14,669
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Current maturities of long-term debt		$		21			$		21
Current operating lease liabilities				124					148
Accounts payable				912					773
Accrued liabilities:
Employee compensation				571					637
Accrued interest				160					189
Other				354					418
Total current liabilities				2,142					2,186
Long-term debt (g)				11,466					11,614
Deferred income taxes				369					354
Long-term operating lease liabilities				563					605
Other long-term liabilities				739					644
Total liabilities				15,279					15,403
Redeemable noncontrolling interests in equity of consolidated subsidiaries				323					541
STOCKHOLDERS’ DEFICIT
Community Health Systems, Inc. stockholders’ deficit:
Preferred stock, $.01 par value per share, 100,000,000 shares authorized; none issued				-					-
Common stock, $.01 par value per share, 300,000,000 shares authorized; 136,774,911    shares issued and outstanding at December 31, 2023, and 134,703,717 shares    issued and outstanding at December 31, 2022				1					1
Additional paid-in capital				2,185					2,084
Accumulated other comprehensive loss				(14	)				(21	)
Accumulated deficit				(3,564	)				(3,431	)
Total Community Health Systems, Inc. stockholders’ deficit				(1,392	)				(1,367	)
Noncontrolling interests in equity of consolidated subsidiaries				245					92
Total stockholders’ deficit				(1,147	)				(1,275	)
Total liabilities and stockholders’ deficit		$		14,455			$		14,669

 

For footnotes, see pages 13, 14 and 15.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)

 

	Year Ended December 31,
	2023					2022
Cash flows from operating activities
Net income	$		16			$		179
Adjustments to reconcile net income to net cash provided by    operating activities:
Depreciation and amortization			505					534
Deferred income taxes			35					165
Stock-based compensation expense			22					20
Impairment and (gain) loss on sale of businesses, net (f)			(87	)				71
Gain from early extinguishment of debt			(72	)				(253	)
Gain from CoreTrust Transaction			-					(119	)
Other non-cash expenses, net			181					182
Changes in operating assets and liabilities, net of effects of
acquisitions and divestitures:
Patient accounts receivable			(193	)				22
Supplies, prepaid expenses and other current assets			(82	)				(128	)
Accounts payable, accrued liabilities and income taxes			(50	)				(158	)
Other			(65	)				(215	)
Net cash provided by operating activities			210					300
Cash flows from investing activities
Acquisitions of facilities and other related businesses			(38	)				(9	)
Purchases of property and equipment			(467	)				(415	)
Proceeds from disposition of hospitals and other ancillary operations			432					89
Proceeds from sale of property and equipment			28					38
Purchases of available-for-sale debt securities and equity securities			(137	)				(114	)
Proceeds from sales of available-for-sale debt securities and equity securities			232					110
Distribution of CoreTrust proceeds			-					121
Purchases of investments in unconsolidated affiliates			(11	)				(19	)
Increase in other investments			(65	)				(60	)
Net cash used in investing activities			(26	)				(259	)
Cash flows from financing activities
Repurchase of restricted stock shares for payroll tax withholding requirements			(4	)				(8	)
Deferred financing costs and other debt-related costs			(3	)				(74	)
Proceeds from noncontrolling investors in joint ventures			5					13
Redemption of noncontrolling investments in joint ventures			(1	)				(5	)
Distributions to noncontrolling investors in joint ventures			(141	)				(125	)
Other borrowings			39					48
Issuance of long-term debt			989					1,535
Proceeds from ABL Facility			3,176					542
Repayments of long-term indebtedness			(4,324	)				(2,356	)
Net cash used in financing activities			(264	)				(430	)
Net change in cash and cash equivalents			(80	)				(389	)
Cash and cash equivalents at beginning of period			118					507
Cash and cash equivalents at end of period	$		38			$		118

 

For footnotes, see pages 13, 14 and 15.

