0001108109false00011081092024-10-232024-10-23

 

 

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): October 23, 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 October 23, 2024, Community Health Systems, Inc. (the “Company”) announced operating results for the third quarter ended September 30, 2024. 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 updated annual earnings guidance. This 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 October 23, 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:	October 23, 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 THIRD QUARTER

ENDED SEPTEMBER 30, 2024 RESULTS

 

 

FRANKLIN, Tenn. (October 23, 2024) – Community Health Systems, Inc. (NYSE: CYH) (the “Company”) today announced financial and operating results for the three and nine months ended September 30, 2024.

 

The following highlights the financial and operating results for the three months ended September 30, 2024.

 

 

Commenting on the results, Tim L. Hingtgen, chief executive officer of Community Health Systems, Inc., said, “Our teams continued to execute well in a number of areas, advancing key priorities related to volume growth, operational improvements and patient outcome success. I especially want to express gratitude for the extraordinary efforts made across many of our health systems to ensure the safety of our patients during back-to-back hurricanes that affected many of our communities.”

 

Three Months Ended September 30, 2024

 

Net operating revenues for the three months ended September 30, 2024, totaled $3.090 billion, a 0.1 percent increase compared to $3.086 billion for the same period in 2023. On a same-store basis, net operating revenues increased 5.1 percent for the three months ended September 30, 2024, compared to the same period in 2023. Net operating revenues for the three months ended September 30, 2024, reflect a 4.1 percent decrease in admissions and a 3.7 percent decrease in adjusted admissions, compared to the same period in 2023. On a same-store basis, admissions increased 2.4 percent and adjusted admissions increased 2.6 percent for the three months ended September 30, 2024, compared to the same period in 2023.

 

 

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Net loss attributable to Community Health Systems, Inc. stockholders was $(391) million, or $(2.95) per share (diluted), for the three months ended September 30, 2024, compared to $(91) million, or $(0.69) per share (diluted), for the same period in 2023. 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 $(0.30) per share (diluted) for the three months ended September 30, 2024, compared to $(0.33) per share (diluted) for the same period in 2023.

 

Adjusted EBITDA for the three months ended September 30, 2024, was $347 million compared to $360 million for the same period in 2023.

 

The increase in net loss attributable to Community Health Systems, Inc. stockholders for the three months ended September 30, 2024, compared to the same period in 2023, was driven by the change in estimate to increase the professional liability claims accrual and period-over-period changes in impairment and (gain) loss on the sale of businesses, partially offset by having a benefit from income taxes in the current period compared to a provision for income taxes in the prior period. In addition, the increase in net loss attributable to Community Health Systems, Inc. stockholders and the decrease in Adjusted EBITDA for the three months ended September 30, 2024, compared to the same period in 2023, was driven by increased expense for salaries and benefits, increased costs for outsourced medical specialists, losses resulting from Hurricane Helene and increased patient claim denials, partially offset by higher same-store volumes, increased reimbursement rates, a higher net benefit from supplemental reimbursement programs, reduced expense for contract labor and reductions in supplies expense.

 

Nine Months Ended September 30, 2024

 

Net operating revenues for the nine months ended September 30, 2024, totaled $9.369 billion, a 0.7 percent increase compared to $9.308 billion for the same period in 2023. On a same-store basis, net operating revenues increased 5.2 percent for the nine months ended September 30, 2024, compared to the same period in 2023. Net operating revenues for the nine months ended September 30, 2024, reflect a 3.1 percent decrease in admissions and a 3.4 percent decrease in adjusted admissions, compared to the same period in 2023. On a same-store basis, admissions increased 3.0 percent and adjusted admissions increased 2.5 percent for the nine months ended September 30, 2024, compared to the same period in 2023.

 

Net loss attributable to Community Health Systems, Inc. stockholders was $(446) million, or $(3.38) per share (diluted), for the nine months ended September 30, 2024, compared to $(180) million, or $(1.38) per share (diluted), for the same period in 2023. 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 $(0.61) per share (diluted) for the nine months ended September 30, 2024, compared to $(0.98) per share (diluted) for the same period in 2023.

