What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-19 compared with 2024-02-21 · 517 added, 544 removed, 1555 unchanged (41% of the section changed)

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Our affiliates are leading providers of healthcare services, developing and operating healthcare delivery systems in 39 distinct markets across 15 states.

As of December 31, 2023, our 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.

As of December 31, 2024, our subsidiaries own or lease 76 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.

We generate revenues by providing a broad range of general and specialized hospital healthcare services and outpatient services to patients in the communities in which we are located.

For the hospitals that we own and operate, we are paid for our services by governmental agencies, private insurers and directly by the patients we serve.

Economic conditions in the United States continue to be challenging in various respects, and the United States economy continues to experience significant inflationary pressures, elevated interest rates and challenging labor market conditions.

Taking into account these factors, we have incurred in certain recent periods, and may continue to incur, increased expenses arising from factors such as wage inflation for permanent employees, increased rates for and utilization of temporary contract labor (including contract nursing personnel) and increased rates for outsourced medical specialists.

While we have implemented cost containment and other measures to try to counteract these developments, we may be unable to fully offset the impact of these factors on the operation of our business.

If economic conditions in the United States further significantly deteriorate and/or public health conditions related to the COVID-19 pandemic significantly worsen, any such developments could materially and adversely affect our results of operations, financial position, and/or our cash flows.

For the hospitals and other sites of care that we own and operate, we are paid for our services by governmental agencies, private insurers and directly by the patients we serve.

Acquisition, Divestiture and Closure Activity

During the year ended December 31, 2024, we paid approximately $25 million to acquire the operating assets and related businesses of certain physician practices, clinics, ambulatory surgery centers and other ancillary businesses that operate within the communities served by our hospitals.

We allocated the purchase price in connection with these acquisitions to property and equipment, intangible assets, working capital, noncontrolling interests and goodwill.

The purchase price for these transactions was primarily allocated to property and equipment, intangible assets, working capital, noncontrolling interests and goodwill.

During 2024, we completed the divestiture of two hospitals.

These hospitals represented annual net operating revenues in 2023 of approximately $198 million and we received total net proceeds of approximately $174 million in connection with these dispositions.

These total net proceeds do not include additional cash consideration which may be received in connection with the sale of Tennova Healthcare – Cleveland that was completed on August 1, 2024 (beyond the approximately $160 million in cash received at closing), which additional payments are contingent upon potential modifications to supplemental reimbursement programs as more specifically provided in the asset purchase agreement underlying the transaction.

Such modifications are not complete as of December 31, 2024 and an estimate of consideration that may be received by the Company in 2025 has therefore not been recognized.

During 2023, we completed the divestiture of eight hospitals and the sale of a majority interest in one hospital.

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This hospital represented annual net operating revenues in 2021 of approximately $18 million, and we received total net proceeds of less than $1 million in connection with this disposition.

During 2021, we completed the divestiture of five hospitals, including three which closed effective January 1, 2021 (for these hospitals we received net proceeds at a preliminary closing on December 31, 2020).

These five hospitals represented annual net operating revenues in 2020 of approximately $275 million and, including the net proceeds for the three hospital divestitures that preliminarily closed on December 31, 2020, we received total net proceeds of approximately $28 million in connection with the disposition of these hospitals.

The following table provides a summary of hospitals that we divested (or, in the case of Lutheran Rehabilitation Hospital, in which the Company sold a majority interest) during the years ended December 31, 2024, 2023 and 2022:

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2024 Divestitures:

Tennova Healthcare - Cleveland

Hamilton Health Care Systems, Inc.

Cleveland, TN

August 1, 2024

Davis Regional Medical Center

Iredell Memorial Hospital

Statesville, NC

October 1, 2024

2023 Divestitures:

Greenbrier Valley Medical Center

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SSM Health Care of Oklahoma, Inc.

2021 Divestitures:

Lea Regional Medical Center

Covenant Health System

January 1, 2021

Tennova Healthcare - Tullahoma

Vanderbilt University Medical Center

Tullahoma, TN

January 1, 2021

Tennova Healthcare - Shelbyville

Vanderbilt University Medical Center

Shelbyville, TN

January 1, 2021

Northwest Mississippi Medical Center

Delta Health System

Clarksdale, MS

February 1, 2021

AllianceHealth Midwest

SSM Health Care of Oklahoma, Inc.

Midwest City, OK

April 1, 2021

During the three months ended September 30, 2022, we completed the closure of Shorepoint Health Venice hospital (312 licensed beds) in Venice, Florida.

We recorded an impairment charge of approximately $29 million during the year ended December 31, 2022, to adjust the fair value of the long-lived assets of this hospital, including property and equipment and capitalized software costs, based on their estimated fair value.

During the three months ended September 30, 2022, the provision of inpatient services and substantially all outpatient services ceased at First Hospital Wyoming Valley (psychiatric hospital) (149 licensed beds) in Wilkes-Barre, Pennsylvania, resulting in the closure of this facility being substantially complete as of September 30, 2022.

We completed the closure of First Hospital Wyoming Valley during the three months ended December 31, 2022.

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We recorded an impairment charge of approximately $1 million during the year ended December 31, 2022 in conjunction with exiting the lease to operate this hospital.

On July 30, 2021, we sold our unconsolidated equity interests in Macon Healthcare, LLC, a joint venture with certain subsidiaries of HCA representing two hospitals in Macon, Georgia, in which we owned a 38% interest.

We received $110 million in cash in connection with the sale of these equity interests and recognized a pre-tax gain of approximately $39 million on the sale of our investments in unconsolidated affiliates during the year ended December 31, 2021.

In addition to hospitals divested in 2021, 2022 and in 2023, we have entered into a definitive agreement to sell two hospitals as noted below where the divestiture has not yet been completed.

On February 28, 2023, we entered into a definitive agreement for the sale of substantially all of the assets of Lake Norman Regional Medical Center (123 licensed beds) in Mooresville, North Carolina, and Davis Regional Medical Center (144 licensed beds) in Statesville, North Carolina, to Novant Health, Inc.

For additional information regarding this potential disposition, see the Current Report on Form 8-K filed by us on February 28, 2023.

On January 25, 2024, the Federal Trade Commission, or FTC, filed a complaint seeking to enjoin the consummation of the sale of these hospitals to Novant.

For additional information regarding this litigation, see the Legal Proceedings section of Part I, Item 3 of this Form 10-K.

Taking into account this FTC action, there can be no assurance that this transaction with Novant will be completed, or if this transaction is completed, the ultimate timing of the completion of this transaction.

On November 7, 2024, we entered into a definitive agreement to sell our 50% interest in Merit Health Biloxi (153 licensed beds) in Biloxi, Mississippi, to an affiliate of Memorial Hospital of Gulfport, which had a preexisting 50% ownership interest in Merit Health Biloxi.

This divestiture was completed on February 1, 2025.

In addition to hospitals divested as reflected above, we have entered into definitive agreements to sell four hospitals as noted below where the divestiture has not yet been completed.

As previously disclosed in a Current Report on Form 8-K, on November 22, 2024, we entered into a definitive agreement to sell ShorePoint Health Port Charlotte (254 licensed beds) in Port Charlotte, Florida, certain assets of ShorePoint Health Punta Gorda (208 licensed beds) in Punta Gorda, Florida, and certain ancillary businesses related to such facilities to subsidiaries of Adventist Health System Sunbelt Healthcare Corporation.

Due to the effects of Hurricane Helene and Hurricane Milton, the Punta Gorda hospital has indefinitely suspended inpatient operations.

As previously disclosed in a Current Report on Form 8-K, on December 11, 2024, we entered into a definitive agreement to sell Lake Norman Regional Medical Center (123 licensed beds) in Mooresville, North Carolina, and related businesses, to Duke University Health System, Inc.

Finally, on January 29, 2025, we entered into a definitive agreement to sell our 50% interest in Merit Health Madison (67 licensed beds) in Canton, Mississippi, to an affiliate of the University of Mississippi Medical Center, which currently has a 50% ownership interest in Merit Health Madison.

There can be no assurance that these transactions will be completed, or if these transactions are completed, the ultimate timing of the completion of these transactions.

Moreover, we may give consideration to divesting certain additional hospitals and non-hospital businesses.

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Overview of Operating Results

Our net operating revenues for the year ended December 31, 2023 increased $279 million to approximately $12.5 billion compared to approximately $12.2 billion for the year ended December 31, 2022.

On a same-store basis, net operating revenues for the year ended December 31, 2023 increased $552 million.

We had net income of $16 million during the year ended December 31, 2023, compared to $179 million for the year ended December 31, 2022.

Net income for the year ended December 31, 2023 included the following:

• an after-tax charge of $28 million for expense related to government and other legal matters and related costs,

Net operating revenues increased from approximately $12.5 billion for the year ended December 31, 2023 to approximately $12.6 billion for the year ended December 31, 2024.

On a same-store basis, net operating revenues for the year ended December 31, 2024 increased $653 million, compared to the same period in 2023.

We had net loss of $(362) million during the year ended December 31, 2024, compared to net income of $16 million for the year ended December 31, 2023.

Net loss for the year ended December 31, 2024 included the following:

• an after-tax benefit of $27 million for gain from early extinguishment of debt,

• an after-tax charge of $40 million for expense related to costs associated with our multi-year initiative to modernize and consolidate technology platforms and associated processes,

• an after-tax benefit of $42 million resulting from gains on the sale of five hospitals and the sale of a majority interest in one hospital, offset by losses on the sale of three hospitals and impairment of long-lived assets that were idled, disposed or held-for-sale, and

• an after-tax charge of $10 million for restructuring charges related to the closure of businesses as well as service line closures and consolidations at certain hospitals.

• an after-tax charge of $250 million resulting from the impairment of long-lived assets that were idled, disposed or held-for-sale, a loss on the sale of one hospital and a gain on the sale of one hospital,

• an after-tax charge of $116 million for a change in estimate for professional liability claims accrual.

Net income for the year ended December 31, 2023 included the following:

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• an after-tax benefit of $61 million for gain from early extinguishment of debt,

• an after-tax benefit of $93 million from the gain on the sale of a majority interest in CoreTrust Holdings, LLC, or CoreTrust, by Healthtrust Purchasing Group, L.P., a group purchasing organization in which we are a noncontrolling partner, or the CoreTrust Transaction,

• an after-tax charge of $12 million for the change in estimate of the professional claims liability related to divested locations,

• an after-tax charge of $55 million for the impairment of long-lived assets of divested and closed businesses based on their estimated fair values, and

• an after-tax charge of $17 million for expense related to costs associated with our multi-year initiative to modernize and consolidate technology platforms and associated processes,

• an after-tax charge of $10 million for restructuring charges related to the closure of businesses as well as service line closures and consolidations at certain hospitals.

Consolidated inpatient admissions for the year ended December 31, 2023, increased 0.3%, compared to the year ended December 31, 2022, and consolidated adjusted admissions for the year ended December 31, 2023, increased 1.7%, compared to the year ended December 31, 2022.

Consolidated inpatient admissions for the year ended December 31, 2024, decreased 3.2%, compared to the year ended December 31, 2023, and consolidated adjusted admissions for the year ended December 31, 2024, decreased 3.4%, compared to the year ended December 31, 2023.

Same-store inpatient admissions for the year ended December 31, 2024, increased 3.2%, compared to the year ended December 31, 2023, and same-store adjusted admissions for the year ended December 31, 2024, increased 2.7%, compared to the year ended December 31, 2023.

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Overview of Legislative and Other Governmental Developments

The healthcare industry is subject to changing political, regulatory, and economic influences that may affect our business.

The healthcare industry is subject to changing political, regulatory, economic and other influences that may affect our business.

Regulatory uncertainty has increased as a result of recent decisions issued by the U.S.

Supreme Court that affect review of federal agency actions, including Loper Bright Enterprises v.

Raimondo , and the outcome of the 2024 federal elections.

Supreme Court decisions increase judicial scrutiny of agency authority, shift greater responsibility for statutory interpretation to courts and expand the timeline in which a plaintiff can sue regulators.

These decisions are expected to significantly impact government agency regulation, particularly within the heavily regulated healthcare industry, in part through an increase in legal challenges to healthcare regulations and agency guidance and decisions.

Federal agencies oversee, regulate and otherwise affect many aspects of our business, including through Medicare and Medicaid policies, policies affecting the size of the uninsured population and enforcement and interpretation of fraud and abuse laws.

These recent Supreme Court decisions may also result in inconsistent judicial interpretations and delays in and other impacts to agency rulemaking and legislative processes.

The outcome of the 2024 federal elections, including Republican control of both the executive and legislative branches, also increases regulatory uncertainty and the potential for significant policy changes.

In recent years, the U.S.

Congress and certain state legislatures have introduced and passed a large number of proposals and legislation affecting the healthcare system, including laws intended to impact access to health insurance and reduce healthcare costs and government spending.

The most prominent of these efforts, the Affordable Care Act, affects how healthcare services are covered, delivered and reimbursed, and expanded health insurance coverage through a combination of public program expansion and private sector health insurance reforms.

The Affordable Care Act has been, and continues to be, subject to legislative and regulatory changes and court challenges.

To increase access to health insurance during the COVID-19 pandemic, the ARPA enhanced subsidies for individuals eligible to purchase coverage through Affordable Care Act marketplaces.

Subsequent legislation extended these enhanced subsidies through 2025.

In addition, early COVID-related legislation required states to maintain continuous Medicaid enrollment, among other conditions, to receive a temporary increase in federal funds for Medicaid expenditures.

The expiration of this “continuous coverage” requirement in April 2023 has resulted in significant Medicaid coverage disruptions and dis-enrollments.

CMS has required certain

states to pause disenrollments due to noncompliant renewal systems.

These and other changes and initiatives may impact the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if purchased.

Of critical importance to us is the potential impact of any changes specific to the Medicaid program, including the funding and expansion provisions of the Affordable Care Act and subsequent legislation or agency initiatives.

Historically, the states with the greatest reductions in the number of uninsured adult residents have expanded Medicaid under the Affordable Care Act.

A number of states have opted out of the Medicaid coverage expansion provisions, but could ultimately decide to expand their programs at a later date.

Congress and certain state legislatures have introduced and passed a large number of proposals and legislation affecting the healthcare system, including laws intended to increase access to health insurance and reduce healthcare costs and government spending.

For example, the Affordable Care Act, affects how healthcare services are covered, delivered and reimbursed, and expanded health insurance coverage through a combination of public program expansion and private sector health insurance reforms.

However, changes in the law’s implementation, subsequent legislation and regulations, state initiatives and other factors have affected or may affect the number of individuals that elect or are able to obtain public or private health insurance and the scope of such coverage, if obtained.

For example, COVID-19 relief legislation temporarily enhanced subsidies available for individuals to purchase coverage through Affordable Care Act marketplaces.

Subsequent legislation extended these enhanced subsidies through 2025, but further extension is uncertain, and expiration of the enhanced subsidies may significantly increase the uninsured rate.

Other legislative and executive branch initiatives related to health insurance could also result in increased prices for consumers purchasing health insurance coverage or may permit the sale of insurance plans that do not satisfy current Affordable Care Act consumer protections, which could increase rates of uninsured and underinsured individuals and destabilize insurance markets.

Of critical importance to us is the potential impact of any changes specific to the Medicaid program, including changes resulting from legislative and administrative actions at the federal and state levels, particularly those related to funding and expansion provisions of the Affordable Care Act.

The states with the greatest reductions in the number of uninsured adult residents have expanded Medicaid under the Affordable Care Act.

Of the 15 states in which we operated hospitals as of December 31, 2024, nine states have taken action to expand their Medicaid programs.

At this time, the other six states have not, including Florida, Alabama, Tennessee, Mississippi and Texas, where we operated a significant number of hospitals as of December 31, 2023.

Some states use, or have applied to use, waivers granted by CMS to implement expansion, impose different eligibility or enrollment conditions, or otherwise implement programs that vary from federal standards.

Other recent reform initiatives and proposals at the federal and state levels include those focused on price transparency and limiting out-of-network charges, which may impact prices, our competitive position and the relationships between hospitals, insurers, patients, and ancillary providers (such as anesthesiologists, radiologists, and pathologists).

At this time, the other six states have opted out of Medicaid expansion, including Florida, Alabama, Tennessee, Mississippi and Texas, where we operated a significant number of hospitals at December 31,

Changes to federal funding formulas for Medicaid could have a particularly significant impact in states that expanded Medicaid, especially if federal contributions for Medicaid expansion populations decrease and states are unable to offset the reductions.

Further, some states have trigger laws that would end their Medicaid expansion or require other changes if federal funding is reduced.

CMS administrators may also make changes to Medicaid payment models and may grant states additional flexibilities in the administration of Medicaid programs, including by allowing additional states to condition Medicaid enrollment on work or other community engagement or to impose other eligibility or coverage restrictions.

There is a trend across the healthcare industry toward value-based purchasing.

CMS adjusts Medicare reimbursement for hospitals and other providers based on quality measures and administers various ACOs and alternative payment model demonstration projects.

Other recent reform initiatives and proposals at the federal and state levels include those focused on price transparency, and limiting out-of-network billing.

For example, the No Surprises Act imposes various requirements on providers and health plans intended to prevent “surprise” medical bills.

Among other restrictions and requirements, the law prohibits providers from charging patients an amount beyond the in-network cost sharing amount for services rendered by out-of-network providers, subject to limited exceptions.

For services for which balance billing is prohibited (even when no balance billing occurs), the No Surprises Act may limit the amounts received by out-of-network providers from health plans, and also establishes a dispute resolution process for providers and payors to handle payment disputes that cannot be resolved through direct negotiations.

The regulations and related guidance implementing the No Surprises Act have been and continue to be subject to legal challenges.

The No Surprises Act also requires providers to provide a good faith estimate of expected charges to uninsured or self-pay patients for scheduled items and services, in advance of the date of the scheduled item or service or upon request.

Based on these estimates, patients may invoke a patient-provider dispute resolution process established by regulation to challenge charges in certain circumstances.

Other trends toward transparency and value-based purchasing may impact the competitive position and patient volumes of providers.

For example, the CMS Care Compare website makes available to the public certain data that hospitals submit in connection with Medicare reimbursement claims, including hospital performance data on quality measures and patient satisfaction.

In addition, Medicare reimbursement for hospitals is adjusted based on quality and efficiency measures, and CMS currently administers various accountable care organizations and bundled payment demonstration projects.

The CMS Innovation Center has highlighted the need to accelerate the movement to value-based care and drive broader system transformation.

Throughout the acute phase of the COVID-19 pandemic that began in 2020, federal and state governments passed legislation, promulgated regulations and took other administrative actions intended to assist healthcare providers in providing care to COVID-19 and other patients during the public health emergency and to provide financial relief.

The public health emergency declared by HHS in response to the pandemic expired in May 2023.

Although federal and state governments have terminated most of the temporary measures that were implemented to assist providers, the effects of certain of these measures, including those intended to provide financial relief during the public health emergency, continue to impact providers.

For example, the BCA sequestration was extended several times as part of COVID-relief and subsequent legislation, and the payment reductions are currently set to continue through April 2032.

Further, the ARPA, in addition to providing funding for healthcare providers, increased the federal budget deficit in a manner that triggers an additional statutorily mandated sequestration under the Pay-As-You Go Act of 2010.

As a result, an additional Medicare spending reduction of up to 4% was required to take effect in January 2022.

However, Congress has delayed implementation of this payment reduction until 2025.

We received pandemic relief fund payments through various federal, state and local programs of approximately $161 million and $58 million during the years ended December 31, 2022 and 2021.

Approximately $173 million and $148 million during the years ended December 31, 2022 and 2021, respectively, was recognized as pandemic relief funds within the consolidated statements of (loss) income.

We did not receive or recognize any significant level of payments or benefits under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, or other COVID-19 related stimulus and relief legislation during the year ended December 31, 2023 and does not expect to receive or recognize any significant level of payments or benefit under the CARES Act and other existing legislation related to COVID-19 in future periods.