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Footnotes to Financial Highlights, Financial Statements and Selected Operating Data

 

	Three Months Ended											Year Ended
	December 31,											December 31,
	2023					2022						2023					2022
Net income (loss) attributable to Community Health Systems, Inc. stockholders:
Net income	$		85			$		446				$		16			$		179
Less: Income attributable to noncontrolling interests, net of taxes			39					32						149					133
Net income (loss) attributable to Community Health Systems, Inc.    stockholders — basic and diluted	$		46			$		414				$		(133	)		$		46

 

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Footnotes to Financial Highlights, Financial Statements and Selected Operating Data (Continued)

The Company believes it is useful to provide investors and other users of the Company’s financial statements this performance measure to align with how management assesses the Company’s results of operations. Adjusted EBITDA also is comparable to a similar metric called Consolidated EBITDA, as defined in the Company’s asset-based loan facility (the “ABL Facility”) and the Company’s existing note indentures, which is a key component in the determination of the Company’s compliance with certain covenants under the ABL Facility and such note indentures (including the Company’s ability to service debt and incur capital expenditures), and is used to determine the interest rate and commitment fee payable under the ABL Facility (although Adjusted EBITDA does not include all of the adjustments described in the ABL Facility). Adjusted EBITDA includes the Adjusted EBITDA attributable to hospitals that were divested during the course of such year, but in each case solely to the extent relating to the period prior to the consummation of the applicable divestiture.

Adjusted EBITDA is not a measurement of financial performance under U.S. GAAP. It should not be considered in isolation or as a substitute for net income, operating income, or any other performance measure calculated in accordance with U.S. GAAP. The items excluded from Adjusted EBITDA are significant components in understanding and evaluating financial performance. The Company believes such adjustments are appropriate as the magnitude and frequency of such items can vary significantly and are not related to the assessment of normal operating performance. Additionally, this calculation of Adjusted EBITDA may not be comparable to similarly titled measures disclosed by other companies.

The following table reflects the reconciliation of Adjusted EBITDA, as defined, to net income (loss) attributable to Community Health Systems, Inc. stockholders as derived directly from the condensed consolidated financial statements (in millions):

 

	Three Months Ended												Year Ended
	December 31,												December 31,
	2023					2022							2023					2022
Net income (loss) attributable to Community Health
Systems, Inc. stockholders	$		46			$		414					$		(133	)		$		46
Adjustments:
Provision for (benefit from) income taxes			108					(121	)						191					170
Depreciation and amortization			121					136							505					534
Net income attributable to noncontrolling interests			39					32							149					133
Interest expense, net			209					205							830					858
Gain from early extinguishment of debt			(72	)				(180	)						(72	)				(253	)
Impairment and (gain) loss on sale of businesses, net			(78	)				17							(87	)				71
Gain from CoreTrust Transaction			-					(119	)						-					(119	)
Expense from government and other legal matters    and related costs			3					-							36					5
Expense from business transformation costs			9					-							22					-
Expense related to employee termination benefits    and other restructuring charges			1					5							12					6
Change in estimate for professional claims liability related    to divested locations			-					15							-					15
Adjusted EBITDA	$		386			$		404					$		1,453			$		1,466

 

 

	Three Months Ended									Year Ended
	December 31,									December 31,
	2023				2022					2023				2022
Weighted-average number of shares outstanding - basic		131				129					130				129
Add effect of dilutive securities:
Stock awards and options		1				1					-				1
Weighted-average number of shares outstanding - diluted		132				130					130				130

 

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Footnotes to Financial Highlights, Financial Statements and Selected Operating Data (Continued)

 

The Company generated a net loss attributable to Community Health Systems, Inc. stockholders for the year ended December 31, 2023, so the effect of dilutive securities is not considered because their effect would be antidilutive. If the Company had generated net income, the effect of stock awards and options on the diluted shares calculation would have been an increase of 422,487 shares during the year ended December 31, 2023.