 

Adjusted EBITDA for the nine months ended September 30, 2024, was $1.112 billion compared to $1.068 billion for the same period in 2023.

 

The increase in net loss attributable to Community Health Systems, Inc. stockholders for the nine months ended September 30, 2024, compared to the same period in 2023, is primarily attributable to period-over-period changes in impairment and (gain) loss on the sale of businesses and a change in estimate to increase the professional liability claims accrual, partially offset by a gain from early extinguishment of debt, having a benefit from income taxes in the current period compared to a provision for income taxes in the prior period and the factors that contributed to the increase in Adjusted EBITDA as noted below. In addition, the increase in Adjusted EBITDA for the nine months ended September 30, 2024, compared to the same period in 2023, was driven by higher same-store volumes, increased reimbursement rates, favorable changes in payor mix, a higher net benefit from supplemental reimbursement programs, reduced expense for contract labor and reductions in supplies expense, partially offset by lower acuity and increased patient claim denials.

 

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Financing Activity

During the three months ended September 30, 2024, the Company extinguished approximately $143 million principal value of its 5⅝% Senior Secured Notes due 2027 through open market repurchases utilizing cash on hand.

 

Other

 

During 2024, through the date of this press release, the Company has completed two hospital divestitures including one on August 1, 2024 and the other on October 1, 2024.

 

Certain of the Company’s facilities in Florida, Georgia and Tennessee have experienced an interruption in their business and incurred additional costs as a direct result of Hurricane Helene, which made landfall in late September 2024, and Hurricane Milton, which made landfall in early October 2024. Hurricane Helene resulted in an estimated loss of operating revenues together with incremental expenses directly related to hurricane response efforts of approximately $7 million on a pre-tax basis during the three months ended September 30, 2024. No insurance proceeds related to Hurricane Helene were received or recognized during the three months ended September 30, 2024. Further, taking into account the timing of these events, it is expected that additional net operating revenues will be lost and incremental operating expenses will be incurred for remediation and restoration efforts in the fourth quarter of 2024 and one or more future periods. Insurance proceeds, which are expected to cover substantially all of the Company’s costs related to these events, are expected to be received in one or more future periods.

 

Financial and statistical data 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 in 2024 and 2023.

 