We received pandemic relief fund payments through various federal, state and local programs of approximately $161 million during the year ended December 31, 2022.

Approximately $173 million was recognized as pandemic relief funds within the consolidated statements of (loss) income during the year ended December 31, 2022.

We did not receive or recognize any significant level of payments or benefits under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, or other COVID-19 related stimulus and relief legislation during the years ended December 31, 2024 and 2023, and we do not expect to receive or recognize any significant level of payments or benefit under the CARES Act and other existing legislation related to COVID-19 in future periods.

The federal deficit and other federal and state budgetary pressures have affected government healthcare program expenditures, and we anticipate these effects will continue.

For example, the payment reductions required by the Budget Control Act of 2011 and subsequent legislation are currently set to continue through the first eight months of federal fiscal year 2032.

It is possible that future deficit reduction legislation will impose additional spending reductions.

Reimbursement by government programs may be affected by broad shifts in payment policy.

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In light of the U.S.

Supreme Court decision and to achieve budget neutrality, CMS implemented a reduction of approximately 3.1% to payment rates for non-drug services under the outpatient PPS for calendar year 2023.

In addition, HHS directed that $9 billion be paid to affected 340B providers in one-time lump sum payments as the remedy for calendar years 2018 through 2022.

Supreme Court decision and to achieve budget neutrality, CMS reduced payment rates for non-drug services under the outpatient PPS for calendar year 2023, and lump sum payments were distributed to affected 340B providers as the remedy for calendar years 2018 through 2022.

Moreover, in order to comply with budget neutrality requirements, HHS finalized a corresponding offset in future non-drug item and service payments for all outpatient PPS providers (except new providers) that will reduce the outpatient PPS conversion factor by 0.5% annually.

This adjustment will start in calendar year 2026 and continue for approximately 16 years.

This reduction to payment rates adversely affected our results for the year ended December 31, 2023, and the reduction to the outpatient PPS conversion factor as noted above is anticipated to adversely impact our results.

This reduction to payment rates adversely affected our results for the years ended December 31, 2023 and 2024, and the reduction to the outpatient PPS conversion factor as noted above is anticipated to adversely impact our results beginning in 2026.

In addition, future payment adjustments may apply to hospitals reimbursed under the inpatient PPS as a result of a 2024 court decision that vacated a low wage index policy CMS adopted in 2020.

Under the policy, CMS increased the wage index values for hospitals with low wage index, thereby increasing their reimbursement, and offset these increases by decreasing reimbursement for all other hospitals.

CMS addressed the impact of the court decision prospectively in its final rule updating inpatient hospital payment rates and policies for federal fiscal year 2025, removing the upward reimbursement adjustment for the low-wage hospitals and the related budget neutrality factor that decreased reimbursement for all other hospitals.

However, it is not yet clear whether, when, or how the agency will address the impact of the low wage policy in federal fiscal years 2020 through 2024.

Sources of Revenue

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Included in Managed Care and other third-party payors is net operating revenues from insurance companies with which we have insurance provider contracts, insurance companies for which we do not have insurance provider contracts, workers’ compensation carriers and non-patient service revenue, such as gain (loss) on investments, rental income and cafeteria sales.

We generally expect the portion of revenues received from the Medicare, Medicare Managed Care and Medicaid programs to increase over the long-term due to the general aging of the population and other factors, including health reform initiatives.

There has been a trend toward increased enrollment in Medicare Managed Care and Medicaid managed care programs, which may adversely affect our net operating revenues.

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These rates are indexed for inflation annually, although increases have historically been less than actual inflation.

On August 1, 2023, CMS published the final rule to increase this index by 3.3% for hospital inpatient acute care services that are reimbursed under the prospective payment system for federal fiscal year 2024 (which began October 1, 2023).

Together with other changes to

payment policies, payment rates for hospital inpatient acute care services are expected to increase approximately 3.1%.

CMS has published the final rule establishing payment rates for federal fiscal year 2025 (which began October 1, 2024) for hospital inpatient acute care services reimbursed under the prospective system, increasing payment rates by approximately 2.9%.

This increase reflects a market basket increase of 3.4%, reduced by a 0.5 percentage point productivity adjustment.

Hospitals that do not submit required patient quality data are subject to a reduction in payments.

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We are unable to predict whether or on what terms CMS will extend the supplemental programs in the states in which we operate.

Under these supplemental programs, we recognize revenue and related expenses in the period in which amounts are estimable and payment is reasonably assured.

Under these supplemental programs, we recognize revenue and related expenses in the period in which amounts are estimable

and payment is reasonably assured.

Reimbursement under these programs is reflected in net operating revenues and included as Medicaid revenue in the table above, and fees, taxes or other program related costs are reflected in other operating expenses.

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Interest expense, net

Gain (loss) from early extinguishment of debt

Gain on sale of equity interests in Macon Healthcare, LLC

Gain from early extinguishment of debt

Gain from CoreTrust Transaction

Equity in earnings of unconsolidated affiliates

Income before income taxes

(Loss) income before income taxes

Provision for income taxes

Net (loss) income

Net income attributable to noncontrolling interests

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Net (loss) income attributable to Community Health Systems,

Same-store percentage (decrease) increase from prior year (e):

Same-store percentage increase from prior year (e):

Net operating revenues

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Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased $653 million, or 5.5%, during the year ended December 31, 2024, compared to the same period in 2023.

On a period-over-period basis, the increase in same-store net operating revenues was primarily attributable to higher inpatient and outpatient volumes, increased reimbursement rates, favorable changes in payor mix and higher revenues from supplemental reimbursement programs, partially offset by lower acuity and increased patient claim denials.

Non-same-store net operating revenues decreased $509 million during the year ended December 31, 2024, compared to the same period in 2023, with the decrease attributable primarily to the divestiture of hospitals during 2024 and 2023.

On a consolidated basis, inpatient admissions decreased by 3.2% and adjusted admissions decreased by 3.4% during the year ended December 31, 2024, compared to the same period in 2023.

On a same-store basis, net operating revenues per adjusted admission increased 2.8%, while inpatient admissions increased by 3.2% and adjusted admissions increased by 2.7% for the year ended December 31, 2024, compared to the same period in 2023.

Operating expenses, as a percentage of net operating revenues, increased from 92.3% during the year ended December 31, 2023 to 95.7% during the year ended December 31, 2024.

Operating expenses, excluding depreciation and amortization and impairment and (gain) loss on sale of businesses, as a percentage of net operating revenues, increased from 89.0% for the year ended December 31, 2023 to 89.5% for the year ended December 31, 2024.

Salaries and benefits decreased as a percentage of net operating revenues from 43.4% for the year ended December 31, 2023 to 42.9% for the year ended December 31, 2024, primarily due to an increase in net operating revenues, partially offset by increased hiring commensurate with lower utilization of contract labor.

Supplies, as a percentage of net operating revenues, decreased from 16.0% for the year ended December 31, 2023 to 15.4% for the year ended December 31, 2024, primarily due to changes in the mix of services, the benefit of cost savings initiatives and an increase in net operating revenues.

Other operating expenses, as a percentage of net operating revenues, increased from 27.0% for the year ended December 31, 2023 to 28.8% for the year ended December 31, 2024, primarily due to a change in estimate for the professional liability claims accrual, increased expense for supplemental reimbursement programs and outsourced medical specialists, partially offset by decreased costs for contract labor and an increase in net operating revenues.

Lease cost and rent, as a percentage of net operating revenues, decreased from 2.6% for the year ended December 31, 2023 to 2.4% for the year ended December 31, 2024.

Depreciation and amortization, as a percentage of net operating revenues, decreased to 3.8% for the year ended December 31, 2024 from 4.0% for the year ended December 31, 2023 primarily due to an increase in net operating revenues and a reduction in the amortization of capitalized internal-use software.

Impairment and (gain) loss on sale of businesses, net was expense of $301 million for the year ended December 31, 2024, compared to a gain of $87 million for the same period in 2023.

The expense in 2024 and the gain in 2023 related primarily to divestiture activity during each respective period as discussed more specifically under “Acquisition, Divestiture and Closure Activity” herein.

Interest expense, net, increased by $30 million to $860 million for the year ended December 31, 2024 compared to $830 million for the same period in 2023.

This was primarily due to our refinancing activity during 2024 and 2023.

Gain from early extinguishment of debt of $25 million was recognized during the year ended December 31, 2024, compared to $72 million in the same period in 2023, as a result of our refinancing activity during 2024 and 2023.

Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, remained consistent at 0.1% for the years ended December 31, 2024 and 2023.

The net results of the above-mentioned changes resulted in (loss) income before income taxes changing by $490 million to a loss of $(283) million for the year ended December 31, 2024 from income of $207 million for the same period in 2023.

Our provision for income taxes for the years ended December 31, 2024 and 2023 was $79 million and $191 million, respectively, and the effective tax rates were (27.9)% and 92.3% for the years ended December 31, 2024 and 2023, respectively.

The decrease in the provision for income taxes for the year ended December 31, 2024, compared to the same period in 2023, was primarily due to a decrease in non-deductible goodwill related to divested hospitals and a decrease in income before income taxes in 2024 compared to 2023.

The difference in our effective tax rate for the year ended December 31, 2024, compared to the same period in 2023, was due to the aforementioned decrease in the provision for income taxes and the decrease in (loss) income before taxes.

Net (loss) income, as a percentage of net operating revenues, was (2.9)% for the year ended December 31, 2024, compared to 0.1% for the same period in 2023.

Net income attributable to noncontrolling interests, as a percentage of net operating revenues, was 1.2% for both of the years ended December 31, 2024 and 2023.

Net loss attributable to Community Health Systems, Inc.

was $(516) million for the year ended December 31, 2024, compared to $(133) million for the same period in 2023.

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Net operating revenues increased by 2.3% to approximately $12.5 billion for the year ended December 31, 2023, from approximately $12.2 billion for the year ended December 31, 2022.

Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased $552 million, or 4.8%, during the year ended December 31, 2023, compared to the same period in 2022.

On a period-over-period basis, the increase in net operating revenues was primarily attributable to higher inpatient and outpatient volumes, increased reimbursement rates, higher acuity and an increase in non-patient revenue, partially offset by unfavorable changes in payor mix.

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On a same-store basis, net operating revenues per adjusted admission decreased 0.5%, while inpatient admissions increased by 3.5% and adjusted admissions increased by 5.3% for the year ended December 31, 2023, compared to the same period in 2022.

Operating costs and expenses, as a percentage of net operating revenues, decreased from 93.3% during the year ended December 31, 2022 to 92.3% during the year ended December 31, 2023.

Operating costs and expenses, excluding depreciation and amortization and impairment and (gain) loss on sale of businesses, as a percentage of net operating revenues, increased from 88.3% for the year ended December 31, 2022 to 89.0% for the year ended December 31, 2023.

Operating expenses, as a percentage of net operating revenues, decreased from 93.3% during the year ended December 31, 2022 to 92.3% during the year ended December 31, 2023.

Operating expenses, excluding depreciation and amortization and impairment and (gain) loss on sale of businesses, as a percentage of net operating revenues, increased from 88.3% for the year ended December 31, 2022 to 89.0% for the year ended December 31, 2023.

Salaries and benefits decreased as a percentage of net operating revenues from 43.6% for the year ended December 31, 2022 to 43.4% for the year ended December 31, 2023, primarily due to an increase in net operating revenues, partially offset by increased hiring commensurate with lower utilization of contract labor.

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This was primarily due to our refinancing activity during 2023 and 2022.

Gain from early extinguishment of debt of $72 million was recognized during the year ended December 31, 2023, compared to a gain from early extinguishment of debt of $253 million in the same period in 2022, as a result of our refinancing activity during the years ended December 31, 2023 and 2022.

There was no gain from the CoreTrust Transaction during the year ended December 31, 2023.

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The increase in the provision for income taxes for the year ended December 31, 2023, compared to the same period in 2022, was primarily due to non-deductible goodwill related to divested hospitals in 2023 compared to 2022.

The difference in our effective tax rate for the year ended December 31, 2023, compared to the same period in 2022 was due to the aforementioned increase in the provision for income taxes and the decrease in income before taxes.

The difference in our effective tax rate for the year ended

December 31, 2023, compared to the same period in 2022, was due to the aforementioned increase in the provision for income taxes and the decrease in income before taxes.

Net income, as a percentage of net operating revenues, was 0.1% for the year ended December 31, 2023, compared to 1.5% for the same period in 2022.

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Net (loss) income attributable to Community Health Systems, Inc.

was $(133) million for the year ended December 31, 2023, compared to net income of $46 million for the same period in 2022.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Net operating revenues decreased by 1.3% to approximately $12.2 billion for the year ended December 31, 2022, from approximately $12.4 billion for the year ended December 31, 2021.

Net operating revenues on a same-store basis from hospitals that were operated throughout both periods decreased $27 million, or 0.2%, during the year ended December 31, 2022, compared to the same period in 2021.

On a period-over-period basis, there was a decline in net operating revenues as a result of fewer inpatient admissions, which was partially offset by an increase in outpatient visits and surgeries.

Also, lower overall acuity of services was partially offset by improved reimbursement rates.

Non-same-store net operating revenues decreased $130 million during the year ended December 31, 2022, compared to the same period in 2021, with the decrease attributable primarily to the divestiture of hospitals during 2021 and 2022.

On a consolidated basis, inpatient admissions decreased by 1.7% during the year ended December 31, 2022, compared to the same period in 2021.

Also on a consolidated basis, adjusted admissions increased by 2.6% during the year ended December 31, 2022, as compared to the same period in 2021.

On a same-store basis, net operating revenues per adjusted admission decreased 5.0%, while inpatient admissions increased by 0.5% and adjusted admissions increased by 5.0% for the year ended December 31, 2022, compared to the same period in 2021.

Operating costs and expenses, as a percentage of net operating revenues, increased from 88.7% during the year ended December 31, 2021 to 93.3% during the year ended December 31, 2022.

Operating costs and expenses, excluding depreciation and amortization and impairment and (gain) loss on sale of businesses, as a percentage of net operating revenues, increased from 84.1% for the year ended December 31, 2021 to 88.3% for the year ended December 31, 2022.

Salaries and benefits increased as a percentage of net operating revenues from 42.4% for the year ended December 31, 2021 to 43.6% for the year ended December 31, 2022, primarily due to wage increases driven by inflation and competitive labor market conditions.

Supplies, as a percentage of net operating revenues, decreased from 16.5% for the year ended December 31, 2021 to 16.2% for the year ended December 31, 2022.

Other operating expenses, as a percentage of net operating revenues, increased from 23.9% for the year ended December 31, 2021 to 27.3% for the year ended December 31, 2022, primarily due to higher costs for contract labor, professional liability insurance and medical specialist fees.

Lease cost and rent, as a percentage of net operating revenues, increased from 2.5% for the year ended December 31, 2021 to

2.6% for the year ended December 31, 2022.

Pandemic relief funds, as a percentage of net operating revenues, were (1.4)% for the year ended December 31, 2022, compared to (1.2)% for the same period in 2021.

Depreciation and amortization, as a percentage of net operating revenues, remained consistent at 4.4% for both years ended December 31, 2022 and 2021.

Impairment and (gain) loss on sale of businesses was $71 million for the year ended December 31, 2022, which primarily related to a hospital divestiture and the closure or non-renewal of leases for three hospitals as discussed more specifically under “Acquisition, Divestiture, Closures and Other Activity” herein, compared to $24 million for the same period in 2021, which related primarily to divestitures during the period.

Interest expense, net, decreased by $27 million to $858 million for the year ended December 31, 2022 compared to $885 million for the same period in 2021.

This was primarily due to our debt refinancing activity during 2021 and 2022.

Gain from early extinguishment of debt of $253 million was recognized during the year ended December 31, 2022, compared to a loss from early extinguishment of debt of $79 million in the same period in 2021, as a result of the refinancing of certain of our outstanding notes in each period as well as open market and privately negotiated repurchases of certain of our outstanding notes completed during the year ended December 31, 2022.

There was no pre-tax gain recognized on the sale of unconsolidated equity interests during the year ended December 31, 2022.

A pre-tax gain of $39 million was recognized during the year ended December 31, 2021 on the sale of unconsolidated equity interests in Macon Healthcare, LLC, a joint venture with certain subsidiaries of HCA representing two hospitals in Macon, Georgia, in which we owned a 38% interest.

Gain from the CoreTrust Transaction of $119 million was recognized during the year ended December 31, 2022, as discussed below under the heading “Liquidity and Capital Resources.” There was no gain from the CoreTrust Transaction recognized during the year ended December 31, 2021.

Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, decreased to (0.1)% for the year ended December 31, 2022 from (0.2)% for the year ended December 31, 2021, primarily due to the sale of our unconsolidated equity interests in Macon Healthcare, LLC during the year ended December 31, 2021.

The net results of the above-mentioned changes resulted in income before income taxes decreasing $150 million to $349 million for the year ended December 31, 2022 from $499 million for the year ended December 31, 2021.

Our provision for income taxes for the years ended December 31, 2022 and 2021 was $170 million and $131 million, respectively, and the effective tax rates were 48.7% and 26.3% for the years ended December 31, 2022 and 2021, respectively.

The increase in the provision for income taxes for the year ended December 31, 2022, compared to the same period in 2021 was primarily due to an increase in non-deductible interest for 2022 compared to 2021, compounded by an adverse change in the Internal Revenue Code Section 163(j) limit for deductible interest expense beginning in 2022.

The difference in our effective tax rate for the year ended December 31, 2022, compared to the same period in 2021 was due to the aforementioned increase in the provision for income taxes and the decline in income before taxes.

Net income, as a percentage of net operating revenues, was 1.5% for the year ended December 31, 2022, compared to 3.0% for the same period in 2021.

Net income attributable to noncontrolling interests, as a percentage of net operating revenues, remained consistent at 1.1% for both years ended December 31, 2022 and 2021.

Net income attributable to Community Health Systems, Inc.

was $46 million for the year ended December 31, 2022, compared to $230 million for the same period in 2021.

was net loss of $(133) million for the year ended December 31, 2023, compared to net income of $46 million for the same period in 2022.

Liquidity and Capital Resources

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Net cash provided by operating activities was approximately $480 million for the year ended December 31, 2024, compared to $210 million for the year ended December 31, 2023.

The increase in cash provided by operating activities is primarily due to increased collections of patient accounts receivable and lower cash paid for interest, partially offset by increased income tax payments.

Total cash paid for interest decreased to approximately $741 million for the year ended December 31, 2024, from approximately $801 million for the year ended December 31, 2023.

Cash paid for income taxes, net of refunds received, resulted in a net payment of $171 million and $91 million during the years ended December 31, 2024 and 2023, respectively.

Our net cash used in investing activities was approximately $275 million for the year ended December 31, 2024, compared to approximately $26 million for the year ended December 31, 2023, an increase of approximately $249 million.

The increase in net cash used in investing activities during the year ended December 31, 2024, compared to the prior year, was impacted by a decrease of $258 million in cash proceeds from dispositions of hospitals and other ancillary operations and a decrease of $96 million in cash from the net impact of the purchases and sales of available-for-sale debt and equity securities, partially offset by a decrease of $107 million in cash used for the purchase of property and equipment.

Our net cash used in financing activities was $206 million for the year ended December 31, 2024, compared to $264 million for the year ended December 31, 2023, a decrease of $58 million.

This was primarily due to the net impact of our debt borrowings and repayments during the year ended December 31, 2024, compared to the same period in 2023.

2023 Compared to 2022

Net cash provided by operating activities was approximately $210 million for the year ended December 31, 2023, compared to $300 million for the year ended December 31, 2022.

The decrease in cash provided by operating activities is partially the result of the payment of accumulated benefits under the Company’s supplemental executive retirement plan, or SERP.

Because securities are held in a rabbi trust to be used for the payment of SERP benefits, the aforementioned cash outflow is offset by inflows from sales of investments, which are reflected as a cash inflow from investing activities as noted below.