 

	Three Months Ended								Year Ended
	December 31,								December 31,
	2023				2022				2023				2022
Net income (loss) per share (diluted), as reported	$	0.35			$	3.18			$	(1.02	)		$	0.35
Adjustments:
Gain from early extinguishment of debt		(0.47	)			(1.18	)			(0.47	)			(1.60	)
Impairment and (gain) loss on sale of businesses, net		(0.37	)			0.10				(0.33	)			0.42
Gain from CoreTrust Transaction		-				(0.71	)			-				(0.71	)
Expense from government and other legal matters and related costs		0.02				-				0.22				0.03
Expense from business transformation costs		0.05				-				0.13				-
Expense related to employee termination benefits and other    restructuring charges		-				0.03				0.07				0.04
Change in estimate for professional claims liability related to    divested locations		-				0.09				-				0.09
Net (loss) income per share (diluted), excluding adjustments	$	(0.41	)		$	1.50			$	(1.39	)		$	(1.38	)

 

 

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Regulation FD Disclosure

Set forth below is selected information concerning the Company’s projected consolidated operating results for the year ending December 31, 2024. These projections are based on the Company’s historical operating performance, current trends and other assumptions that the Company believes are reasonable at this time. The 2024 guidance should be considered in conjunction with the assumptions included herein. See pages 18, 19 and 20 for a list of factors that could affect the future results of the Company or the healthcare industry generally. The following is provided as guidance to analysts and investors:

 

	2024 Projection Range
Net operating revenues (in millions)	$		12,300				to		$		12,700
Adjusted EBITDA (in millions)	$		1,475				to		$		1,625
Net loss per share - diluted	$		(0.65	)			to		$		(0.05	)
Weighted-average diluted shares (in millions)			132				to				133

 

The following assumptions were used in developing the 2024 guidance provided above:

Other assumptions used in the above guidance:

• Expressed as a percentage of net operating revenues, depreciation and amortization of approximately 4.0% for 2024. Additionally, this is a fixed cost and the percentages may vary based on changes in net operating revenues. Such amounts exclude the possible impact of any future hospital fixed asset impairments.

 

• Interest expense is estimated to be between $820 million and $840 million while cash paid for interest, which excludes the amortization of deferred financing costs, is expected to be $730 million to $750 million. Total fixed rate debt is expected to average approximately 99% of total debt during 2024.

• Expressed as a percentage of net operating revenues, net income attributable to noncontrolling interests of approximately 1.2% to 1.3% for 2024.

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• Expressed as a percentage of net operating revenues, provision for income taxes of approximately 0.8% to 0.9% for 2024.

 

A reconciliation of the Company’s projected 2024 Adjusted EBITDA, a forward-looking non-GAAP financial measure, to the Company’s projected net loss attributable to Community Health Systems, Inc. stockholders, the most directly comparable GAAP financial measure, is shown below (in millions):

	Year Ending
	December 31, 2024
	Low					High
Net loss attributable to Community Health Systems, Inc.
stockholders (1)	$		(86	)		$		(7	)
Adjustments:
Depreciation and amortization			490					510
Interest expense, net			820					840
Provision for income taxes			106					122
Net income attributable to noncontrolling interests			145					160
Adjusted EBITDA (1)	$		1,475			$		1,625

(1) The Company does not include in this reconciliation the impact of certain items not included in the Company’s forecast set forth above that would be included in a reconciliation of historical net loss attributable to Community Health Systems, Inc. stockholders to Adjusted EBITDA such as, but not limited to, losses (gains) from early extinguishment of debt, impairment and (gain) loss on sale of businesses and expense from government and other legal matters and related costs, in light of the fact that such items are not determinable, and/or the inherent difficulty in quantifying such projected amounts, on a forward-looking basis.

_
	2024
	Guidance
Total	$	350			to		$	400

	2024
	Guidance
Total	$	500			to		$	650

 

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Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties. All statements in this press release other than statements of historical fact, including statements regarding 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. Although the Company believes that these forward-looking statements are based on reasonable assumptions, these assumptions are inherently subject to significant economic and competitive uncertainties and contingencies, which are difficult or impossible to predict accurately and may be beyond the control of the Company. Accordingly, the Company cannot give any assurance that its expectations will in fact occur and cautions that actual results may differ materially from those in the forward-looking statements. 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.

These factors include, among other things:

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The consolidated operating results for the three months and year ended December 31, 2023, are not necessarily indicative of the results that may be experienced for any future periods. The Company cautions that the projections for calendar year 2024 set forth in this press release are given as of the date hereof based on currently available information. The Company undertakes no obligation to revise or update any forward-looking statements (including such guidance), or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

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