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), expense related to government and other legal matters and related costs, 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 as well as a change in estimate to increase such accrual recorded during the third quarter of 2024 as further described in footnote (c) to the Financial Highlights, Financial Statements and Selected Operating Data below, 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 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 attributable to Community Health Systems, Inc. stockholders per share (diluted), a non-GAAP financial measure, to reflect the impact on net 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 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 updated 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 39 distinct markets across 15 states. As of October 23, 2024, the Company’s subsidiaries own or lease 69 affiliated hospitals with more than 11,000 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 Thursday, October 24, 2024 at 10:00 a.m. Central, 11:00 a.m. Eastern, to review financial and operating results for the third quarter ended September 30, 2024. 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											Nine Months Ended
	September 30,											September 30,
	2024					2023						2024					2023
Net operating revenues	$		3,090			$		3,086				$		9,369			$		9,308
Net loss (f)			(355	)				(52	)					(334	)				(70	)
Net loss attributable to Community Health    Systems, Inc. stockholders			(391	)				(91	)					(446	)				(180	)
Adjusted EBITDA (c)			347					360						1,112					1,068
Net cash provided by operating activities			67					29						264					120
Loss per share attributable to Community    Health Systems, Inc. stockholders:
Basic (f)	$		(2.95	)		$		(0.69	)			$		(3.38	)		$		(1.38	)
Diluted (e), (f)			(2.95	)				(0.69	)					(3.38	)				(1.38	)
Weighted-average number of shares outstanding (d):
Basic			132					131						132					130
Diluted			132					131						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 (a)(b)
(In millions, except per share amounts)
(Unaudited)
	Three Months Ended September 30,
	2024										2023
						% of Net										% of Net
						Operating										Operating
	Amount					Revenues					Amount					Revenues
Net operating revenues	$		3,090				100.0		%		$		3,086				100.0		%
Operating expenses:
Salaries and benefits			1,359				44.0		%				1,338				43.4		%
Supplies			469				15.2		%				489				15.8		%
Other operating expenses			1,010				32.6		%				853				27.7		%
Lease cost and rent			73				2.4		%				79				2.6		%
Depreciation and amortization			117				3.8		%				128				4.1		%
Impairment and (gain) loss on sale of businesses, net (f)			267				8.6		%				26				0.8		%
Total operating expenses			3,295				106.6		%				2,913				94.4		%
(Loss) income from operations (f)			(205	)			(6.6	)	%				173				5.6		%
Interest expense, net			216				7.1		%				208				6.8		%
Equity in earnings of unconsolidated affiliates			(2	)			(0.1	)	%				(2	)			(0.1	)	%
Loss before income taxes			(419	)			(13.6	)	%				(33	)			(1.1	)	%
(Benefit from) provision for income taxes			(64	)			(2.1	)	%				19				0.6		%
Net loss (f)			(355	)			(11.5	)	%				(52	)			(1.7	)	%
Less: Net income attributable to noncontrolling interests			36				1.2		%				39				1.2		%
Net loss attributable to Community Health Systems,    Inc. stockholders	$		(391	)			(12.7	)	%		$		(91	)			(2.9	)	%
Loss per share attributable to Community    Health Systems, Inc. stockholders:
Basic (f)	$		(2.95	)							$		(0.69	)
Diluted (e), (f)	$		(2.95	)							$		(0.69	)
Weighted-average number of shares outstanding (d):
Basic			132										131
Diluted			132										131

 

For footnotes, see pages 13, 14 and 15.

 

 

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Loss (a)(b)

(In millions, except per share amounts)

(Unaudited)

 

	Nine Months Ended September 30,
	2024										2023
						% of Net										% of Net
						Operating										Operating
	Amount					Revenues					Amount					Revenues
Net operating revenues	$		9,369				100.0		%		$		9,308				100.0		%
Operating expenses:
Salaries and benefits			4,054				43.3		%				4,040				43.4		%
Supplies			1,439				15.4		%				1,499				16.1		%
Other operating expenses			2,737				29.2		%				2,524				27.1		%
Lease cost and rent			224				2.4		%				240				2.6		%
Depreciation and amortization			357				3.8		%				384				4.1		%
Impairment and (gain) loss on sale of businesses, net (f)			294				3.1		%				(9	)			(0.1	)	%
Total operating expenses			9,105				97.2		%				8,678				93.2		%
Income from operations (f)			264				2.8		%				630				6.8		%
Interest expense, net			643				6.9		%				621				6.7		%
Gain from early extinguishment of debt			(25	)			(0.3	)	%				-				-		%
Equity in earnings of unconsolidated affiliates			(7	)			(0.1	)	%				(5	)			(0.1	)	%
(Loss) income before income taxes			(347	)			(3.7	)	%				14				0.2		%
(Benefit from) provision for income taxes			(13	)			(0.1	)	%				84				1.0		%
Net loss (f)			(334	)			(3.6	)	%				(70	)			(0.8	)	%
Less: Net income attributable to noncontrolling interests			112				1.2		%				110				1.1		%
Net loss attributable to Community Health    Systems, Inc. stockholders	$		(446	)			(4.8	)	%		$		(180	)			(1.9	)	%
Loss per share attributable to Community Health    Systems, Inc. stockholders:
Basic (f)	$		(3.38	)							$		(1.38	)
Diluted (e), (f)	$		(3.38	)							$		(1.38	)
Weighted-average number of shares outstanding (d):
Basic			132										130
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 Comprehensive Loss

(In millions)

(Unaudited)

 