Total cash paid for interest decreased to

approximately $801 million for the year ended December 31, 2023, from approximately $835 million for the year ended December 31, 2022.

Total cash paid for interest decreased to approximately $801 million for the year ended December 31, 2023, from approximately $835 million for the year ended December 31, 2022.

Cash paid for income taxes, net of refunds received, resulted in a net payment of $91 million and $6 million during the years ended December 31, 2023 and 2022, respectively.

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Our net cash used in financing activities was $264 million for the year ended December 31, 2023, compared to $430 million for the year ended December 31, 2022, a decrease of $166 million.

This was primarily due to the net effect of our debt repayments, refinancing activities, and cash paid for deferred financing costs and other debt-related costs during the years ended December 31, 2023 and 2022.

2022 Compared to 2021

Net cash provided by operating activities was approximately $300 million for the year ended December 31, 2022, compared to net cash used in operating activities of $131 million for the year ended December 31, 2021, with the change primarily attributable to the repayment of Medicare accelerated payments in 2021.

Total cash paid for interest increased to approximately $835 million for the year ended December 31, 2022, from approximately $778 million for the year ended December 31, 2021.

Cash paid for income taxes, net of refunds received, resulted in a net payment of $6 million and $4 million during the years ended December 31, 2022 and 2021, respectively.

Our net cash used in investing activities was approximately $259 million for the year ended December 31, 2022, compared to approximately $524 million for the year ended December 31, 2021, a decrease of approximately $265 million.

The decrease in net cash used in investing activities during the year ended December 31, 2022, compared to the prior year, primarily resulted from a decrease of $54 million in cash used for the purchase of property and equipment, an increase of $28 million in cash proceeds from the sale of property and equipment, a decrease of $53 million in cash used to purchase other investments, a decrease of $65 million in cash used in the net impact of the purchases and sales of available-for-sale debt and equity securities, an increase resulting from $121 million in cash representing our share of proceeds from the CoreTrust Transaction distributed during the year ended December 31, 2022, and an increase of $72 million in cash proceeds from dispositions of hospitals and other ancillary operations.

These items, which decreased cash used in investing activities, were partially offset by an increase of $6 million in cash paid for acquisitions of facilities and other related businesses, an increase of $12 million in cash used to purchase investments in unconsolidated affiliates, and a decrease of $110 million in cash from the sale of equity interests in Macon Healthcare, LLC during the year ended December 31, 2022, compared to the year ended December 31, 2021.

Our net cash used in financing activities was $430 million for the year ended December 31, 2022, compared to approximately $514 million for the year ended December 31, 2021, a decrease of approximately $84 million.

Net working capital was approximately $1.1 billion and $896 million at December 31, 2023 and December 31, 2022, respectively.

Net working capital increased by approximately $170 million between December 31, 2022 and December 31, 2023.

The increase is primarily due to the increase in accounts receivable, other current assets and prepaid expenses and taxes as well as decreases in current operating lease liabilities, accrued liabilities for employee compensation, accrued interest, and other current accrued liabilities during the year ended December 31, 2023, partially offset by a decrease in cash, supplies and prepaid income taxes and an increase in accounts payable.

In addition to cash flows from operations, available sources of capital include amounts available under the asset-based loan (ABL) credit agreement, or the ABL Credit Agreement, as amended and restated on November 22, 2021, and anticipated access to public and private debt markets as well as proceeds from the disposition of hospitals or other investments such as our minority equity interests in various businesses, as applicable.

This was primarily due to the net effect of our debt repayments, refinancing activities, and cash paid for deferred financing costs and other debt-related costs during the year ended December 31, 2023, compared to the same period in 2022.

Net working capital was approximately $956 million and $1.1 billion at December 31, 2024 and December 31, 2023, respectively.

Net working capital decreased by approximately $110 million between December 31, 2023 and December 31, 2024.

The decrease is primarily due to decreases in prepaid expenses and taxes and prepaid income taxes and increases in accrued interest, accrued liabilities for employee compensation and other current liabilities during the year ended December 31, 2024, partially offset by increases in patient accounts receivable and other current assets and decreases in current operating lease liabilities.

In addition to cash flows from operations, available sources of capital include amounts available under the asset-based loan (ABL) credit agreement, or the ABL Credit Agreement, as amended and restated on June 5, 2024, and anticipated access to public and private debt markets as well as proceeds from the disposition of hospitals or other investments such as our minority equity interests in various businesses, as applicable.

Pursuant to the ABL Credit Agreement, the lenders have extended to CHS/Community Health Systems, Inc., or CHS, a revolving asset-based loan facility.

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At December 31, 2024, we had outstanding borrowings of $341 million and approximately $491 million of additional borrowing capacity (after taking into consideration $66 million of outstanding letters of credit) under the ABL Facility.

Principal amounts outstanding under the ABL Facility, if any, will be due and payable in full on November 22, 2026.

Letters of credit were reduced during the year ended December 31, 2024 by $15 million, primarily in relation to a professional liability claim that was settled and funded during the year ended December 31, 2024.

Principal amounts outstanding under the ABL Facility, if any, will be due and payable in full on June 5, 2029.

2024 Financing Activity

On June 5, 2024, CHS completed the offering of an additional $1.225 billion aggregate principal amount of its outstanding 10.875% Senior Secured Notes due 2032, or the Tack-On Notes, at an issue price of 102.000%, plus accrued and unpaid interest from December 22, 2023 to the closing date (which equaled approximately $60 million).

The Tack-On Notes are part of the same series as, and rank equally with, the 10⅞% Senior Secured Notes due 2032 issued in December 2023.

Proceeds from the offering of the Tack-On Notes, together with cash on hand, were used to redeem all of the remaining $1.116 billion of outstanding 8.000% Senior Secured Notes due 2026, to fund senior note repurchases in the amount of approximately $98 million resulting in the extinguishment of $130 million principal amount of the 6⅞% Senior Notes due 2028, pay related fees and expenses and for general corporate purposes.

On June 5, 2024, the ABL Credit Agreement, as noted above, was amended and restated to, among other things, extend the maturity to June 5, 2029.

During the year ended December 31, 2024, the Company extinguished approximately $143 million principal value of the 5⅝% Senior Secured Notes due 2027 through open market repurchases utilizing cash on hand.

An immaterial pre-tax and after-tax loss from early extinguishment resulted from these repurchases.

2023 Financing Activity

On December 22, 2023, we completed a private offering of $1.000 billion aggregate principal amount of 10⅞% Senior Secured Notes due January 15, 2032, or the 10⅞% Senior Secured Notes due 2032.

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A pre-tax gain from early extinguishment of debt of approximately $72 million was recognized associated with these financing activities during the year ended December 31, 2023.

2022 Financing Activity

On February 4, 2022, we completed a private offering of $1.535 billion aggregate principal amount of 5¼% Senior Secured Notes due May 15, 2030, or the 5¼% Senior Secured Notes due 2030.

The proceeds of the offering were used to redeem the 6⅝% Senior Secured Notes due 2025 on February 4, 2022, and to pay related fees and expenses.

The 5¼% Senior Secured Notes due 2030 bear interest at a rate of 5.250% per year payable semi-annually in arrears on May 15 and November 15, commencing on November 15, 2022.

During the year ended December 31, 2022, we extinguished a portion of certain series of our outstanding notes through a combination of open market and privately negotiated repurchases, as follows (in millions):

Principal Amount

6⅞% Senior Notes due 2028

4¾% Senior Secured Notes due 2031

6⅞% Junior-Priority Secured Notes due 2029

6⅛% Junior-Priority Secured Notes due 2030

Total principal amount of debt extinguished

A pre-tax gain from early extinguishment of debt of approximately $253 million was recognized associated with these financing activities during the year ended December 31, 2022.

Additional Liquidity Information

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A breach of any of these covenants could result in a default under the ABL Facility and/or the indentures that govern our outstanding notes.

Upon the occurrence of an event of default under the ABL Facility or indentures that govern our outstanding notes, all amounts outstanding

under the ABL Facility and the indentures that govern our outstanding notes may become immediately due and payable and all commitments under the ABL Facility to extend further credit may be terminated.

Upon the occurrence of an event of default under the ABL Facility or indentures that govern our outstanding notes, all amounts outstanding under the ABL Facility and the indentures that govern our outstanding notes may become immediately due and payable and all commitments under the ABL Facility to extend further credit may be terminated.

As of December 31, 2024, approximately $20 million of our outstanding debt of approximately $11.5 billion is due within the next 12 months and approximately 97% of our outstanding debt has a fixed rate of interest.

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Net proceeds from divestitures, if any, are expected to be used for general corporate purposes (including potential debt repayments and/or debt repurchases) and capital expenditures.

Ongoing negative economic conditions may negatively impact our service mix, revenue mix, payor mix and patient volumes, as well as our ability to collect outstanding receivables.

Challenging economic conditions may negatively impact our service mix, revenue mix, payor mix and patient volumes, as well as our ability to collect outstanding receivables.

Any material increase in our billing cycles or deterioration in the collectability of our accounts receivable would adversely affect our cash flows and results of operations and may require an increased level of working capital.

We believe that our current levels of cash, internally generated cash flows and current levels of availability for additional borrowing under the ABL Facility, our anticipated continued access to the capital markets, and the use of proceeds from any potential future dispositions as noted above, will be sufficient to finance acquisitions, capital expenditures, working capital requirements, and any debt repurchases or other debt repayments we may elect to make or be required to make through the next 12 months and the foreseeable future thereafter.

However, ongoing negative economic conditions (including inflationary conditions and elevated interest rate levels) have resulted in, and may continue to result in, significant disruptions of financial and capital markets, which could reduce our ability to access capital and negatively affect our liquidity in the future.

However, the then current macroeconomic conditions, financial and capital market conditions, and the then current interest rate environment may adversely impact our ability to refinance our indebtedness or otherwise access capital on favorable terms, or at all.

As noted above, during the years ended December 31, 2024 and 2023, we extinguished a portion of certain series of our outstanding notes through open market and privately negotiated repurchases, and we may elect from time to time to continue to purchase our outstanding debt in open market purchases, privately negotiated transactions or otherwise.

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Material cash requirements from known contractual and other obligations primarily consist of purchase obligations, long-term debt and related interest payments, operating leases, finance leasing and financing obligations, and capital expenditures related to routine capital, information systems infrastructure and applications, replacement or de novo construction projects and bed expansion projects, certain commitments and other investments.

Refer to Notes 6, 9 and 15 of the Notes to Consolidated Financial Statements for amounts outstanding as of December 31, 2023 related to long-term debt, and related interest payments, operating leases, finance leasing and financing obligations, and certain commitments.

Refer to Notes 6, 9 and 16 of the Notes to Consolidated Financial Statements for amounts outstanding at December 31, 2024 related to long-term debt, and related interest payments, operating leases, finance leasing and financing obligations, and certain commitments.

Purchase obligations include supplies and third-party services purchased in the normal course of business.

Open purchase orders total $342 million as of December 31, 2023 and substantially all such amounts are due in the next 12 months.

Other investments includes, among other things, purchases of investments in unconsolidated affiliates which are expected to be incurred within the next 24 months.

Open purchase orders total $146 million at December 31, 2024 and substantially all such amounts are due in the next 12 months.

Other investments include, among other things, purchases of investments in unconsolidated affiliates which are expected to be incurred within the next 24 months.

Cash expenditures for purchases of facilities and other related businesses were approximately $25 million in 2024, $38 million in 2023 and $9 million in 2022.

Our expenditures for the years ended December 31, 2023, 2022 and 2021, were primarily related to physician practices, clinics, ambulatory surgery centers and other ancillary businesses, including the purchase of certain assets from American Physician Partners as described in Note 3 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K.

Excluding the cost to construct replacement and de novo hospitals, our cash expenditures for routine capital for the year ended December 31, 2023 totaled $466 million compared to $358 million in 2022 and $321 million in 2021.

These capital expenditures related primarily to the purchase of additional equipment, major and minor renovations that result in additional bed capacity, and information systems infrastructure.

The costs to construct replacement hospitals and de novo hospitals during the year ended December 31, 2023 were approximately $1 million.

Costs to construct replacement hospitals totaled $17 million and $63 million for the years ended December 31, 2022 and 2021, respectively, primarily related to the construction of a replacement facility in Fort Wayne, Indiana.

During the years ended December 31, 2022 and 2021, we also had cash expenditures of $40 million and $85 million, respectively, that represent both planning and construction costs primarily for de novo hospitals.

Pursuant to a hospital purchase agreement from our March 1, 2016 acquisition of Northwest Health - Starke, formerly known as Starke Hospital, we committed to spend up to $15 million toward the construction of a replacement facility in Knox, Indiana.

Our expenditures for the years ended December 31, 2024, 2023 and 2022, were primarily related to physician practices, clinics, ambulatory surgery centers and other ancillary businesses.

Capital expenditures relate primarily to expansion and renovation of existing facilities, construction of additional access points such as freestanding emergency departments and ambulatory surgery centers, investments in higher acuity service lines and information technology infrastructure, as well as routine expenditures for equipment, minor renovations and other upgrades.

Capital expenditures for the year ended December 31, 2024 totaled $360 million compared to $467 million in 2023 and $415 million in 2022.

Included in the capital expenditures for the year ended December 31, 2022, were costs to construct replacement hospitals totaling $17 million, primarily related to the construction of a replacement facility in Fort Wayne, Indiana.

Pursuant to a hospital purchase agreement from our March 1, 2016 acquisition of Northwest Health - Starke, formerly known as Starke Hospital, we committed to make an investment of up to $15 million toward the construction of a replacement facility in Knox, Indiana.

Construction is required to be completed within five years of the date we enter into a new lease with Starke County, Indiana, the hospital lessor, or in the event we do not enter into a new lease with Starke County, construction shall be completed by September 30, 2026.

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Ongoing legislative and regulatory efforts and judicial interpretations could reduce or otherwise adversely affect the payments we receive from Medicare and Medicaid and other payors.

Within the statutory framework of the Medicare and Medicaid programs, there are substantial areas subject to administrative rulings, interpretations and discretion, and which are at times subject to court challenges, which may further affect payments made under those programs.

Further, the federal and state governments might, in the future, reduce the funds available under those programs, require repayment of previously received funds or require more stringent utilization and quality reviews of hospital facilities.

Within the statutory framework of the Medicare and Medicaid programs, there are substantial areas subject to administrative rulings, interpretations and discretion that are at times subject to court challenges, which may further affect payments made under those programs.

We expect legal challenges to healthcare regulations and agency guidance, including those related to Medicare and Medicaid payment policies, to increase as a result of recent U.S.

Supreme Court decisions as noted above.

The increased potential for legal challenges may result in delays in and other impacts to the agency rulemaking process.

Further, the federal and state governments may reduce the funds available under the Medicare and Medicaid programs, require repayment of previously received funds or require more stringent utilization and quality reviews of hospital facilities.

Additionally, there may be a continued rise in managed care programs and further restructuring of the financing and delivery of healthcare in the United States.

These events could cause our future financial results to be adversely impacted.

These events could adversely impact our future financial results.

We cannot estimate the impact of Medicare and Medicaid reimbursement changes that have been enacted or otherwise determined or that are currently or may in the future be under consideration.

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We believe that our critical accounting policies are limited to those described below.

The following information should be read in conjunction with our significant accounting policies included in Note 1 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K.

The following information should be read in conjunction with our significant accounting policies included in Note 1 of the Notes to the Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K.

Revenue Recognition

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Explicit price concessions are recorded for contractual allowances that are calculated and recorded through a combination of internally- and externally-developed data collection and analysis tools to automate the monthly estimation of required contractual allowances.

Within these automated systems, payors’ historical paid claims data and contracted amounts are utilized to calculate the contractual allowances.

Within these automated systems, payors’ historical paid claims data and

contracted amounts are utilized to calculate the contractual allowances.

This data is updated on a monthly basis.

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Due to the complexities involved in these estimates, actual payments we receive could be different from the amounts we estimate and record.

If the actual contractual reimbursement percentage under government programs and managed care contracts differed by 1% at December 31, 2023 from our estimated reimbursement percentage, net income for the year ended December 31, 2023 would have changed by approximately $97 million, and net accounts receivable at December 31, 2023 would have changed by $124 million.

If the actual contractual reimbursement percentage under government programs and managed care contracts differed by 1% at December 31, 2024 from our estimated reimbursement percentage, net loss for the year ended December 31, 2024 would have changed by approximately $100 million, and net accounts receivable at December 31, 2024 would have changed by $128 million.

Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties.

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Patient accounts receivable can be impacted by the effectiveness of our collection efforts and, as described in our significant accounting policies included in Note 1 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K, numerous factors may affect the net realizable value of accounts receivable.

If the actual collection percentage differed by 1% at December 31, 2023 from our estimated collection percentage as a result of a change in expected recoveries, net income for the year ended December 31, 2023 would have changed by $37 million, and net accounts receivable at December 31, 2023 would have changed by $48 million.

If the actual collection percentage differed by 1% at December 31, 2024 from our estimated collection percentage as a result of a change in expected recoveries, net loss for the year ended December 31, 2024 would have changed by $38 million, and net accounts receivable at December 31, 2024 would have changed by $49 million.

We also continually review our overall reserve adequacy by monitoring historical cash collections as a percentage of trailing net operating revenues, as well as by analyzing current period net operating revenues and admissions by payor classification, days revenue outstanding, the composition of self-pay receivables between pure self-pay patients and the patient responsibility portion of third-party insured receivables and the impact of recent acquisitions and dispositions.

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We believe this policy accurately reflects our ongoing collection efforts and is consistent with industry practices.

We had approximately $1.7 billion at both December 31, 2023 and 2022, being pursued by various outside collection agencies.

We had approximately $1.6 billion and $1.7 billion at December 31, 2024 and 2023, respectively, being pursued by various outside collection agencies.

We expect to collect less than 4%, net of estimated collection fees, of the amounts being pursued by outside collection agencies.

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Days revenue outstanding, adjusted for the impact of receivables for state Medicaid supplemental payment programs and divested facilities, was 55 days and 58 days at December 31, 2024 and 2023, respectively.

Total gross accounts receivable (prior to allowance for contractual adjustments and implicit price concessions) was approximately $16.8 billion as of December 31, 2023 and approximately $15.9 billion as of December 31, 2022.

The approximate percentage of total gross accounts receivable (prior to allowance for contractual adjustments and implicit price concessions) summarized by aging categories is as follows:

As of December 31, 2023:

Total gross accounts receivable (prior to allowance for contractual adjustments and implicit price concessions) was approximately $17.3 billion and $16.8 billion at December 31, 2024 and 2023, respectively.

The approximate percentage of total gross accounts receivable (prior to allowance for contractual adjustments and implicit price concessions) summarized by payor and aging categories is as follows:

At December 31, 2024:

% of Gross Receivables

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Medicare Managed Care

Other third-party payors

As of December 31, 2022:

Managed Care and other third-party payors

At December 31, 2023:

% of Gross Receivables

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Self-pay receivables

The combined total at our hospitals and clinics for the estimated implicit price concessions for self-pay accounts receivable and allowances for other self-pay discounts and contractuals, as a percentage of gross self-pay receivables, was approximately 91% at both December 31, 2023 and 2022.

If the receivables that have been written-off, but where collections are still being pursued by outside collection agencies, were included in both the allowances and gross self-pay receivables specified above, the percentage of combined allowances to total self-pay receivables would have been 93% at both December 31, 2024 and 2023.

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The estimates are based on specific claim facts, our historical claim reporting and payment patterns, the nature and level of our hospital operations, and actuarially determined projections.

The actuarially determined projections are based on our actual claim data, including historic reporting and payment patterns, which have been gathered over the life of the Company.

The actuarially determined projections are based on our actual claim data, including historic reporting and payment patterns.

As discussed below, since we purchase excess insurance on a claims-made basis that transfers risk to third-party insurers, the estimated liability for professional and general liability claims does include an amount for the losses covered by our excess insurance.