	Three Months Ended										Nine Months Ended
	September 30,										September 30,
	2024					2023					2024					2023
Net loss	$		(355	)		$		(52	)		$		(334	)		$		(70	)
Other comprehensive income (loss), net of income taxes:
Net change in fair value of available-for-sale debt    securities, net of tax			2					(3	)				4					(1	)
Amortization and recognition of unrecognized    pension cost components, net of tax			2					-					2					-
Other comprehensive income (loss)			4					(3	)				6					(1	)
Comprehensive loss			(351	)				(55	)				(328	)				(71	)
Less: Comprehensive income attributable to    noncontrolling interests			36					39					112					110
Comprehensive loss attributable to Community    Health Systems, Inc. stockholders	$		(387	)		$		(94	)		$		(440	)		$		(181	)

 

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 September 30,
		Consolidated												Same-Store
		2024				2023				% Change				2024				2023				% Change
Number of hospitals (at end of period)			70				76								70				70
Licensed beds (at end of period)			11,517				12,494								11,517				11,544
Beds in service (at end of period)			9,889				10,621								9,889				9,917
Admissions			104,593				109,043				-4.1	%			103,774				101,312				2.4	%
Adjusted admissions			240,701				249,988				-3.7	%			238,812				232,799				2.6	%
Patient days			453,053				459,838								449,574				443,819
Average length of stay (days)			4.3				4.2								4.3				4.4
Occupancy rate (average beds in service)			49.8	%			47.1	%							49.4	%			48.6	%
Net operating revenues		$	3,090			$	3,086				0.1	%		$	3,073			$	2,923				5.1	%
Net inpatient revenues as a % of net operating    revenues			47.2	%			46.5	%							47.2	%			46.2	%
Net outpatient revenues as a % of net operating    revenues			52.8	%			53.5	%							52.8	%			53.8	%
(Loss) income from operations (f)		$	(205	)		$	173				-218.5	%
(Loss) income from operations as a %    of net operating revenues			-6.6	%			5.6	%
Depreciation and amortization		$	117			$	128
Net loss attributable to Community Health    Systems, Inc. stockholders		$	(391	)		$	(91	)			-329.7	%
Net loss attributable to Community Health    Systems, Inc. stockholders as a % of net    operating revenues			-12.7	%			-2.9	%
Adjusted EBITDA (c)		$	347			$	360				-3.6	%
Adjusted EBITDA as a % of net    operating revenues			11.2	%			11.7	%
Net cash provided by operating activities		$	67			$	29				131.0	%

 

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)

 

		Nine Months Ended September 30,
		Consolidated												Same-Store
		2024				2023				% Change				2024				2023				% Change
Number of hospitals (at end of period)			70				76								70				70
Licensed beds (at end of period)			11,517				12,494								11,517				11,544
Beds in service (at end of period)			9,889				10,621								9,889				9,917
Admissions			317,396				327,466				-3.1	%			311,613				302,447				3.0	%
Adjusted admissions			719,941				745,207				-3.4	%			707,201				689,983				2.5	%
Patient days			1,405,286				1,453,905								1,378,445				1,360,574
Average length of stay (days)			4.4				4.4								4.4				4.5
Occupancy rate (average beds in service)			51.9	%			50.1	%							50.9	%			50.3	%
Net operating revenues		$	9,369			$	9,308				0.7	%		$	9,255			$	8,801				5.2	%
Net inpatient revenues as a % of net operating    revenues			47.6	%			46.9	%							47.5	%			46.7	%
Net outpatient revenues as a % of net operating    revenues			52.4	%			53.1	%							52.5	%			53.3	%
Income from operations (f)		$	264			$	630				-58.1	%
Income from operations as a % of net    operating revenues			2.8	%			6.8	%
Depreciation and amortization		$	357			$	384
Net loss attributable to Community    Health Systems, Inc. stockholders		$	(446	)		$	(180	)			-147.8	%
Net loss attributable to Community    Health Systems, Inc. stockholders    as a % of net operating revenues			-4.8	%			-1.9	%
Adjusted EBITDA (c)		$	1,112			$	1,068				4.1	%
Adjusted EBITDA as a % of net    operating revenues			11.9	%			11.5	%
Net cash provided by operating activities		$	264			$	120				120.0	%