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Since we believe that the amount and timing of our future claims payments are reliably determinable, we discount the amount we accrue for losses resulting from professional liability claims.

The net present value of the projected payments was discounted using weighted-average interest rates of 3.7% in 2023, 3.8% in 2022 and 1.8% in 2021.

The net present value of the projected payments was discounted using weighted-average risk free rates of 3.7% in both 2024 and 2023, and 3.8% in 2022.

This liability is adjusted for new claims information in the period such information becomes known to us.

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The average lag period between claim occurrence and payment of a final settlement is between three and four years, although the facts and circumstances of individual claims could result in the timing of such payments being different from this average.

Since claims are paid promptly after settlement with the claimant is reached, settled claims represent approximately 1% of the total liability at the end of any period.

Since claims are paid promptly after settlement with the claimant is reached, settled claims represent approximately 4% or less of the total liability at the end of any period.

For purposes of estimating our individual claim accruals, we utilize specific claim information, including the nature of the claim, the expected claim amount, the year in which the claim occurred and the laws of the jurisdiction in which the claim occurred.

Once the case accruals for known claims are determined, information is stratified by loss layers and retentions, accident years, reported years and geography.

Several actuarial methods are used against this data to produce estimates of ultimate paid losses and reserves for incurred but not reported claims.

Several actuarial methods are used to produce estimates of ultimate paid losses and reserves for incurred but not reported claims.

Each of these methods uses our company-specific historical claims data and other information.

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Significant assumptions are made on the basis of the aforementioned information in estimating reserves for incurred but not reported claims.

A 1% change in assumptions for either severity or frequency as of December 31, 2023 would have increased or decreased the reserve between $5 million to $15 million.

Based on these analyses, we determine our estimate of the professional liability claims.

A 1% change in assumptions for either severity or frequency at December 31, 2024 would have increased or decreased the reserve by approximately $5 million to $10 million.

Based on these analyses, we periodically review and determine our estimate of the professional liability claims.

The determination of management’s estimate, including the preparation of the reserve analysis that supports such estimate, involves subjective judgment of management.

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In the ordinary course of business, our expense with respect to professional liability claims, which is actuarially determined, is limited to amounts not covered by third-party insurance policies, which typically provide coverage for professional liability claims.

During the year ended December 31, 2020, we incurred expenses in the amount of approximately $50 million related to the settlement of a professional liability claim for which our third-party insurers’ obligation to provide coverage to us in connection with the underlying loss was being litigated.

The subject of the litigation for the recovery of the full amount of the $50 million settlement was whether the claim was covered under the subject policies.

This litigation was settled during the year ended December 31, 2021, and in connection with this settlement, approximately $22 million was recovered from various third-party insurers related to their obligation to provide coverage for the professional liability claim.

During the year ended December 31, 2022, we experienced an increase in the amounts paid or expected to be paid to settle outstanding professional liability claims related to divested locations, compared to the same period in the prior year and to previous actuarially determined estimates.

This resulted in a change in estimate of $15 million during the three months and year ended December 31, 2022.

This resulted in a change in estimate of $15 million during the year ended December 31, 2022.

During the year ended December 31, 2023, we experienced an increase in the amounts paid or expected to be paid to settle outstanding professional liability claims, compared to the same period in the prior year and to previous actuarially determined estimates due to adverse claim developments.

During the year ended December 31, 2024, in connection with our periodic review of the professional liability claims accrual, we, with input from our third-party actuary, considered recent increases in the amounts paid to resolve outstanding professional liability claims arising in prior periods as well as recent increases in individual claim accruals for unresolved prior period claims.

The emergence in the period of adverse developments, including from social inflationary pressures, impacted the actuarially determined estimate for the resolution of professional liability claims and resulted in an upward revision to the professional liability claims accrual estimate in the amount of $149 million during the year ended December 31, 2024, the majority of which increase in estimate related to divested locations.

There were no other significant changes in our estimate of the reserve for professional liability claims during the years ended December 31, 2024, 2023 and 2022.

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The $75 million in integrated occurrence coverage will also apply to claims reported between June 1, 2020 and June 1, 2025 for events that occurred prior to June 1, 2020 but which were not previously known or reported.

For certain policy years prior to June 1, 2014, if the first aggregate layer of excess coverage becomes fully utilized, then the self-insured retention will increase to $10 million per claim for any subsequent claims in that policy year until our total aggregate coverage is met.

For certain policy years prior to June 1, 2014, if the first aggregate layer of excess coverage becomes fully utilized, then the self-insured retention will

increase to $10 million per claim for any subsequent claims in that policy year until our total aggregate coverage is met.

Beginning June 1, 2018, this drop-down provision in the excess policies attaches over the $15 million per claim self-insured retention.

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We believe that future income will enable us to realize certain deferred tax assets, subject to the valuation allowance we have established.

The total amount of unrecognized benefit that would impact the effective tax rate, if recognized, was $45 million as of December 31, 2023.

The total amount of unrecognized benefit that would impact the effective tax rate, if recognized, was $42 million at December 31, 2024.

A total of $5 million of interest and penalties is included in the amount of liability for uncertain tax positions at December 31, 2024.

It is our policy to recognize interest and penalties related to unrecognized benefits in our consolidated statements of income as income tax expense.

It is our policy to recognize interest and penalties related to unrecognized benefits in our consolidated statements of (loss) income as income tax expense.

It is possible the amount of unrecognized tax benefit could change in the next 12 months as a result of a lapse of the statute of limitations and settlements with taxing authorities;

however, we do not anticipate the change will have a material impact on our consolidated results of operations or consolidated financial position.

Our federal income tax return for the 2018 tax year is under examination by the Internal Revenue Service.

Our income tax return for the 2018 tax year has been effectively settled with the Internal Revenue Service in 2024.

The settlement was not material to our consolidated results of operations or consolidated financial position.

Our income tax return for the 2021 and 2022 tax years are under examination by the Internal Revenue Service.

We believe the result of this examination will not be material to our consolidated results of operations or consolidated financial position.

In addition, we have extended our federal statute of limitations through June 30, 2025 for the tax period ended December 31, 2018.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-07, “Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures.” This ASU includes additional requirements for the disclosure of significant segment expenses and segment measure(s) of profit or loss, as well as new disclosure requirements for entities with a single reportable segment and certain qualitative information about the chief operating decision maker.

This ASU is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024.

The amendments in this ASU must be applied retrospectively to all periods presented.

Early adoption is permitted.

We are currently evaluating the impact that adoption of this ASU will have on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740), Improvements to Income Tax Disclosures.” This ASU establishes new requirements for the categorization and disaggregation of information in the rate reconciliation as well as for disaggregation of income taxes paid.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update, or ASU, 2023-09, “Income Taxes (Topic 740), Improvements to Income Tax Disclosures.” This ASU establishes new requirements for the categorization and disaggregation of information in the rate reconciliation as well as for disaggregation of income taxes paid.

Additionally, this ASU modifies and eliminates certain existing requirements for indefinitely reinvested foreign earnings and unrecognized tax benefits.

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We are currently evaluating the impact that adoption of this ASU will have on our consolidated financial statements.

We have evaluated all other recently issued, but not yet effective, ASUs and do not expect the eventual adoption of these ASUs to have a material impact on our consolidated financial position or results of operations.

We have evaluated all other recently issued, but not yet effective, ASUs and do not expect the eventual adoption of such ASUs to have a material impact on our consolidated financial position or results of operations.

FORWARD-LOOKIN G STATEMENTS

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These factors include, among other things:

• general economic and business conditions, both nationally and in the regions in which we operate, including the current negative macroeconomic conditions, ongoing inflationary pressures that have significantly increased and may continue to significantly increase our expenses, the current high interest rate environment, ongoing challenging labor market conditions and labor shortages, and current geopolitical instability, as well as the potential impact on us of financial, credit and capital conditions, including the potential impact of such conditions on our ability to access credit, liquidity and capital market sources on acceptable terms or at all;

• the impact of current or future federal and state health reform initiatives;

• the extent to and manner in which states adopt changes to Medicaid programs, implement health insurance exchanges or alter or reduce the provision of, or payment for, healthcare to state residents through legislation, regulation or otherwise;

• changes related to health insurance enrollment, including those affecting the beneficiary enrollment process and the stability of health insurance exchanges;

• general economic and business conditions, both nationally and in the regions in which we operate, including the impact in recent periods of challenging macroeconomic conditions and inflationary pressures, the current high interest rate environment, and current geopolitical instability, as well as the potential impact on us of political, financial, credit and capital conditions;

• the impact of current and future healthcare public policy developments and possible changes to federal, state or local laws, regulations and policies affecting the healthcare industry, including changes affecting the structure of or funding for the Medicare and Medicaid programs;

• changes by the federal and state governments to state Medicaid programs, including the extent and nature of structural and funding changes and manner in which any such changes are implemented, and other developments that affect the administration of health insurance exchanges or alter or reduce the provision of, or payment for, healthcare to state residents through legislation, regulation or otherwise;

• changes related to health insurance enrollment, including those affecting the beneficiary enrollment process and the stability of health insurance exchanges, and the expiration of the temporarily enhanced subsidies available for individuals to purchase coverage through Affordable Care Act marketplaces;

• risks associated with our substantial indebtedness, leverage and debt service obligations, including our ability to refinance such indebtedness on acceptable terms or to incur additional indebtedness, and our ability to remain in compliance with debt covenants;

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• changes in, or the failure to comply with, federal, state or local laws or governmental regulations affecting our business;

• judicial developments impacting the Company or the healthcare industry, including the potential impact of the recent decisions of the U.S.

Supreme Court regarding the actions of federal agencies;

• potential adverse impact of known and unknown legal, regulatory and governmental proceedings and other loss contingencies, including governmental investigations and audits, and federal and state false claims act litigation;

• our ability, where appropriate, to enter into and maintain provider arrangements with payors and the terms of these arrangements, which may be further affected by the increasing consolidation of health insurers and managed care companies and vertical integration efforts involving payors and healthcare providers;

• our ability to enter into and maintain provider arrangements with payors and the terms of these arrangements, which may be further affected by the increasing consolidation of health insurers and managed care companies and vertical integration efforts involving payors and healthcare providers;

• changes in, or the failure to comply with, contract terms with payors and changes in reimbursement policies, methodologies or rates paid by federal or state healthcare programs or commercial payors;

• security breaches, cyber-attacks, loss of data, other cybersecurity threats or incidents, and any actual or perceived failures to comply with legal requirements governing the privacy and security of health information or other regulated, sensitive or confidential information, or legal requirements regarding data privacy or data protection;

• security breaches, cyber-attacks, loss of data, other cybersecurity threats or incidents, including those experienced with respect to our information systems or the information systems of third parties with whom we conduct business, and any actual or perceived failures to comply with legal requirements governing the privacy and security of health information or other regulated, sensitive or confidential information, or legal requirements regarding data privacy or data protection;

• the development, adoption and use of emerging technologies, including artificial intelligence and machine learning;

• any potential impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets, or changes in the useful lives of other intangible assets;

• the effects related to the sequestration spending reductions pursuant to both the Budget Control Act of 2011 and the Pay-As-You-Go Act of 2010 and the potential for future deficit reduction legislation;

• the effects related to the sequestration spending reductions pursuant to the Budget Control Act of 2011 and the potential for future deficit reduction legislation;

• increases in the amount and risk of collectability of patient accounts receivable, including decreases in collectability which may result from, among other things, self-pay growth and difficulties in recovering payments for which patients are responsible, including co-pays and deductibles;

• the efforts of insurers, healthcare providers, large employer groups and others to contain healthcare costs, including the trend toward value-based purchasing;

• the impact of competitive labor market conditions and the shortage of nurses, including in connection with our ability to hire and retain qualified nurses, physicians, other medical personnel and key management, and increased labor expenses as a result of such competitive labor market conditions, inflation and competition for such positions;

• the efforts of insurers, healthcare providers, large employer groups and others to contain healthcare costs, including the trend toward value-based purchasing and increased reimbursement denials by insurers;

• the impact of competitive labor market conditions, including in connection with our ability to hire and retain qualified nurses, physicians, other medical personnel and key management, and increased labor expenses arising from inflation and/or competition for such positions;

• the inability of third parties with whom we contract to provide hospital-based physicians and the effectiveness of our efforts to mitigate such non-performance including through acquisitions of outsourced medical specialist businesses, engagement with new or replacement providers, employment of physicians and re-negotiation or assumption of existing contracts;

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• changes in medical or other technology;

• any failure of our ongoing process of redesigning and consolidating key business functions, including through the implementation of a new core enterprise resource planning system, to proceed as expected or to be completed successfully;

• any failure of key business functions, including our ability to realize the intended benefits of a new core enterprise resource planning system and the redesigned and consolidated processes which are supported by such system;

• changes in U.S.

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• the impact that changes in our relationships with joint venture or syndication partners could have on effectively operating our hospitals or ancillary services or in advancing strategic opportunities;

• our ability to successfully integrate any acquired hospitals and/or outpatient facilities, or to recognize expected synergies from acquisitions;

• our ability to successfully integrate any acquired hospitals and/or outpatient facilities, or to realize expected benefits from acquisitions such as increased growth in patient service revenues;

• the impact of severe weather conditions and climate change, as well as the timing and amount of insurance recoveries in relation to severe weather events;

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• timeliness of reimbursement payments received under government programs;

• effects related to pandemics, epidemics, or outbreaks of infectious diseases, including the impact of any future developments related to COVID-19 and the COVID-19 pandemic on our business, results of operations, financial condition, and/or cash flows;

• effects related to pandemics, epidemics, outbreaks of infectious diseases or other public health crises;

• any failure to comply with our obligations under license or technology agreements;

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Trading securities are reported at fair value with unrealized gains and losses included in earnings.

Other comprehensive income, net of tax, included an unrealized gain of $6 million during the year ended December 31, 2023.

There was no comprehensive income or loss resulting from unrealized gains or losses on marketable securities during the year ended December 31, 2024.

We are exposed to market risk related to market illiquidity.

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How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the net realizable value of self-pay accounts receivable included the following, among others:

Our audit procedures related to management’s estimate of implicit price concessions associated with self-pay accounts receivable included the following, among others:

• We tested management’s internal controls that address the risks of material misstatement related to the Company’s estimation of implicit self-pay price concessions.

• We evaluated management’s methodology and related assumptions, including cash collections, by comparing actual results to management’s historical estimates.

• We tested the underlying data related to the recognition of patient level charges and the subsequent activities, including cash collections and non-cash adjustments.

• We tested the mathematical accuracy of the estimates applied to period-end accounts receivable.

• We developed an expectation for self-pay price concession by payor and compared it to the recorded balance.

• We evaluated the appropriateness of the industry, economic, and Company factors that were used in determining the net realizable value of self-pay accounts receivable.

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• We tested management’s internal controls that address the risks of material misstatement related to professional liability claims, including those over the projection of the settlement value of reported and unreported claims.

• We evaluated the assumptions used by management to estimate the self-insurance reserves by:

o Testing the underlying data that served as the basis for the actuarial analysis, including historical claims, to test that the inputs to the actuarial estimate were reasonable.

o Comparing management’s prior-year assumptions of expected development and ultimate loss to actual amounts incurred during the current year to identify potential bias in the determination of the self-insurance reserves.

• We tested the underlying data that served as the basis for the actuarial analysis, including historical claims, to test that the inputs to the actuarial estimate were reasonable.

• With the assistance of our actuarial specialists, we developed independent estimates of the professional liability claims, including loss data and industry claim development factors, and compared our estimates to management’s estimates.

Goodwill Impairment – Refer to Notes 1 and 4 to the financial statements

Critical Audit Matter Description

Goodwill is evaluated for impairment annually and when an event occurs or circumstances change that, more likely than not, reduce the fair value of the reporting unit below its' carrying value.

The Company estimates the fair value of the reporting unit using both a discounted cash flow model as well as a market multiple model.

The determination of fair value using the discounted cash flow model requires management to make significant estimates and assumptions related to forecasts of revenue growth rates, EBITDA (earnings before interest, income taxes, and depreciation and amortization) margins, and a discount rate.

The determination of fair value using the market multiple model requires management to make significant assumptions related to revenue and EBITDA multiples.

The fair value of the Company’s hospital reporting unit exceeded the carrying value as of the annual measurement date of October 31 st and, therefore, no impairment was recognized.

Given the significant estimates and assumptions management makes to estimate the fair value of the hospital reporting unit and the sensitivity of such assumptions, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts of future revenues, EBITDA margins, and revenue and EBITDA multiples, and the selection of the discount rates for the hospital reporting unit required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the fair value of the hospital reporting unit included the following, among others:

• We tested the effectiveness of controls over the Company’s evaluation of goodwill impairment, including the controls over the determination of the fair value of the reporting unit.

• We evaluated the reasonableness of revenue and EBITDA growth in management's forecasts by evaluating historical forecasts to actual results and comparing the forecasts used in the income approach to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in Company’s press releases as well as in analyst and industry reports of the Company and companies in its peer group.

• With the assistance of our fair value specialists, we evaluated the discount rate, including developing a range of independent estimates, and comparing those to the discount rate selected by management.

• With the assistance of fair value specialists, we evaluated the revenue and EBITDA multiples in the market approach and performed the following:

o We evaluated the valuation methodology and calculations in the market approach.

o We independently calculated the revenue and EBITDA multiples of the Company and compared them to the multiples selected by management.

o We evaluated the weighting of the revenue and EBITDA multiples in determining the fair value calculated in the market approach.

/s/ Deloitte & Touche LLP

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Net operating revenues

Operating costs and expenses:

Operating expenses:

Salaries and benefits

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Impairment and (gain) loss on sale of businesses, net

Total operating costs and expenses

Total operating expenses

Income from operations

Interest expense, net of interest income of $ 2 in both 2023

and 2022 and $ 3 in 2021

(Gain) loss from early extinguishment of debt

Gain on sale of equity interests in Macon Healthcare, LLC

Interest expense, net of interest income of $ 3 , $ 2 and $ 2 in 2024, 2023

and 2022, respectively

Gain from early extinguishment of debt

Gain from CoreTrust Transaction

Equity in earnings of unconsolidated affiliates

Income before income taxes

(Loss) income before income taxes

Provision for income taxes

Net (loss) income

Net income attributable to noncontrolling interests

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(In millions)

Net (loss) income

Other comprehensive income (loss), net of income taxes:

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Other comprehensive income (loss)

Comprehensive income

Comprehensive (loss) income

Comprehensive income attributable to noncontrolling interests

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CONSOLIDATED B ALANCE SHEETS

December 31, 2024

December 31, 2023

(In millions, except share data)

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Purchase of subsidiary shares from noncontrolling interests

Other reclassifications of noncontrolling interests

Disposition of less-than-wholly owned hospital

Noncontrolling interests in acquired entity

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Purchase of subsidiary shares from noncontrolling interests

Other reclassifications of noncontrolling interests

Noncontrolling interests in acquired entity

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Other reclassifications of noncontrolling interests

Disposition of less-than-wholly owned hospital

Noncontrolling interests in acquired entity

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vested shares

Issuance of common stock in connection with the exercise

of stock options

Stock-based compensation

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Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by

(used in) operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by

operating activities:

Depreciation and amortization

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Impairment and (gain) loss on sale of businesses, net

(Gain) loss from early extinguishment of debt

Gain on sale of equity interests in Macon Healthcare, LLC

Gain from early extinguishment of debt

Gain from CoreTrust Transaction

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Supplies, prepaid expenses and other current assets

Repayment/derecognition of Medicare accelerated payments

Accounts payable, accrued liabilities and income taxes

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

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Purchases of investments in unconsolidated affiliates

Proceeds from sale of equity interests in Macon Healthcare, LLC

Distribution of CoreTrust Transaction proceeds

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Interest payments

Income tax (payments) refunds, net

Income tax payments, net of refunds

See accompanying notes to the consolidated financial statements.

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and its subsidiaries (collectively the “Company”) own, lease and operate general acute care hospitals as well as outpatient facilities in communities across the country.

As of December 31, 2023, the Company’s subsidiaries own or lease 71 affiliated hospitals, with approximately 12,000 beds, and operate more than 1,000 sites of care, i ncluding physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers.

At December 31, 2024, the Company’s subsidiaries own or lease 76 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.

Effective December 31, 2024, the count of affiliated hospitals was updated to separately distinguish facilities providing inpatient, acute-care services other than on the primary hospital campus.

Throughout these notes to the consolidated financial statements, Community Health Systems, Inc.

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The hospitals, operations and businesses described in this filing are owned and operated, and management services provided, by distinct and indirect subsidiaries of Community Health Systems, Inc.

As of December 31, 2023 , Indiana, Alabama, Texas and Florida represent the only areas of significant geographic concentration.

At December 31, 2024 , Indiana, Alabama, Texas and Florida represent the only areas of significant geographic concentration.

Net operating revenues generated by the Company’s hospitals in Indiana, as a percentage of consolidated net operating revenues, were 16.7 % in 2024 , 17.1 % in 2023 , and 17.3 % in 2022 .

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All intercompany accounts, profits and transactions have been eliminated.

Noncontrolling interests in less-than-wholly-owned consolidated subsidiaries of the Parent Company are presented as a component of total equity to distinguish between the interests of the Parent Company and the interests of the noncontrolling owners.

Noncontrolling interests in less-than-wholly-owned consolidated subsidiaries of the Parent Company are presented as a component of total equity in the consolidated balance sheets to distinguish between the interests of the Parent Company and the interests of the noncontrolling owners.

Revenues, expenses and income from these subsidiaries are included in the consolidated amounts as presented in the consolidated statements of (loss) income, along with a net income measure that separately presents the amounts attributable to the controlling interests and the amounts attributable to the noncontrolling interests for each of the periods presented.

Noncontrolling interests that are redeemable or may become redeemable at a fixed or determinable price at the option of the holder or upon the occurrence of an event outside of the control of the Company are presented in mezzanine equity in the consolidated balance sheets.

Reclassifications .

Certain prior period amounts have been reclassified to conform to the current period presentation within these notes to the consolidated financial statements.

Cost of Revenue .

Substantially all of the Company’s operating costs and expenses are “cost of revenue” items.

Operating costs that could be classified as general and administrative by the Company would include the Company’s corporate office costs at its Franklin, Tennessee office, which were collectively $ 248 million, $ 229 million and $ 222 million for the years ended December 31, 2023, 2022 and 2021 , respectively.

Substantially all of the Company’s operating expenses are “cost of revenue” items.

Operating expenses that could be classified as general and administrative by the Company would include the Company’s corporate office costs at its Franklin, Tennessee office, which were $ 304 million, $ 248 million and $ 229 million for the years ended December 31, 2024, 2023 and 2022 , respectively.

Included in these corporate office costs is stock-based compensation of $ 17 million, $ 22 million and $ 20 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The increase in corporate office costs during the year ended December 31, 2024 , compared to the same period in 2023, is primarily due to the impact of certain non-recurring adjustments.

Cash Equivalents .

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Trading securities are reported at fair value with unrealized gains and losses included in earnings.

Other comprehensive income (loss), net of tax, included an unrealized gain of $ 6 million and unrealized losses of $ 17 million and $ 5 million during the years ended December 31, 2023, 2022 and 2021 , respectively.

Other comprehensive income (loss), net of tax, included unrealized gains of $ 6 million and an unrealized loss of $ 17 million during the years ended December 31, 2023 and 2022, respectively.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

comprehensive income or loss resulting from unrealized gains and losses on marketable securities for the year ended December 31, 2024 .

Property and Equipment .

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however, maintenance and repairs which do not improve or extend the useful lives of the respective assets are charged to operations as incurred.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Interest capitalized related to construction in progress was $ 17 million, $ 13 million and $ 9 million for the years ended December 31, 2024, 2023 and 2022 , respectively.

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Currently, several states utilize supplemental reimbursement programs for the purpose of providing reimbursement to providers that is not specifically tied to an individual’s care, some of which offsets a portion of the cost of providing care to Medicaid and indigent patients.

These programs are authorized by Centers for Medicare & Medicaid Services (“CMS”) and are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers.

The programs are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers.

The programs are generally authorized by the Centers for Medicare & Medicaid Services (“CMS”) for a specified period of time and require CMS’s approval to be extended.

Under these supplemental programs, the Company recognizes revenue and related expenses in the period in which amounts are estimable and payment is reasonably assured.

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Taxes or other program-related costs are reflected in other operating expenses.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company’s net operating revenues during the years ended December 31, 2024, 2023 and 2022 have been presented in the following table based on an allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage (in millions):

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Managed Care and other third-party payors

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Patient Accounts Receivable

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Final settlements for some payors and programs are subject to adjustment based on administrative review and audit by third parties.

As a result of these final settlements, the Company has recorded amounts due to third-party payors of $ 97 million and $ 101 million as of December 31, 2023 and 2022 , respectively, and these amounts are included in accrued liabilities-other in the accompanying consolidated balance sheets.

Amounts due from third-party payors were $ 130 million and $ 97 million as of December 31, 2023 and 2022 , respectively, and are included in other current assets in the accompanying consolidated balance sheets.

As a result of these final settlements, the Company has recorded amounts due to third-party payors of $ 125 million and $ 97 million at December 31, 2024 and 2023 , respectively, and these amounts are included in accrued liabilities-other in the accompanying consolidated balance sheets.

Amounts due from third-party payors were $ 161 million and $ 130 million at December 31, 2024 and 2023 , respectively, and are included in other current assets in the accompanying consolidated balance sheets.

Substantially all Medicare and Medicaid cost reports are final settled through 2020.

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The estimated cost of these charity care services was determined using a ratio of cost to gross charges and applying that ratio to the gross charges associated with providing care to charity patients for the period.

The Company determines amounts that qualify for charity care based on the patient’s household income relative to the federal poverty level guidelines, as established by the federal government.

The Company updated its policy during the three months ended March 31, 2022 in a manner which increased the number of accounts qualifying for charity care.

This resulted in an increase in charity care services during the year ended December 31, 2022, compared to the same period in 2021.

Leases are recorded in the consolidated balance sheets through recognition of a liability for the discounted present value of future fixed lease payments and a corresponding ROU asset.

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Leases with an initial term of 12 months or less that do not have an option to purchase the underlying asset that is deemed reasonably certain to be exercised are not recorded in the consolidated balance sheets;

rather, rent expense for these leases is recognized on a straight-line basis over the lease term, or when incurred if a month-to-month lease.

rather, rent expense for these leases is recognized on a straight-line basis over the lease term, or when

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

incurred if a month-to-month lease.

When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments.

2 unchanged sentences

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Physician Income Guarantees .

3 unchanged sentences

Adjustments to the ultimate value of the guarantee paid to physicians are recognized in the period that the change in estimate is identified.

As of December 31, 2023 and 2022 , the unamortized portion of these physician income guarantees was $ 9 million and $ 12 million, respectively, and is recorded in other assets in the consolidated balance sheets.

At December 31, 2024 and 2023 , the unamortized portion of these physician income guarantees was $ 8 million and $ 9 million, respectively, and is recorded in other assets in the consolidated balance sheets.

Concentrations of Credit Risk .

1 unchanged sentence

Because of the economic diversity of the Company’s facilities and non-governmental third-party payors, Medicare represents the only significant concentration of credit risk from payors.

Accounts receivable, net of contractual allowances, from Medicare was $ 194 million and $ 198 million at December 31, 2023 and 2022 , respectively, representing 6 % of consolidated net accounts receivable at both December 31, 2023 and 2022 .

Accounts receivable, net of contractual allowances, from Medicare was $ 175 million and $ 194 million at December 31, 2024 and 2023, respectively, repre senting 5 % and 6 % of consol idated net accounts receivable at December 31, 2024 and 2023 , respectively.

Accounting for the Impairment or Disposal of Long-Lived Assets.

During the year ended December 31, 2024, the Company recorded a net expense of approximately $ 301 million, comprised of (i) an approximate $ 263 million impairment charge recorded to reduce the carrying value of several assets that were idled, disposed of or which were previously classified as held-for-sale, (ii) an approximate $ 34 million impairment charge recorded to reduce the carrying value of a hospital that was deemed held-for-sale based on the difference between carrying value of the hospital disposal group compared to the estimated fair value less costs to sell, and (iii) an approximate $ 8 million impairment charge to adjust the carrying value of long-lived assets at a hospital that was sold at a sales price below carrying value, partially offset by a gain of approximately $ 4 million related to the sale of one hospital.

During the year ended December 31, 2024 , approximately $ 111 million of goodwill was allocated from the hospital operations reporting unit associated with the disposal groups for which impairment charges or a gain on sale was recorded during the period.

During the year ended December 31, 2023, the Company recorded a net gain of approximately $ 87 million, comprised of a gain of $ 145 million related to the sale of five hospitals and the sale of a majority interest in one hospital, offset by (i) an approximate $ 49 million impairment charge to adjust the carrying value of long-lived assets at three hospitals that were sold at a sales price below carrying value, and (ii) an approximate $ 9 million impairment charge recorded to reduce the carrying value of several assets that were idled, disposed of or held-for-sale.

During the year ended December 31, 2023, approximately $ 186 million of goodwill was allocated from the hospital operations reporting unit associated with the disposal groups for which impairment charges or a gain on sale was recorded during the period.

During the year ended December 31, 2022, the Company recorded an impairment charge of approximately $ 71 million, of which (i) approximately $ 7 million was recorded to adjust the carrying value of long-lived assets at hospitals and related businesses that were sold at a sales price below carrying value, (ii) approximately $ 44 million was recorded to reduce the carrying value of closed hospitals to estimated fair value less costs to sell, (iii) approximately $ 9 million was recorded related to the expiration or planned non-renewal of leases to operate certain hospitals, and (iv) approximately $ 11 million was recorded to reduce the carrying value of several assets that were either idled, disposed or held-for-sale.

Income Taxes.

3 unchanged sentences

Other comprehensive loss is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

Supplier Finance Program.

The Company has an agreement with a third-party financial institution that allows participating suppliers the ability to finance payment obligations from the Company.

The Company is not party to the agreements among suppliers and the third-party financial institution and does not receive compensation from this arrangement.

The Company’s obligation to its suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decision to finance amounts under the arrangement.

The Company has not pledged assets as security or provided guarantees as part of this program.

The Company’s outstanding payment obligations under the supplier finance program, which are included in accounts payabl e in the Company’s consolidated balance sheets, totaled $ 3 million, $ 3 million and $ 9 million at December 31, 2024, 2023 and 2022 , respectively.

Payment obligations under the program average approximately $ 25 million to $ 35 million per quarter and are timely settled such that the inflows into the program approximate the outflows in each period presented.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Segment Reporting .

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The Company operates a single operating segment represented by hospital operations (which includes the Company’s acute care hospitals and related healthcare entities that provide inpatient and outpatient healthcare services).

CO VID-19 Pandemic.

COVID-19 Pandemic.

Various stimulus laws, including the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and the American Rescue Plan Act of 2021 (the “ARPA”), among others, authorized significant funding to be distributed to eligible healthcare providers through the Public Health and Social Services Emergency Fund (the “PHSSEF”).

Various stimulus laws, including the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and the American Rescue Plan Act of 2021, among others, authorized significant funding to be distributed to eligible healthcare providers through the Public Health and Social Services Emergency Fund (the “PHSSEF”).

PHSSEF payments were intended to compensate healthcare providers for lost revenues and incremental expenses incurred in response to the COVID-19 pandemic and are not required to be repaid, provided that recipients attest to and comply with certain terms and conditions, including audit and reporting requirements.

Various state and local programs also exist to provide relief, either independently or through distribution of monies received via the CARES Act and other enacted federal legislation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company received pandemic relief fund payments through various federal, state and local programs of approximately $ 161 million and $ 58 million during the years ended December 31, 2022 and 2021.

Approximately $ 173 million and $ 148 million during the years ended December 31, 2022 and 2021, respectively, was recognized as pandemic relief funds within the consolidated statements of (loss) income.

The Company did not receive or recognize any significant level of payments or benefits under the CARES Act or other COVID-19 related stimulus and relief legislation during the year ended December 31, 2023 and does not expect to receive or recognize any significant level of payments or benefit under the CARES Act and other existing legislation related to COVID-19 in future periods.

The Company received pandemic relief fund payments through various federal, state and local programs of approximately $ 161 million during the year ended December 31, 2022.

Approximately $ 173 million was recognized as pandemic relief funds within the consolidated statements of (loss) income during the year ended December 31, 2022.

New Accounting Pronouncements .

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures.” This ASU includes additional requirements for the disclosure of significant segment expenses and segment measure(s) of profit or loss, as well as new disclosure requirements for entities with a single reportable segment and certain qualitative information about the chief operating decision maker.

This ASU is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024.

The amendments in this ASU must be applied retrospectively to all periods presented.

Early adoption is permitted.

The Company is currently evaluating the impact that adoption of this ASU will have on its consolidated financial statements.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740), Improvements to Income Tax Disclosures.” This ASU establishes new requirements for the categorization and disaggregation of information in the rate reconciliation as well as for disaggregation of income taxes paid.

Additionally, this ASU modifies and eliminates certain existing requirements for indefinitely reinvested foreign earnings and unrecognized tax benefits.

6 unchanged sentences

Amended and Restated 2009 Stock Option and Award Plan, which was most recently amended and restated as of March 22, 2023 and most recently approved by the Company’s stockholders at the annual meeting of stockholders held on May 9, 2023 (the “2009 Plan”).

The 2009 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code (“IRC”) and for the grant of stock options which do not so qualify, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance-based shares or units and other share awards.

The 2009 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code and for the grant of stock options which do not so qualify, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance-based shares or units and other share awards.

Persons eligible to receive grants under the 2009 Plan include the Company’s directors, officers, employees and consultants.

2 unchanged sentences

The exercise price of all options granted under the 2009 Plan is equal to the fair value of the Company’s common stock on the option grant date.

As of December 31, 2023 , 9,017,113 shares of unissued common stock were reserved for future grants under the 2009 Plan.

At December 31, 2024 , 3,867,118 shares of unissued common stock were reserved for future grants under the 2009 Plan.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table reflects the impact of total compensation expense related to stock-based equity plans on the reported operating results for the respective periods (in millions):

Year Ended December 31,

Effect on income before income taxes

Effect on net income

Effect on (loss) income before income taxes

Effect on net (loss) income

At December 31, 2024 , $ 19 million of unrecognized stock-based compensation expense related to outstanding unvested stock options, restricted stock and RSUs (the terms of which are summarized below) was expected to be recognized over a weighted-average period of 19 months.

1 unchanged sentence

There were no modifications to awards during the years ended December 31, 2024, 2023 and 2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The fair value of stock options was estimated using the Black Scholes option pricing model with the following assumptions and weighted-average fair values during the years ended December 31, 2024, 2023 and 2022:

2 unchanged sentences

84.3 % - 87.5 %

84.3 % - 88.9 %

Expected dividends

2 unchanged sentences

1.5 % - 1.6 %

0.3 % - 0.9 %

In determining the expected term, the Company examined concentrations of option holdings and historical patterns of option exercises and forfeitures, as well as forward-looking factors, in an effort to determine if there were any discernible employee populations.

From this analysis, in determining the expected term for the year ended December 31, 2023, the Company identified one population, consisting of persons receiving grants of stock options.

Additionally, in determining the expected term for the years ended December 31, 2022 and 2021, two populations were identified, one consisting of certain senior executives who have since retired as executive officers, and the other consisting of substantially all other recipients.

The expected volatility rate was estimated based on historical volatility.

In determining expected volatility, the Company also reviewed the market-based implied volatility of actively traded options of its common stock and determined that historical volatility utilized to estimate the expected volatility rate did not differ significantly from the implied volatility.

The expected term computation is based on historical exercise and cancellation patterns and forward-looking factors, where present, for each population identified.

From this analysis, in determining the expected term for the years ended December 31, 2024 and 2023, the Company identified one population, consisting of persons receiving grants of stock options.

Additionally, in determining the expected term for the year ended December 31, 2022, two populations were identified, one consisting of certain senior executives who have since retired as executive officers, and the other consisting of substantially all other recipients.

The computation of expected term was performed using the simplified method for all stock options granted in the periods presented.

The simplified method was used as a result of the Company determining that historical exercise data does not provide a reasonable basis for the expected term of its grants, due primarily to the limited number of stock option exercises that have occurred.

The risk-free interest rate is based on the U.S.

2 unchanged sentences

The Company adjusts the estimated forfeiture rate to its actual experience.

The expected volatility rate was estimated based on historical volatility.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Options outstanding and exercisable under the 2009 Plan as of December 31, 2024, and changes during each of the years in the three-year period prior to December 31, 2024, were as follows (in millions, except share and per share data):

10 unchanged sentences

This amount changes based on the market value of the Company’s common stock.

The aggregate intrinsic value of options exercised during the years ended December 31, 2023, 2022 and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2021 was less than $ 1 million for all three years.

The aggregate intrinsic value of options vested and expected to vest approximates that of the outstanding options.

There were no stock option exercises during the year ended December 31, 2024.

The aggregate intrinsic value of options exercised during the years ended December 31, 2023 and 2022 w as less than $ 1 million for both years.

Th e aggregate intrinsic value of options vested and expected to vest approximates that of the outstanding options.

The Company has also awarded restricted stock under the 2009 Plan to employees of certain subsidiaries.

6 unchanged sentences

Notwithstanding the above-mentioned performance objectives and vesting requirements, the restrictions with respect to restricted stock granted under the 2009 Plan may lapse earlier in the event of death, disability, change in control of the Company or, other than for performance-based awards, termination of employment by the Company for any reason other than for cause of the holder of the restricted stock.

On March 1, 2023, restricted stock awards subject to performance objectives granted on March 1, 2020 vested at 100 % of the shares originally granted based on the Company’s cumulative performance compared to objectives for the 2020 through 2022 performance period.

On March 1, 2024, restricted stock awards subject to performance objectives granted on March 1, 2021 vested based on the Company’s cumulative performance compared to performance objectives for the 2021 through 2023 performance period, which were set prior to the date of grant.

Such awards vested at 80 % of the number of shares originally granted to the Company’s then executive chairman, chief executive officer and chief financial officer based on the performance objectives applicable to the then executive chairman, chief executive officer and chief financial officer, and at 100 % of the number of shares originally granted to other senior executives based on the performance objectives applicable to such other senior executives.

Restricted stock awards subject to performance objectives that have not yet been satisfied are not considered outstanding for purposes of determining diluted earnings per share unless the performance objectives have been satisfied on the basis of results through the end of each respective reporting period.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Restricted stock outstanding under the 2009 Plan as of December 31, 2024, and changes during each of the years in the three-year period prior to December 31, 2024, were as follows:

7 unchanged sentences

Each of the Company’s then serving non-management directors received grants under the 2009 Plan of 62,718 RSUs, 29,268 RSUs and 17,682 RSUs on March 1, 2024, 2023 and 2022, respectively.

Both the March 2023 and 2022 grants had a grant date fair value of approximately $ 180,000 and the March 2021 grant had a fair value of approximately $ 170,000 .

In addition to the grants set forth above, on March 1, 2023, the non-employee Chairman of the Board of Directors was awarded an additional RSU grant of 43,089 RSUs with a grant date fair value of approximately $ 265,000 as additional compensation for serving as Chairman of the Board of Directors.

Vesting of these RSUs occurs in one-third increments on each of the first three anniversaries of the award date or upon the director’s earlier cessation of service on the board, other than for cause.

The March 2024, 2023 and 2022 grants each had a grant date fair value of approximately $ 180,000 .

In addition to the grants set forth above, on March 1, 2024 and 2023, the Chairman of the Board of Directors was awarded an additional grant of 92,334 RSUs and 43,089 RSUs, respectively, each with a grant date fair value of approximately $ 265,000, as additional compensation for serving as Chairman of the Board of Directors.