 

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)

 

		September 30, 2024					December 31, 2023
ASSETS
Current assets
Cash and cash equivalents		$		33			$		38
Patient accounts receivable				2,043					2,231
Supplies				311					328
Prepaid income taxes				92					76
Prepaid expenses and taxes				227					260
Other current assets				402					275
Total current assets				3,108					3,208
Property and equipment				9,094					9,511
Less accumulated depreciation and amortization				(4,130	)				(4,304	)
Property and equipment, net				4,964					5,207
Goodwill				3,940					3,958
Deferred income taxes				29					29
Other assets, net				1,864					2,053
Total assets		$		13,905			$		14,455
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Current maturities of long-term debt		$		20			$		21
Current operating lease liabilities				113					124
Accounts payable				842					912
Accrued liabilities:
Employee compensation				460					571
Accrued interest				198					160
Other				493					354
Total current liabilities				2,126					2,142
Long-term debt (g)				11,467					11,466
Deferred income taxes				239					369
Long-term operating lease liabilities				528					563
Other long-term liabilities				815					739
Total liabilities				15,175					15,279
Redeemable noncontrolling interests in equity of consolidated subsidiaries				322					323
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; 138,936,058    shares issued and outstanding at September 30, 2024, and 136,774,911    shares issued and outstanding at December 31, 2023				1					1
Additional paid-in capital				2,194					2,185
Accumulated other comprehensive loss				(8	)				(14	)
Accumulated deficit				(4,010	)				(3,564	)
Total Community Health Systems, Inc. stockholders’ deficit				(1,823	)				(1,392	)
Noncontrolling interests in equity of consolidated subsidiaries				231					245
Total stockholders’ deficit				(1,592	)				(1,147	)
Total liabilities and stockholders’ deficit		$		13,905			$		14,455

 

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)

 

	Nine Months Ended September 30,
	2024					2023
Cash flows from operating activities
Net loss	$		(334	)		$		(70	)
Adjustments to reconcile net loss to net cash provided by    operating activities:
Depreciation and amortization			357					384
Deferred income taxes			(129	)				22
Stock-based compensation expense			12					16
Impairment and (gain) loss on sale of businesses, net (f)			294					(9	)
Gain from early extinguishment of debt			(25	)				-
Other non-cash expenses, net			142					132
Changes in operating assets and liabilities, net of effects of
acquisitions and divestitures:
Patient accounts receivable			126					(119	)
Supplies, prepaid expenses and other current assets			(48	)				(100	)
Accounts payable, accrued liabilities and income taxes			(119	)				(69	)
Other			(12	)				(67	)
Net cash provided by operating activities			264					120
Cash flows from investing activities
Acquisitions of facilities and other related businesses			(1	)				(35	)
Purchases of property and equipment			(251	)				(357	)
Proceeds from disposition of hospitals and other ancillary operations			174					123
Proceeds from sale of property and equipment			5					27
Purchases of available-for-sale debt securities and equity securities			(54	)				(126	)
Proceeds from sales of available-for-sale debt securities and equity securities			54					221
Purchases of investments in unconsolidated affiliates			(4	)				(8	)
Increase in other investments			(55	)				(51	)
Net cash used in investing activities			(132	)				(206	)
Cash flows from financing activities
Repurchase of restricted stock shares for payroll tax withholding requirements			(2	)				(4	)
Deferred financing costs and other debt-related costs			(8	)				-
Proceeds from noncontrolling investors in joint ventures			1					4
Redemption of noncontrolling investments in joint ventures			(3	)				(1	)
Distributions to noncontrolling investors in joint ventures			(121	)				(108	)
Other borrowings			18					30
Issuance of long-term debt			1,236					-
Proceeds from ABL Facility			2,662					2,290
Repayments of long-term indebtedness			(3,920	)				(2,152	)
Net cash (used in) provided by financing activities			(137	)				59
Net change in cash and cash equivalents			(5	)				(27	)
Cash and cash equivalents at beginning of period			38					118
Cash and cash equivalents at end of period	$		33			$		91