Pursuant to the Company’s non-management director compensation program, on June 1, 2024, a new non-management director, who was elected to the Board of Directors at the Annual Meeting of the Company’s stockholders on May 7, 2024, received a grant of 62,718 RSUs (the same number of RSUs granted to the other non-management directors on March 1, 2024), which had a grant date fair value of approximately $ 248,000 .

Vesting of RSUs granted to non-management directors occurs in one-third increments on each of the first three anniversaries of the award date or upon the director’s earlier cessation of service on the Board of Directors, other than for cause.

Each non-management director may elect, prior to the beginning of the calendar year in which the award is granted, to defer the receipt of shares of the Company’s common stock issuable upon vesting until either his or her (i) separation from service with the Company or (ii) attainment of an age specified in advance by the non-management director.

A total of four directors elected to defer the receipt of RSUs granted on March 1, 2021 and March 1, 2023 to a future date and a total of three directors elected to defer the receipt of RSUs granted on March 1, 2022 to a future date.

A total of five directors elected to defer the receipt of shares of the Company’s common stock upon vesting of the RSUs granted on March 1, 2024 to a future date and the new non-management director elected to defer the receipt of shares of the Company’s common stock upon vesting of the RSUs granted on June 1, 2024 to a future date.

A total of four directors elected to defer the receipt of shares of the Company’s common stock upon vesting of the RSUs granted on March 1, 2023 to a future date, and a total of three directors elected to defer the receipt of shares of the Company’s common stock upon vesting of the RSUs granted on March 1, 2022 to a future date.

COMMUNITY HEALTH SYSTEMS, INC.

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Goodwill is not recognized in an asset acquisition.

During the years ended December 31, 2023, 2022 and 2021 , one or more subsidiaries of the Company paid approximately $ 38 million, $ 9 million and $ 3 million, respectively, to acquire the operating assets and related businesses of certain physician practices, clinics, ambulatory surgery centers and other ancillary businesses that operate within the communities served by the Company’s affiliated hospitals.

During the year ended December 31, 2023 , a majority of the amount paid related to the Company's purchase of certain assets from American Physician Partners (“APP”) for approximately $ 20 million.

During the years ended December 31, 2024, 2023 and 2022 , one or more subsidiaries of the Company paid approximately $ 25 million, $ 38 million and $ 9 million, respectively, to acquire the operating assets and related businesses of certain physician practices, clinics, ambulatory surgery centers, urgent care centers and other ancillary businesses that operate within the communities served by the Company’s affiliated hospitals.

During the year ended December 31, 2024, a majority of the amount paid related to the Company's purchase of a group of urgent care centers operating in and around Tucson, Arizona.

During the year ended December 31, 2023, a majority of the amount paid related to the Company’s purchase of certain assets from American Physician Partners (“APP”).

This transaction, which resulted in the Company recording a definite-lived intangible asset for the acquisition of an assembled workforce, was accounted for as an asset acquisition.

In connection with these acquisitions, inclusive of APP, the Company allocated the purchase price to property and equipment, working capital, intangible assets, noncontrolling interests and goodwill.

In connection with these acquisitions, inclusive of the urgent care centers and APP, the Company allocated the purchase price to property and equipment, working capital, intangible assets, noncontrolling interests and goodwill.

COMMUNITY HEALTH SYSTEMS, INC.

4 unchanged sentences

2024 Divestitures:

Tennova Healthcare - Cleveland

Hamilton Health Care Systems, Inc.

Cleveland, TN

August 1, 2024

Davis Regional Medical Center

Iredell Memorial Hospital

Statesville, NC

October 1, 2024

2023 Divestitures:

Greenbrier Valley Medical Center

34 unchanged sentences

SSM Health Care of Oklahoma, Inc.

2021 Divestitures:

Lea Regional Medical Center

Covenant Health System

January 1, 2021

Tennova Healthcare - Tullahoma

Vanderbilt University Medical Center

Tullahoma, TN

January 1, 2021

Tennova Healthcare - Shelbyville

Vanderbilt University Medical Center

Shelbyville, TN

January 1, 2021

Northwest Mississippi Medical Center

Delta Health System

Clarksdale, MS

February 1, 2021

AllianceHealth Midwest

SSM Health Care of Oklahoma, Inc.

Midwest City, OK

April 1, 2021

On February 28, 2023, the Company entered into a definitive agreement for the sale of substantially all of the assets of Lake Norman Regional Medical Center ( 123 licensed beds) in Mooresville, North Carolina, and Davis Regional Medical Center ( 144 licensed beds) in Statesville, North Carolina, to Novant Health, Inc.

In January 2024, the Federal Trade Commission filed a Complaint for Temporary Restraining Order and Preliminary Injunction seeking to enjoin the consummation of the aforementioned sale of Lake Norman Regional Medical Center and Davis Regional Medical Center to Novant Health, Inc.

An administrative merits hearing on such matter is scheduled for April 29, 2024.

These hospitals were classified as held-for-sale as of December 31, 2023.

The following table discloses amounts included in the consolidated balance sheet for hospitals and other assets classified as held-for-sale as of December 31, 2023 and 2022 (in millions).

Other assets, net primarily includes goodwill and the net property and equipment for hospitals held-for-sale.

No hospitals were classified as held-for-sale as of December 31, 2021 and no divestitures or potential divestitures meet the criteria for reporting as a discontinued operation as of December 31, 2023, 2022, or 2021 .

Effective August 1, 2024, the Company completed the sale of Tennova Healthcare – Cleveland to Hamilton Health Care Systems, Inc.

In addition to the base purchase price of approximately $ 160 million which was received at a preliminary closing on July 31, 2024, the Company is entitled to receive additional cash consideration contingent upon potential modifications to supplemental reimbursement programs as more specifically provided in the asset purchase agreement underlying the transaction.

Such modifications are not complete as of December 31, 2024 and an estimate of consideration that may be received by the Company in 2025 has not been recognized.

On November 7, 2024, a subsidiary of the Company entered into a definitive agreement to sell its 50 % interest in Merit Health Biloxi ( 153 licensed beds) in Biloxi, Mississippi, to an affiliate of Memorial Hospital of Gulfport, which had a preexisting 50 % ownership interest in Merit Health Biloxi.

This disposition was completed on February 1, 2025, as further described in Note 17.

On November 22, 2024, the Company entered into a definitive agreement to sell ShorePoint Health Port Charlotte ( 254 licensed beds) in Port Charlotte, Florida, certain assets of ShorePoint Health Punta Gorda ( 208 licensed beds) in Punta Gorda, Florida, and certain ancillary businesses related to such facilities to subsidiaries of Adventist Health System Sunbelt Healthcare Corporation.

Due to the effects of Hurricane Helene and Hurricane Milton, the Punta Gorda hospital has indefinitely suspended inpatient operations.

On December 11, 2024, the Company entered into a definitive agreement to sell Lake Norman Regional Medical Center ( 123 licensed beds) in Mooresville, North Carolina, and related businesses, to Duke University Health System, Inc.

The hospitals for which definitive agreements had been reached but for which the sale was not complete, were classified as held-for-sale at December 31, 2024.

The following table discloses amounts included in the consolidated balance sheet for hospitals classified as held-for-sale as of December 31, 2024 and 2023 (in millions).

Other current assets primarily includes patient accounts receivable and prepaid expenses.

Other assets, net, primarily includes the net property and equipment and goodwill for the hospitals held-for-sale.

Accrued liabilities primarily includes lease obligations for the hospitals held-for-sale.

No divestitures or potential divestitures meet the criteria for reporting as a discontinued operation at December 31, 2024, 2023, or 2022 .

Other current assets

1 unchanged sentence

Accrued liabilities

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

During the three months ended September 30, 2022, the Company completed the closure of ShorePoint Health Venice hospital ( 312 licensed beds) in Venice, Florida.

3 unchanged sentences

The Company recorded an impairment charge of approximately $ 15 million during the year ended December 31, 2022, to adjust the fair value of the long-lived assets of this hospital, including property and equipment and capitalized software costs, based on their estimated fair value.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On December 31, 2022, the lease for AllianceHealth Clinton ( 56 licensed beds) in Clinton, Oklahoma, expired and was not renewed.

1 unchanged sentence

GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the years ended 2023 and 2022 are as follows (in millions):

The changes in the carrying amount of goodwill for the years ended December 31, 2024 and 2023 are as follows (in millions):

Balance, beginning balance

4 unchanged sentences

Accumulated impairment losses

Goodwill allocated to hospitals divested or held-for-sale reflects the net activity of changing the classification of entities as held-and-used or held-for-sale during the year ended December 31, 2024.

Goodwill is allocated to each identified reporting unit, which is defined as an operating segment or one level below the operating segment (referred to as a component of the entity).

5 unchanged sentences

The cash flow forecasts are adjusted by an appropriate discount rate based on the Company’s estimate of a market participant’s weighted-average cost of capital.

These models are both based on the Company’s best estimate of future revenues and operating costs and are reconciled to the Company’s consolidated market capitalization, with consideration of the amount a potential acquirer would be required to pay, in the form of a control premium, in order to gain sufficient ownership to set policies, direct operations and control management decisions.

These models are both based on the Company’s best estimate of future revenues and operating expenses and are reconciled to the Company’s consolidated market capitalization, with consideration of the amount a potential acquirer would be required to pay, in the form of a control premium, in order to gain sufficient ownership to set policies, direct operations and control management decisions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The determination of fair value in the Company’s goodwill impairment analysis is based on an estimate of fair value for the reporting unit utilizing known and estimated inputs at the evaluation date.

3 unchanged sentences

The determination of fair value of the Company’s hospital operations reporting unit as part of its goodwill impairment measurement represents a Level 3 fair value measurement in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Intangible Assets

During the year ended December 31, 2023 , the Company acquired goodwill and a definite-lived intangible asset for the acquisition of an assembled workforce.

No intangible assets other than goodwill were acquired during the year ended 2022 .

During the years ended December 31, 2024 and 2023, the Company acquired goodwill as well as definite-lived intangible assets for the acquisition of assembled workforces.

The gross carrying amount of the Company’s other intangible assets subject to amortization was $ 28 million and $ 27 million at December 31, 2024 and 2023 , respectively, and the net carrying amount was $ 15 million and $ 20 million at December 31, 2024 and 2023 , respectively.

2 unchanged sentences

The Company’s intangible assets include an assembled workforce and various contract-based intangible assets related to operating licenses, management contracts, or non-compete agreements entered into in connection with prior acquisitions.

The weighted-average remaining amortization period for the intangible assets subject to amortization is approximately three years.

The weighted-average remaining amortization period for the intangible assets subject to amortization is approximately two years.

There are no expected residual values related to these intangible assets.

Amortization expense on these intangible assets was $ 5 million, $ 1 million and less than $ 1 million during the years ended December 31, 2023, 2022 and 2021 , respectively.

Amortization expense on these intangible assets was $ 9 million, $ 5 million and $ 1 million during the years ended December 31, 2024, 2023 and 2022 , respectively.

Amortization expense on intangible assets is estimated to be $ 9 milli on, $ 5 million and $ 1 million in 2025, 2026 and 2027, respectively.

4 unchanged sentences

Amortization expense on capitalized internal-use software was $ 80 million, $ 80 million and $ 85 million during the years ended December 31, 2024, 2023 and 2022 , respectively.

Amortization expense on capitalized internal-use software is estimated to be $ 57 million in 2024, $ 39 million in 2025, $ 27 million in 2026, $ 12 million in 2027, $ 7 million in 2028 and $ 2 million thereafter.

Amortization expense on capitalized internal-use software is estimated to be $ 51 million in 2025, $ 39 million in 2026, $ 17 million in 2027, $ 10 million in 2028, $ 2 million in 2029 and less than $ 1 million thereafter.

The provision for income taxes consists of the following (in millions):

13 unchanged sentences

Amended return adjustments

Change in tax refunds

Permanent differences

Provision to return

Provision for income taxes and

1 unchanged sentence

The Company’s effective tax rates were ( 27.9 )%, 92.3 % and 48.7 % for the years ended December 31, 2024, 2023 and 2022, respectively.

The increase in the Company’s effective tax rate for the year ended December 31, 2023, when compared to the year ended December 31, 2022, was primarily due to non-deductible goodwill related to hospitals divested in 2023 and a decrease in income before taxes.

The increase in the Company’s effective tax rate for the year ended December 31, 2022, when compared to the year ended December 31, 2021, was primarily due to an increase in non-deductible interest for 2022 compared to 2021, compounded by an adverse change in the IRC Section 163(j) limit for deductible interest expense beginning in 2022.

The decrease in the Company’s effective tax rate for the year ended December 31, 2024, when compared to the year ended December 31, 2023, was primarily due to a decrease in non-deductible goodwill related to divested hospitals and a decrease in (loss) income before income taxes in 2024 compared to 2023.

The decrease in the Company’s effective tax rate for the year ended December 31, 2023, when compared to the year ended December 31, 2022, was primarily due to non-deductible goodwill related to hospitals divested in 2023 and a decrease in income before taxes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Deferred income taxes are based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities under the provisions of the enacted tax laws.

Deferred income taxes as of December 31, 2023 and 2022 consist of (in millions):

Deferred income taxes at December 31, 2024 and 2023 consist of (in millions):

Net operating loss and credit carryforwards

17 unchanged sentences

Total deferred income taxes

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company believes that the net deferred tax assets will ultimately be realized, except as noted below.

Its conclusion is based on its estimate of future taxable income and the expected timing of temporary difference reversal s.

The Company has gross state net operating loss carryforwards of approximately $ 9.9 billion, which expire from 2024 through 2043 .

The Company’s tax affected federal and state net operating loss and credit carryforwards are approximately less than $ 1 million and $ 533 million, respectively.

A valuation allowance of approximately $ 983 million has been recognized for state net operating loss carryforwards, state credit carryforwards and federal and state deferred tax assets that the Company does not expect to be able to realize.

The Company has gross federal net operating loss carryforwards of approximately $ 176 million and state net operating loss carryforwards of approximately $ 10.8 billion, which expire from 2025 through 2044 .

The Company’s tax affected federal and state net operating loss and credit carryforwards are approximately $ 37 million and $ 578 million, respectively.

A valuation allowance of approximately $ 1.2 billion has been recognized for federal and state net operating loss carryforwards, state credit carryforwards and federal and state deferred tax assets that the Company does not expect to be able to realize.

With respect to the deferred tax liability pertaining to intangibles, as included above, goodwi ll purchased in connection with certain of the Company’s business acquisitions is amortizable for income tax reporting purposes.

However, for financial reporting purposes, there is no corresponding amortization allowed with respect to such purchased goodwill.

The valuation allowance for federal and state jurisdictions where the Company concluded that the associated deferred tax assets would not be realized increased by $ 88 million and $ 66 million, respectively, for the year ended December 31, 2023 , and increased by $ 122 million and decreased by $ 108 million, respectively, for the year ended December 31, 2022.

The valuation allowance for federal and state jurisdictions where the Company concluded that the associated deferred tax assets would not be realized increased by $ 144 million and $ 91 million, respectively, for the year ended December 31, 2024 , and increased by $ 88 million and $ 66 million, respectively, for the year ended December 31, 2023.

The total amount of unrecognized benefit that would affect the effective tax rate, if recognized, was $ 42 million as of December 31, 2024 .

3 unchanged sentences

however, the Company does not anticipate the change will have a material impact on the Company’s consolidated results of operations or consolidated financial position.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following is a tabular reconciliation of the total amount of unrecognized tax benefit for the years ended December 31, 2024, 2023 and 2022 (in millions):

4 unchanged sentences

Unrecognized tax benefit, end of year

The Company’s income tax return for the 2018 tax year remains under examination by the Internal Revenue Service.

The Company’s income tax return for the 2018 tax year has been effectively settled with the Internal Revenue Service in 2024.

The settlement was not material to the Company’s consolidated results of operations or consolidated financial position.

The Company’s income tax return for the 2021 and 2022 tax years are under examination by the Internal Revenue Service.

The Company believes the result of this examination will not be material to its consolidated results of operations or consolidated financial position.

The Company has extended the federal statute of limitations through June 30, 2025 for Community Health Systems, Inc.

for the tax period ended December 31, 2018.

Cash paid for income taxes, net of refunds received, was $ 171 million, $ 91 million and $ 6 million during the years ended December 31, 2024, 2023 and 2022 , respectively.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

LONG-TERM DEBT

11 unchanged sentences

Finance lease and financing obligations

Unamortized deferred debt issuance costs and note discount

Unamortized deferred debt issuance costs

Current maturities

1 unchanged sentence

8% Senior Secured Notes due 2027

On March 6, 2019 , CHS/Community Health Systems, Inc.

(“CHS”) completed a private offering of $ 1.601 billion aggregate principal amount of the 8% Senior Secured Notes due March 15, 2026 (the “8% Senior Secured Notes due 2026”).

The net proceeds from this issuance were used to finance the repayment of approximately $ 1.557 billion aggregate principal amount of CHS’ then outstanding Term H Facility and related fees and expenses.

On November 19, 2019, CHS completed a tack-on offering of $ 500 million aggregate principal amount of the additional 2026 Notes, increasing the total aggregate principal amount of the 8% Senior Secured Notes due 2026 to $ 2.101 billion.

CHS used the proceeds from the additional 2026 Notes to repay amounts outstanding under the ABL Facility and redeem all $ 121 million aggregate principal amount of CHS’ then outstanding 7⅛% Senior Notes due 2020.

The additional 2026 Notes have identical terms, other than issue date, issue price and the date from which interest initially accrued, as the 8% Senior Secured Notes due 2026 issued on March 6, 2019.

The 8% Senior Secured Notes due 2026 bear interest at a rate of 8.000 % per annum, payable semi-annually in arrears on March 15 and September 15 of each year.

Interest on the 8% Senior Secured Notes due 2026 accrues from the initial issuance date of the 8% Senior Secured Notes due 2026.

Interest is calculated on the basis of a 360-day year comprised of 12 30-day months.

The 8% Senior Secured Notes due 2026 are scheduled to mature on March 15, 2026.

The 8% Senior Secured Notes due 2026 are unconditionally guaranteed on a senior-priority secured basis by the Company and each of the CHS current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS᾿ outstanding senior notes) and certain other long-term debt of CHS.

The 8% Senior Secured Notes due 2026 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 8% Senior Secured Notes due 2026.

After March 15, 2022, CHS is entitled, at its option, to redeem all or a portion of the 8% Senior Secured Notes due 2026 upon not less than 15 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the periods set forth below:

Redemption Price

March 15, 2023 to March 14, 2024

March 15, 2024 to March 14, 2026

COMMUNITY HEALTH SYSTEMS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

8% Senior Secured Notes due 2027

On November 19, 2019, CHS issued approximately $ 700 million aggregate principal amount of the 8% Senior Secured Notes due December 15, 2027 (the “8% Senior Secured Notes due 2027”) in connection with the 2019 Exchange Offer.

On November 19, 2019, CHS/Community Health Systems, Inc.

(“CHS”) issued approximately $ 700 million aggregate principal amount of the 8% Senior Secured Notes due December 15, 2027 (the “8% Senior Secured Notes due 2027”) in connection with the 2019 Exchange Offer.

No cash proceeds were received from the 2019 Exchange Offer.

4 unchanged sentences

The 8% Senior Secured Notes due 2027 are unconditionally guaranteed on a senior-priority secured basis by the Company and each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS᾿ outstanding senior notes) and certain other long-term debt of CHS.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The 8% Senior Secured Notes due 2027 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 8% Senior Secured Notes due 2027.

CHS may redeem some or all of the 8% Senior Secured Notes due 2027 at any time on or after December 15, 2022 upon not less than 15 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the periods set forth below:

Redemption Price

December 15, 2024 to December 14, 2027

5⅝% Senior Secured Notes due 2027

9 unchanged sentences

December 15, 2025 to December 14, 2027

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

During the year ended December 31, 2024 , the Company extinguished approximately $ 143 million principal value of the 5⅝ % Senior Secured Notes due 2027 through open market repurchases utilizing cash on hand.

6⅞% Senior Notes due 2028

6 unchanged sentences

The 6⅞% Senior Notes due 2028 are unconditionally guaranteed on a senior-priority unsecured basis by the Company and each of the CHS current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS᾿ outstanding senior notes) and certain other long-term debt of CHS.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

CHS may redeem some or all of the 6⅞% Senior Notes due 2028 at any time on or after April 1, 2023 upon not less than 15 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the periods set forth below:

2 unchanged sentences

April 1, 2025 to March 31, 2028

On December 7, 2020, CHS entered into a privately negotiated agreement with a multi-asset investment manager who has certain funds and accounts which are holders of the 6⅞% Senior Notes due 2028.

11 unchanged sentences

CHS is entitled, at its option, to redeem all or a portion of the 6% Senior Secured Notes due 2029 at any time prior to January 15, 2024, upon not less than 15 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 6% Senior Secured Notes due 2029 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 6% Senior Secured Notes due 2029.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

CHS may redeem up to 40 % of the aggregate principal amount of the 6% Senior Secured Notes due 2029 at any time prior to January 15, 2024 using the net proceeds from certain equity offerings at the redemption price of 106.000 % of the principal amount of the 6% Senior Secured Notes due 2029 redeemed, plus accrued and unpaid interest, if any.

3 unchanged sentences

January 15, 2026 to January14, 2029

COMMUNITY HEALTH SYSTEMS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

5¼% Senior Secured Notes due 2030

12 unchanged sentences

May 15, 2027 to May 14, 2030

COMMUNITY HEALTH SYSTEMS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

4¾% Senior Secured Notes due 2031

5 unchanged sentences

CHS is entitled, at its option, to redeem all or a portion of the 4 ¾% Senior Secured Notes due 2031 at any time prior to February 15, 2026 , upon not less than 15 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 4¾% Senior Secured Notes due 2031 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 4¾% Senior Secured Notes due 2031 .

CHS may redeem up to 40 % of the aggregate principal amount of the 4¾ % Senior Secured Notes due 2031 at any time prior to February 15, 2024 using the net proceeds from certain equity offerings at a redemption price of 104.750 % of the principal amount of the 4¾% Senior Secured Notes due 2031 redeemed, plus accrued and unpaid interest, if any.

In addition, any time prior to February 15, 2026, but not more than once during each 12 month period , CHS may redeem up to 10 % of the original aggregate principal amount of the 4¾ % Senior Secured Notes due 2031 at a redemption price equal to 103 % of the principal amount of the 4¾ % Senior Secured Notes due 2031 to be redeemed, plus accrued and unpaid interest, if any.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

A ny time prior to February 15, 2026, but not more than once during each 12 month period , CHS may redeem up to 10 % of the original aggregate principal amount of the 4¾ % Senior Secured Notes due 2031 at a redemption price equal to 103 % of the principal amount of the 4¾ % Senior Secured Notes due 2031 to be redeemed, plus accrued and unpaid interest, if any.

At any time and from time to time on or after February 15, 2026 , CHS may redeem the 4 ¾% Senior Secured Notes due 2031 in whole or in part, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 4¾% Senior Secured Notes due 2031 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the 12 month period beginning on February 15 of the years indicated below:

Redemption Price

February 15, 2026 to February 14, 2027

8 unchanged sentences

The 10 ⅞ % Senior Secured Notes due 2032 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 10⅞% Senior Secured Notes due 2032.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

CHS is entitled, at its option, to redeem all or a portion of the 10 ⅞ % Senior Secured Notes due 2032 at any time prior to February 15, 2027 , upon not less than 10 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 10⅞ % Senior Secured Notes due 2032 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 10⅞ % Senior Secured Notes due 2032 .

5 unchanged sentences

February 15, 2029 to January 14, 2032

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On June 5, 2024, CHS completed the offering of an additional $ 1.225 billion aggregate principal amount of its outstanding 10.875 % Senior Secured Notes due 2032 (the “Tack-On Notes”) at an issue price of 102.000 %, plus accrued and unpaid interest from December 22, 2023 to the closing date (which equaled approximately $ 60 million).

The Tack-On Notes are part of the same series as, and rank equally with, the 10⅞ % Senior Secured Notes due 2032 issued in December 2023.

Following the issuance of the Tack-On Notes, the total aggregate principal amount of outstanding 10⅞ % Senior Secured Notes due 2032 is $ 2.225 billion.

Proceeds from the offering of the Tack-On Notes, together with cash on hand, were used to redeem all $ 1.116 billion of the outstanding 8.000 % Senior Secured Notes due 2026 , to fund repurchases of the Company’s 6⅞ % Senior Notes due 2028 as noted below, to pay related fees and expenses and for general corporate purposes.

Approximately $ 98 million of the proceeds from the Tack-On Notes, was also used to extinguish $ 130 million principal value of the Company’s 6⅞ % Senior Notes due 2028 in a privately negotiated transaction.

6⅞% Junior-Priority Secured Notes due 2029

4 unchanged sentences

The 6⅞ % Junior-Priority Secured Notes due 2029 and the related guarantees are secured by shared (i) second-priority liens on the Non-ABL Priority Collateral that secures on a first-priority basis CHS’ senior-priority secured notes and (ii) third-priority liens on the ABL-Priority Collateral that secures on a first-priority basis the ABL Facility (and also secures on a second-priority basis CHS’ senior-priority secured notes), in each case subject to permitted liens described in the indenture governing the 6⅞ % Junior-Priority Secured Notes due 2029 .

At any time and from time to time prior to April 15, 2024 , CHS may redeem the 6 ⅞% Junior-Priority Secured Notes due 2029 in whole or in part, at its option, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to 100 % of the principal amount of the 6⅞% Junior-Priority Secured Notes due 2029 to be redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 6⅞% Junior-Priority Secured Notes due 2029 .

CHS may redeem up to 40 % of the aggregate principal amount of the 6⅞% Junior-Priority Secured Notes due 2029 at any time prior to April 15, 2024 using the net proceeds from certain equity offerings at a redemption price of 106.875 % of the principal amount of the 6⅞% Junior-Priority Secured Notes due 2029 redeemed, plus accrued and unpaid interest, if any.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

At any time and from time to time on or after April 15, 2024 , CHS may redeem the 6⅞ % Junior-Priority Secured Notes due 2029 in whole or in part, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 6⅞% Junior-Priority Secured Notes due 2029 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the 12 month period beginning on April 15 of the years indicated below:

Redemption Price

April 15, 2024 to April 14, 2025

7 unchanged sentences

The 6⅛% Junior-Priority Secured Notes due 2030 and the related guarantees are secured by shared (i) second-priority liens on the Non-ABL Priority Collateral and (ii) third-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 6⅛% Junior-Priority Secured Notes due 2030.

CHS is entitled, at its option, to redeem all or a portion of the 6⅛% Junior-Priority Secured Notes due 2030 at any time prior to April 1, 2025 , upon not less than 15 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 6⅛% Junior-Priority Secured Notes due 2030 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 6⅛% Junior-Priority Secured Notes due 2030.

CHS may redeem up to 40 % of the aggregate principal amount of the 6⅛% Junior-Priority Secured Notes due 2030 at any time prior to May 15, 2024 using the net proceeds from certain equity offerings at a redemption price of 106.125 % of the principal amount of the 6⅛% Junior-Priority Secured Notes due 2030 redeemed, plus accrued and unpaid interest, if any.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Junior-Priority Secured Notes due 2030 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 6⅛% Junior-Priority Secured Notes due 2030.

At any time and from time to time on or after April 1, 2025 , CHS may redeem the 6⅛ % Junior-Priority Secured Notes due 2030 in whole or in part, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 6⅛% Junior-Priority Secured Notes due 2030 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the 12 month period beginning on April 1 of the years indicated below:

3 unchanged sentences

April 1, 2027 to March 31, 2030

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

During the years ended December 31, 2024, 2023 and 2022, the Company extinguished a portion of certain series of its outstanding notes through open market repurchases, and privately negotiated repurchases with a limited number of holders, as follows (in millions):

5⅝ % Senior Secured Notes due 2027

6 ⅞% Senior Notes due 2028

5 unchanged sentences

Financing and repayment transactions discussed above, including open market and privately negotiated repurchases, resulted in a pre-tax and after-tax gain from early extinguishment of debt of $ 25 million and $ 27 million, respectively, for the year ended December 31, 2024 , a pre-tax and after-tax gain from early extinguishment of debt of $ 72 million and $ 61 million, respectively, for the year ended December 31, 2023 , a pre-tax and after-tax loss from early extinguishment of $ 253 million and $ 208 million, respectively, for the year ended December 31, 2022.

On November 22, 2021, the Company and CHS entered into an amendment and restatement agreement (the “Amendment”) to refinance and replace the asset-based loan (ABL) credit agreement (the “ABL Credit Agreement” and, as amended by the Amendment, the “Amended and Restated ABL Credit Agreement”), dated as of April 3, 2018, with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other agents party thereto.

Pursuant to the Amended and Restated ABL Credit Agreement, the lenders have extended to CHS a revolving asset-based loan facility in the maximum aggregate principal amount of $ 1.0 billion, subject to borrowing base capacity.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On June 5, 2024, the Company and CHS entered into an amendment and restatement agreement (the “Amendment”) to refinance and replace the amended and restated asset-based loan (“ABL”) credit agreement (the “ABL Credit Agreement” and, as amended by the Amendment, the “Amended and Restated ABL Credit Agreement”), dated as of November 22, 2021, with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other agents party thereto.

Pursuant to the Amended and Restated ABL Credit Agreement, the lenders have extended to CHS a revolving asset-based loan facility (the “ABL Facility”) in the maximum aggregate principal amount of $ 1.0 billion, subject to borrowing base capacity.

The ABL Facility includes borrowing capacity available for letters of credit of $ 200 million.

3 unchanged sentences

The issued letters of credit were primarily in support of potential insurance-related claims and certain bonds.

Letters of credit were reduced during the year ended December 31, 2024 by $ 15 million, primarily in relation to a professional liability claim that was settled and funded during the year ended December 31, 2024.

Borrowings under the ABL Facility bear interest at a rate per annum equal to an applicable percentage, plus, at the borrower’s option, either (a) a base rate or (b) the Federal Reserve’s secured overnight financing rate (“SOFR”).

1 unchanged sentence

The applicable commitment fee rate under the ABL Facility is determined based on average utilization as a percentage of the maximum commitment amount under the ABL Facility at a rate per annum of either 0.25 % or 0.375 % times the unused portion of the ABL Facility.

Principal amounts outstanding under the ABL Facility will be due and payable in full on November 22, 2026.

The ABL Facility includes a 91-day springing maturity applicable if more than $ 350 million in the aggregate principal amount of the 8% Senior Secured Notes due 2026, 5⅝% Senior Secured Notes due 2027 or any indebtedness incurred to refinance the foregoing are scheduled to mature or similarly become due on a date prior to November 22, 2026.

Principal amounts outstanding under the ABL Facility will be due and payable in full on June 5, 2029.

The ABL Facility includes a 91-day springing maturity applicable if more than $ 350 million in the aggregate principal amount of the 5⅝% Senior Secured Notes due 2027 or any indebtedness incurred to refinance the foregoing are scheduled to mature or similarly become due on a date prior to June 5, 2029.

In such event, principal amounts outstanding under the ABL Facility will be accelerated and all amounts outstanding under the ABL Facility will become immediately due and payable.

The ABL Facility contains customary representations and warranties, subject to limitations and exceptions, and customary covenants restricting the Company’s ability, subject to certain exceptions, to, among other things (1) declare dividends, make distributions or redeem or repurchase capital stock, (2) prepay, redeem or repurchase other debt, (3) incur liens or grant negative pledges, (4) make loans and investments and enter into acquisitions and joint ventures, (5) incur additional indebtedness or provide certain guarantees, (6) engage in mergers, acquisitions and asset sales, (7) conduct transactions with affiliates, (8) alter the nature of the Company’s, CHS’ or the guarantors’ businesses, (9) grant certain guarantees with respect to physician practices, (10) engage in

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

sale and leaseback transactions or (11) change the Company’s fiscal year.

The Company is also required to comply with a consolidated fixed coverage ratio, upon certain triggering events described below, and various affirmative covenants.

5 unchanged sentences

In addition, in the event the amount of borrowings and letters of credit outstanding at any time under the ABL Facility exceeds the borrowing base at such time, the Company will be required to, first, repay outstanding borrowings and, second, replace or cash collateralize outstanding letters of credit, in an aggregate amount sufficient to eliminate such excess.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Events of default under the ABL Facility include, but are not limited to, (1) CHS’ failure to pay principal, interest, fees or other amounts under the ABL Facility Agreement when due (taking into account any applicable grace period), (2) any representation or warranty proving to have been materially incorrect when made, (3) covenant defaults subject, with respect to certain covenants, to an available cure and applicable grace periods, (4) bankruptcy and insolvency events, (5) a cross default to certain other debt, (6) certain undischarged judgments (not paid within an applicable grace period), (7) a change of control (as defined), (8) certain ERISA-related defaults and (9) the invalidity or impairment of specified security interests, guarantees or subordination provisions in favor of the ABL agent or lenders under the ABL Facility.

As of December 31, 2023, the scheduled maturities of long-term debt outstanding, including finance lease and financing obligations for each of the next five years and thereafter are as follows (in millions):

At December 31, 2024, the scheduled maturities of long-term debt outstanding, including finance lease and financing obligations for each of the next five years and thereafter are as follows (in millions):

Year Ending December 31,

1 unchanged sentence

Deferred debt issuance costs

Unamortized note discount

Total long-term debt

The Company paid interest of $ 801 million, $ 835 million and approximately $ 778 million on borrowings during the years ended December 31, 2023, 2022 and 2021 , respectively.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company paid interest of approximately $ 741 million, $ 801 million and $ 835 million on borrowings during the years ended December 31, 2024, 2023 and 2022 , respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial instruments has been estimated by the Company using available market information as of December 31, 2023 and 2022, and valuation methodologies considered appropriate.

The fair value of financial instruments has been estimated by the Company using available market information at December 31, 2024 and 2023, and valuation methodologies considered appropriate.

The estimates presented in the table below are not necessarily indicative of amounts the Company could realize in a current market exchange (in millions):

19 unchanged sentences

GAAP fair value hierarchy as discussed in Note 8.

The estimated fair value for financial instruments with a fair value that does not equal its carrying value is considered a Level 1 valuation.

The estimated fair value

COMMUNITY HEALTH SYSTEMS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

for financial instruments with a fair value that does not equal its carrying value is considered a Level 1 valuation.

The Company utilizes the market approach and obtains indicative pricing through publicly available subscription services such as Bloomberg to determine fair values where relevant.

11 unchanged sentences

The carrying amount of the ABL Facility and all other debt approximates fair value due to the nature of these obligations.

COMMUNITY HEALTH SYSTEMS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Fair Value Hierarchy

12 unchanged sentences

There were no transfers between levels during the years ended December 31, 2024 or 2023.

The following table sets forth, by level within the fair value hierarchy, the financial assets recorded at fair value on a recurring basis as of December 31, 2023 and 2022 (in millions):

The following table sets forth, by level within the fair value hierarchy, the financial assets recorded at fair value on a recurring basis at December 31, 2024 and 2023 (in millions):

December 31, 2024

2 unchanged sentences

Trading securities

COMMUNITY HEALTH SYSTEMS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2023

6 unchanged sentences

The estimated fair values of these securities are determined using various valuation techniques, including a multi-dimensional relational model that incorporates standard observable inputs and assumptions such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids/offers and other pertinent reference data.

COMMUNITY HEALTH SYSTEMS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Supplemental information regarding the Company’s available-for-sale debt securities (all of which had no withdrawal restrictions) is set forth in the table below (in millions):

As of December 31, 2023:

At December 31, 2024:

Mortgage and asset-backed securities

Total available-for-sale debt securities

As of December 31, 2022:

At December 31, 2023:

Mortgage and asset-backed securities

Total available-for-sale debt securities

As of December 31, 2023 and 2022 , investments with aggregate estimated fair values of approximately $ 145 million ( 306 investments) and $ 169 million ( 348 investments), respectively, generated the gross unrealized losses disclosed in the above table.

At December 31, 2024 and 2023 , investments with aggregate estimated fair values of approximately $ 141 million ( 274 investments) and $ 145 million ( 306 investments), respectively, generated the gross unrealized losses disclosed in the above table.

At each reporting date, the Company performs an evaluation of impaired securities to determine if the unrealized losses are other-than-temporary.

This evaluation considers a number of factors including, but not limited to, the length of time and extent to which the fair value has been less than cost, and management’s ability and intent to hold the securities until fair value recovers.

Based on the results of this evaluation, management concluded that as of December 31, 2023 , there were no other-than-temporary losses related to available-for-sale debt securities.

Based on the results of this evaluation, management concluded that at December 31, 2024 , there were no other-than-temporary losses related to available-for-sale debt securities.

The recent declines in value of the securities and/or length of time they have been below cost, as well as the Company’s ability and intent to hold the securities for a reasonable period of time sufficient for a projected recovery of fair value, have caused management to conclude that the securities, that have generated gross unrealized losses, were not other-than-temporarily impaired.

Management will continue to monitor and evaluate the recoverability of the Company’s available-for-sale debt securities.

The contractual maturities of debt-based securities held by the Company as of December 31, 2023 and 2022, excluding mutual fund holdings, are set forth in the table below (in millions).

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The contractual maturities of debt-based securities held by the Company at December 31, 2024 and 2023, excluding mutual fund holdings, are set forth in the table below (in millions).

Expected maturities will differ from contractual maturities because the issuers of the debt securities may have the right to prepay their obligations without prepayment penalties.

10 unchanged sentences

Other investment income, which includes interest and dividends, related to all investment securities was $ 8 million, $ 7 million and $ 6 million for the years ended December 31, 2024, 2023 and 2022, respectively.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Net losses and gains recognized during the years ended December 31, 2024, 2023 and 2022 for investments in equity securities, which are broken out between investments sold during the year and investments held at the end of the year, are summarized in the table below (in millions):

1 unchanged sentence

Net gains and (losses) recognized during the year on equity securities

Net (losses) and gains recognized during the year on equity

Net gains and (losses) recognized during the year on equity

securities sold during the year

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All such options are at the Company’s discretion and are evaluated at the commencement of the lease, with only those that are reasonably certain of exercise included in determining the appropriate lease term.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The components of lease cost and rent expense for the years ended December 31, 2024, 2023 and 2022 are as follows (in millions):

10 unchanged sentences

Total finance lease cost

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Supplemental balance sheet information related to leases was as follows (in millions):

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Property and equipment

Less accumulated depreciation and amortization

accumulated depreciation and amortization

Property and equipment, net

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(1) Included in the change in other operating assets and liabilities in the consolidated statements of cash flows.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Commitments relating to noncancellable operating and finance leases and financing obligations for each of the next five years and thereafter are as follows (in millions):

5 unchanged sentences

Long-term liabilities

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of December 31, 2024 , there were approximately $ 43 million of assets underlying approved but pending leases that have not yet commenced, primarily for leases of various real estate and medical equipment.

7 unchanged sentences

The Company maintains unfunded deferred compensation plans that allow participants to defer receipt of a portion of their compensation.

The liability for the deferred compensation plans was $ 123 million and $ 127 million as of December 31, 2023 and 2022, respectively, and is included in other long-term liabilities in the consolidated balance sheets.

The liability for the deferred compensation plans was $ 129 million and $ 123 million at December 31, 2024 and 2023, respectively, and is included in other long-term liabilities in the consolidated balance sheets.

Assets designated to pay benefits under these plans are discussed below.

2 unchanged sentences

Variances from actuarially assumed rates will result in increases or decreases in benefit obligations and net periodic cost in future periods.