 

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										Nine Months Ended
	September 30,										September 30,
	2024					2023					2024					2023
Net loss attributable to Community Health Systems, Inc. stockholders:
Net loss	$		(355	)		$		(52	)		$		(334	)		$		(70	)
Less: Income attributable to noncontrolling interests, net of taxes			36					39					112					110
Net loss attributable to Community Health Systems, Inc.    stockholders — basic and diluted	$		(391	)		$		(91	)		$		(446	)		$		(180	)

 

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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 loss attributable to Community Health Systems, Inc. stockholders as derived directly from the condensed consolidated financial statements (in millions):

 

	Three Months Ended												Nine Months Ended
	September 30,												September 30,
	2024					2023							2024					2023
Net loss attributable to Community Health
Systems, Inc. stockholders	$		(391	)		$		(91	)				$		(446	)		$		(180	)
Adjustments:
(Benefit from) provision for income taxes			(64	)				19							(13	)				84
Depreciation and amortization			117					128							357					384
Net income attributable to noncontrolling interests			36					39							112					110
Interest expense, net			216					208							643					621
Gain from early extinguishment of debt			-					-							(25	)				-
Impairment and (gain) loss on sale of businesses, net			267					26							294					(9	)
Expense from government and other legal matters    and related costs			-					24							-					33
Expense from business transformation costs			17					6							41					13
Expense related to employee termination benefits    and other restructuring charges			-					1							-					12
Change in estimate for professional claims liability			149					-							149					-
Adjusted EBITDA	$		347			$		360					$		1,112			$		1,068

 

 

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
	2024				2023					2024				2023
Weighted-average number of shares outstanding - basic		132				131					132				130
Add effect of dilutive securities:
Stock awards and options		-				-					-				-
Weighted-average number of shares outstanding - diluted		132				131					132				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 three and nine months ended September 30, 2024 and 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 1,883,693 shares and 224,178 shares during the three months ended September 30, 2024 and 2023, respectively, and 1,064,103 shares and 298,184 shares during the nine months ended September 30, 2024 and 2023, respectively.

 

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2024				2023				2024				2023
Net loss per share (diluted), as reported	$	(2.95	)		$	(0.69	)		$	(3.38	)		$	(1.38	)
Adjustments:
Gain from early extinguishment of debt		-				-				(0.20	)			-
Impairment and (gain) loss on sale of businesses, net		1.68				0.18				1.85				0.05
Expense from government and other legal matters and related costs		-				0.14				-				0.20
Expense from business transformation costs		0.10				0.04				0.25				0.08
Expense related to employee termination benefits and other    restructuring charges		-				0.01				-				0.07
Change in estimate for professional claims liability		0.87				-				0.88				-
Net loss per share (diluted), excluding adjustments	$	(0.30	)		$	(0.33	)		$	(0.61	)		$	(0.98	)

 

 

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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 update selected guidance provided on July 24, 2024, and are based on the Company’s historical operating performance, current trends and other assumptions that the Company believes are reasonable at this time. This 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)	$		12,450				to		$		12,550
Adjusted EBITDA (in millions)	$		1,500				to		$		1,540
Net loss per share - diluted	$		(0.60	)			to		$		(0.50	)
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:

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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)	$		(79	)		$		(66	)
Adjustments:
Depreciation and amortization			465					480
Interest expense, net			860					850
Provision for income taxes			104					116
Net income attributable to noncontrolling interests			150					160
Adjusted EBITDA (1)	$		1,500			$		1,540

 

(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	$	400			to		$	500

 

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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 and nine months ended September 30, 2024, 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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