Benefits expense under the SERP was $ 8 million for the year ended December 31, 2023 and $ 11 million for both of the years ended December 31, 2022 and 2021 .

Benefits expense under the SERP was $ 7 million, $ 8 million and $ 11 million for the years ended December 31, 2024, 2023 and 2022 , respectively.

The accrued benefit liability for the SERP totaled $ 43 million and $ 42 million at December 31, 2024 and 2023, respectively.

1 unchanged sentence

The weighted-average assumptions used in determining net periodic cost for the year ended December 31, 2023 were a discount rate of 5.1 % and an annual salary increase of 3.0 %.

During 2021 and 2023, certain members of executive management of the Company that were participants in the SERP retired and met the requirements for payout of their SERP retirement benefit.

During 2023, certain members of executive management of the Company that were participants in the SERP retired and met the requirements for payout of their SERP retirement benefit.

The SERP payout provisions require payment to the participant in an actuarially determined lump sum amount six months after the participant retires from the Company.

There were no material settlement losses during the years ended December 31, 2024, 2023 and 2022.

As of December 31, 2023 , the Company had assets of $ 126 million in a non-qualified plan trust generally designated to pay benefits of the deferred compensation plans and the SERP, consisting of equity securities of $ 15 million and company-owned life insurance contracts of $ 111 million.

As of December 31, 2022 , the Company had assets of $ 181 million in a non-qualified plan trust generally designated to pay benefits of the deferred compensation plans and the SERP, consisting of equity securities of $ 46 million and company-owned life insurance contracts of $ 135 million .

The Company maintains the CHS/Community Health Systems, Inc.

Retirement Income Plan (“Pension Plan”), which is a defined benefit, non-contributory pension plan that covers certain employees at three of its formerly owned hospitals.

The Pension Plan provides benefits to covered individuals satisfying certain age and service requirements.

Employer contributions to the Pension Plan are in accordance with the minimum funding requirements of the Employee Retirement Income Security Act of 1974, as amended.

The Company does not expect to make contributions to the Pension Plan in 2024.

In September 2021, the lifetime obligation of the Pension Plan with respect to certain participants was transferred to a third-party insurer via an irrevocable annuity contract.

The third-party insurer began paying benefits to the participants as of November 1, 2021.

This action resulted in a partial plan settlement and recognition of a less than $ 1 million settlement charge during the year ended December 31, 2021.

The Company uses a December 31 measurement date for the benefit obligations and a January 1 measurement date for its net periodic costs for the Pension Plan.

Variances from actuarially assumed rates will result in increases or decreases in benefit obligations, net periodic cost and funding requirements in future periods.

Benefits expense under the Pension Plan was less than $ 1 million for each of the years ended December 31, 2023, 2022 and 2021 , inclusive of the aforementioned partial plan settlement during the year ended December 31, 2021.

The accrued benefit liability for the Pension Plan totaled $ 2 million at both December 31, 2023 and 2022, and is included in other long-term liabilities in the consolidated balance sheets.

The weighted-average assumptions used for determining the net periodic cost for the years ended December 31, 2023 and 2022 were discount rates of 5.2 % and 2.8 %, respectively, and the expected long-term rates of return on assets of 5.5 % and 4.3 %, respectively.

At December 31, 2024 , the Company had assets of $ 129 million in a non-qualified plan trust generally designated to pay benefits of the deferred compensation plans and the SERP, consisting of equity securities of $ 11 million and company-owned life insurance contracts of $ 118 million.

At December 31, 2023 , the Company had assets of $ 126 million in a non-qualified plan trust generally designated to pay benefits of the deferred compensation plans and the SERP, consisting of equity securities of $ 15 million and company-owned life insurance contracts of $ 111 million.

COMMUNITY HEALTH SYSTEMS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company previously maintained the CHS/Community Health Systems, Inc.

Retirement Income Plan (“Pension Plan”), which was a defined benefit, non-contributory pension plan that covered certain employees at three of its formerly owned hospitals.

The Pension Plan was terminated in 2024 upon transfer of the remaining lifetime obligation of the Pension Plan to a third-party via an irrevocable annuity contract.

Settlement of the Pension Plan resulted in recognition of a $ 3 million charge during the year ended December 31, 2024.

Benefits expense under the Pension Plan was $ 4 million for the year ended December 31, 2024, inclusive of the aforementioned settlement charge.

Benefits expense under the Pension Plan was less than $ 1 million for each of the years ended December 31, 2023 and 2022.

STOCKHOLDERS’ DEFICIT

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Each of the aforementioned classes of capital stock has a par value of $ 0.01 per share.

Shares of preferred stock, none of which were outstanding as of December 31, 2023, may be issued in one or more series having such rights, preferences and other provisions as determined by the Board of Directors without approval by the holders of common stock.

Shares of preferred stock, none of which were outstanding at December 31, 2024, may be issued in one or more series having such rights, preferences and other provisions as determined by the Board of Directors without approval by the holders of common stock.

The Company is a holding company, which operates through its subsidiaries.

1 unchanged sentence

The ABL Facility and the indentures governing each series of the Company’s outstanding notes restrict the Company’s subsidiaries from, among other matters, paying dividends and making distributions to the Company, which thereby limits the Company’s ability to pay dividends and/or repurchase stock.

As of December 31, 2023, under the most restrictive test in these agreements (and subject to certain exceptions), the Company has approximately $ 300 million o f capacity to pay permitted dividends and/or repurchase shares of stock or make other restricted payments.

At December 31, 2024, under the most restrictive test in these agreements (and subject to certain exceptions), the Company has approximately $ 300 million o f capacity to pay permitted dividends and/or repurchase shares of stock or make other restricted payments.

The following schedule discloses the effects of changes in the Company’s ownership interest in its less-than-wholly-owned subsidiaries on Community Health Systems, Inc.

3 unchanged sentences

Transfers to the noncontrolling interests:

Net increase (decrease) in Community Health Systems, Inc.

Net (decrease) increase in Community Health Systems, Inc.

paid-in-capital for purchase of subsidiary partnership interests

14 unchanged sentences

Weighted-average number of shares outstanding — diluted

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (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.

stockholders for the years ended December 31, 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 1,333,424 shares and 422,487 shares during the years ended December 31, 2024 and 2023, respectively.

Year Ended December 31,

2 unchanged sentences

Employee stock options and restricted stock awards

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

EQUITY INVESTMENTS

On July 30, 2021 , the Company sold its unconsolidated equity interests in Macon Healthcare, LLC, a joint venture with certain subsidiaries of HCA representing two hospitals in Macon, Georgia, in which the Company held a 38 % interest.

The Company received $ 110 million in cash in connection with the sale of its equity interests and, as a result, recognized a pre-tax gain of approximately $ 39 million on the sale of equity interests in Macon Healthcare, LLC during the year ended December 31, 2021.

On December 31, 2016 , the Company sold 80 % of its ownership interest in the legal entity that owned and operated its home care agency business.

As part of the divestiture of its controlling interest in the home care agency business, the Company recorded an equity method investment representing its remaining 20 % ownership.

Since December 31, 2016 and primarily in conjunction with the divestiture of hospitals, the Company has divested its remaining 20% ownership in certain home care agency businesses.

In March 2005, the Company began purchasing items, primarily medical supplies, medical equipment and pharmaceuticals, under an agreement with HealthTrust Purchasing Group, L.P.

6 unchanged sentences

Included in the Company’s results of operations is the Company’s equity in pre-tax earnings from its investments in unconsolidated affiliates, which was $ 10 million, $ 8 million and $ 14 million for the years ended December 31, 2024, 2023 and 2022, respectively.

SEGMENT INFORMATION

The Company is principally engaged in the provision of healthcare services, including a broad range of general and specialized hospital healthcare services and outpatient services.

Services are delivered within hospitals that the Company owns or operates as well as related healthcare entities that exist to support and supplement services provided in their associated hospital, including, for example, physician practices, urgent care centers, freestanding emergency departments, occupations medicine clinics, imaging centers, cancer centers and ambulatory surgery centers.

The Company has a single reportable segment represented by hospital operations which includes its general acute care hospitals and related healthcare entities that provide inpatient and outpatient healthcare services.

The Company defined its single reportable segment consistent with the manner in which internally reported financial information is regularly reviewed by the Company’s chief executive officer who is the Company’s chief operating decision maker (“CODM”).

Resources are allocated and financial performance is assessed on a consolidated basis.

The CODM does not review assets at a different level or category than the amounts disclosed in the consolidated balance sheets.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company’s CODM uses net (loss) income, as presented in the consolidated statements of (loss) income, to assess performance and allocate resources.

Net (loss) income is used in the annual budgeting process as well as throughout the period when projecting or forecasting quarterly and full-year performance.

The CODM considers budget-to-actual and actual versus prior period (prior month, prior year, etc.) variances on a periodic basis as a means of assessing performance.

The following segment information, including significant segment expenses, is presented in millions:

Year Ended December 31,

Net operating revenues

Salaries and benefits

Contract labor

Medical specialist fees

Other segment items

Depreciation and amortization

Interest expense

Interest income

Impairment and (gain) loss on sale of businesses, net

Gain from early extinguishment of debt

Gain from CoreTrust Transaction

Equity in earnings of unconsolidated affiliates

Provision for income taxes

Net (loss) income

Other segment items include various purchased services and other operating expenses including, for example, lease cost and rent expense, repairs and maintenance, utilities, professional liability claims expense and software maintenance fees.

COMPREHENSIVE LOSS

2 unchanged sentences

Available-for-Sale

Balance as of December 31, 2022

Balance at December 31, 2023

Other comprehensive income

3 unchanged sentences

comprehensive income

Balance as of December 31, 2023

Balance at December 31, 2024

COMMUNITY HEALTH SYSTEMS, INC.

3 unchanged sentences

Available-for-Sale

Balance as of December 31, 2021

Balance at December 31, 2022

Other comprehensive (loss)

3 unchanged sentences

comprehensive (loss) income

Balance as of December 31, 2022

Balance at December 31, 2023

There were no significant reclassifications to net (loss) income out of AOCL for the years ended December 31, 2024 and 2023 .

1 unchanged sentence

Construction and Other Capital Commitments.

Pursuant to a hospital purchase agreement from the Company’s March 1, 2016 acquisition of Northwest Health – Starke, formerly known as Starke Hospital, the Company is committed to spend up to $ 15 million toward the construction of a replacement facility in Knox, Indiana.

Pursuant to a hospital purchase agreement from the Company’s March 1, 2016 acquisition of Northwest Health – Starke, formerly known as Starke Hospital, the Company is committed to make an investment of up to $ 15 million toward the construction of a replacement facility in Knox, Indiana.

Under the terms of such agreement, the construction of the replacement facility for Northwest Health - Starke is required to be completed within five years of the date the Company entered into a new lease with Starke County, Indiana, the hospital lessor, or in the event the Company does not enter into a new lease with Starke County, construction shall be completed by September 30, 2026 .

6 unchanged sentences

At December 31, 2024 , the maximum potential amount of future payments under these guarantees in excess of the liability recorded is $ 9 million.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Professional Liability Claims.

6 unchanged sentences

The actuarially determined projections are based on the Company’s actual claim data, including historic reporting and payment patterns, which have been gathered over the life of the Company.

As discussed below, since the Company purchases excess insurance on a claims-made basis that transfers risk to third-party insurers, the estimated liability for professional and general liability claims does include an amount for the losses covered by excess insurance.

As discussed below, since the Company purchases excess insurance on a claims-made basis that transfers risk to third-party insurers, the estimated liability for professional and general liability claims includes an amount for the losses covered by excess insurance.

The Company also records a receivable for the expected reimbursement of losses covered by this excess insurance.

Since the Company believes that the amount and timing of its future claims payments are reliably determinable, it discounts the amount that is accrued for losses resulting from professional liability claims.

The net present value of the projected payments was discounted using weighted-average interest rates of 3.7 % in 2023, 3.8 % in 2022 and 1.8 % in 2021.

The net present value of the projected payments was discounted using a weighted-average risk-free rate of approximately 3.7 % in both 2024 and 2023 , and 3.8 % in 2022 .

This liability is adjusted for new claims information in the period such information becomes known.

The Company’s estimated liability for professional and general liability claims was $ 443 million and $ 467 million as of December 31, 2023 and 2022 , respectively.

The estimated undiscounted claims liability was $ 498 million and $ 516 million as of December 31, 2023 and 2022 , respectively.

The current portion of the liability for professional and general liability claims was $ 119 million and $ 159 million as of December 31, 2023 and 2022, respectively, and is included in other accrued liabilities in the accompanying consolidated balance sheets, with the long-term portion recorded in other long-term liabilities.

Professional liability expense includes the losses resulting from professional liability claims and loss adjustment expense, as well as excess insurance premiums, and is presented within other operating expenses in the accompanying consolidated statements of (loss) income.

The Company’s estimated liability for professional and general liability claims was $ 573 million and $ 443 million at December 31, 2024 and 2023 , respectively.

The estimated undiscounted claims liability was $ 635 million and $ 498 million at December 31, 2024 and 2023 , respectively.

The current portion of the liability for professional and general liability claims was $ 145 million and $ 119 million at December 31, 2024 and 2023, respectively, and is included in other accrued liabilities in the accompanying consolidated balance sheets, with the long-term portion recorded in other long-term liabilities.

Professional liability

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

expense includes the losses resulting from professional liability claims and loss adjustment expense, as well as excess insurance premiums, and is presented within other operating expenses in the accompanying consolidated statements of (loss) income.

The Company’s processes for obtaining and analyzing claims and incident data are standardized across all of its businesses and have been consistent for many years.

13 unchanged sentences

Moreover, since the Company’s methods and models use different types of data and the Company selects its liability from the results of all of these methods, it typically cannot quantify the precise impact of such factors on its estimates of the liability.

Due to the Company’s standardized and consistent processes for handling claims and the long history and depth of company-specific data, the Company’s methodologies have produced reliably determinable estimates of ultimate paid losses.

Due to the Company’s standardized and consistent processes for handling claims and the long history and depth of company-specific data, the Company’s methodologies have historically produced reliably determinable estimates of ultimate paid losses.

Management considers any changes in the amount and pattern of its historical paid losses up through the most recent reporting period to identify any fundamental shifts or trends in claim development experience in determining the estimate of professional liability claims.

However, due to the subjective nature of this estimate and the impact that previously unforeseen shifts in actual claim experience can have, future estimates of professional liability could be adversely impacted when actual paid losses develop unexpectedly based on assumptions and settlement events that were not previously known or anticipated.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

During the year ended December 31, 2020, the Company incurred expenses in the amount of approximately $ 50 million related to the settlement of a professional liability claim for which the Company’s third-party insurers’ obligation to provide coverage to the Company in connection with the underlying loss was being litigated.

In the ordinary course of business, the Company’s expense with respect to professional liability claims, which is actuarially determined, is limited to amounts not covered by third-party insurance policies, which typically provide coverage for professional liability claims.

The subject of the litigation for the recovery of the full amount of the $ 50 million settlement was whether the claim was covered under the subject policies.

This litigation was settled during the three months ended December 31, 2021, and in connection with this settlement, approximately $ 22 million was recovered from various third-party insurers related to their obligation to provide coverage for the professional liability claim.

During the year ended December 31, 2022, the Company experienced an increase in the amounts paid or expected to be paid to settle outstanding professional liability claims related to divested locations, compared to the same period in the prior year and to previous actuarially determined estimates.

This resulted in a change in estimate of $ 15 million during the three months and year ended December 31, 2022.

This resulted in a change in estimate of $ 15 million during the year ended December 31, 2022.

During the year ended December 31, 2023, the Company experienced an increase in the amounts paid or expected to be paid to settle outstanding professional liability claims, compared to the same period in the prior year and to previous actuarially determined estimates due to adverse claim developments.

During the year ended December 31, 2024 , in connection with the Company’s periodic review of the professional liability claims accrual, the Company, with input from the Company’s third-party actuary, considered recent increases in the amounts paid to resolve outstanding professional liability claims arising in prior periods as well as recent increases in individual claim accruals for unresolved prior period claims.

The emergence in the period of adverse developments, including from social inflationary pressures, impacted the actuarially determined estimate for the resolution of professional liability claims and resulted in an upward revision to the professional liability claims accrual estimate in the amount of $ 149 million during the year ended December 31, 2024 , the majority of which increase in estimate related to divested locations.

There were no other significant changes in the Company’s estimate of the reserve for professional liability claims during the years ended December 31, 2024, 2023 and 2022.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company is primarily self-insured for professional liability claims;

9 unchanged sentences

The excess coverage consists of multiple layers of insurance, the sum of which totals up to $ 95 million per occurrence and in the aggregate for claims reported on or after June 1, 2003, up to $ 145 million per occurrence and in the aggregate for claims reported on or after January 1, 2008, up to $ 195 million per occurrence and in the aggregate for claims reported on or after June 1, 2010, and up to at least $ 215 million per occurrence and in the aggregate for claims reported on or after June 1, 2015.

In addition, for integrated professional liability claims, there is an additional $ 50 million of excess coverage for claims reported on or after June 1, 2014 and an additional $ 75 million of excess coverage for claims reported on or after June 1, 2015 through June 1, 2020.

In addition, for integrated occurrence professional liability claims, there is an additional $ 50 million of excess coverage for claims reported on or after June 1, 2014 and an additional $ 75 million of excess coverage for claims reported on or after June 1, 2015 through June 1, 2020.

The $ 75 million in integrated occurrence coverage will also apply to claims reported between June 1, 2020 and June 1, 2025 for events that occurred prior to June 1, 2020 but which were not previously known or reported.

14 unchanged sentences

The table below presents a reconciliation of the beginning and ending liability balances (in millions) during the years ended December 31, 2024 and 2023, with respect to the Company’s determination of the contingencies of the Company in respect of which an accrual has been recorded.

The liability as of December 31, 2023 is comprised of individually insignificant amounts for various matters.

The liability at December 31, 2024 is comprised of individually insignificant amounts for various matters.

Contingencies

Balance as of December 31, 2021

Balance at December 31, 2022

Reserve for insured claim

Cash payments

Balance as of December 31, 2022

Balance at December 31, 2023

Reserve for insured claim

Cash payments

Balance as of December 31, 2023

Balance at December 31, 2024

In accordance with applicable accounting guidance, the Company establishes a liability for litigation, regulatory and governmental matters for which, based on information currently available, the Company believes that a negative outcome is known or is probable and the amount of the loss is reasonably estimable.

1 unchanged sentence

Due to the uncertainties and difficulty in predicting the ultimate resolution of these contingencies, the actual amount could differ from the estimated amount reflected as a liability in the consolidated balance sheets.

SUBSEQUENT EVENTS

The Company has evaluated all material events occurring subsequent to the balance sheet date for events requiring disclosure or recognition in the consolidated financial statements.

On January 29, 2025, subsidiaries of the Company entered into a definitive agreement for the sale of its 50 % interest in Merit Health Madison ( 67 licensed beds) in Canton, Mississippi, to an affiliate of the University of Mississippi Medical Center, which currently has a 50 % ownership interest in Merit Health Madison.

On February 1, 2025, a subsidiary of the Company completed the sale of its 50 % interest in Merit Health Biloxi ( 153 licensed beds) in Biloxi, Mississippi, to an affiliate of Memorial Hospital of Gulfport, which had a preexisting 50 % ownership interest in Merit Health Biloxi, pursuant to a definitive agreement entered into on November 7, 2024.

The net proceeds from this sale of approximately $ 17 million, were received at a preliminary closing on January 31, 2025.

COMMUNITY HEALTH SYSTEMS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

CONDENSED FINA NCIAL INFORMATION OF PARENT COMPANY

29 unchanged sentences

Net operating revenues

Operating costs and expenses:

Operating expenses:

Salaries and benefits

4 unchanged sentences

Impairment and (gain) loss on sale of businesses, net

Total operating costs and expenses

Total operating expenses

Income from operations

52 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis