What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-24 compared with 2024-10-24 · 189 added, 291 removed, 280 unchanged (63% of the section changed)

1 unchanged sentence

You should read this discussion together with our condensed consolidated financial statements and the accompanying notes included herein.

Throughout this Form 10-Q, we refer to Community Health Systems, Inc., or the Parent Company, and its consolidated subsidiaries in a simplified manner and on a collective basis, using words like “we,” “our,” “us” and the “Company.” This drafting style is suggested by the Securities and Exchange Commission, or SEC, and is not meant to indicate that the publicly-traded Parent Company or any particular subsidiary of the Parent Company owns or operates any asset, business or property.

Throughout this Quarterly Report on Form 10-Q, or Form 10-Q, we refer to Community Health Systems, Inc., or the Parent Company, and its consolidated subsidiaries in a simplified manner and on a collective basis, using words like “we,” “our,” “us” and the “Company.” This drafting style is suggested by the Securities and Exchange Commission, or SEC, and is not meant to indicate that the publicly-traded Parent Company or any particular subsidiary of the Parent Company owns or operates any asset, business or property.

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

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Our affiliates are leading providers of healthcare services, developing and operating healthcare delivery systems in 37 distinct markets across 15 states.

As of September 30, 2024, our subsidiaries own or lease 70 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.

As of March 31, 2025, our subsidiaries own or lease 73 affiliated hospitals, with more than 10,000 beds, and operate more than 1,000 sites of care, including physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers.

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.

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Acquisition and Divestiture Activity

During the nine months ended September 30, 2024, we paid approximately $1 million to acquire the operating assets and related businesses of certain physician practices and clinics that operate within the communities served by our hospitals.

During the three months ended March 31, 2025, we paid less than $1 million to acquire the operating assets and related businesses of certain physician practices and clinics that operate within the communities served by our hospitals.

The purchase price for these transactions was primarily allocated to working capital and property and equipment.

During the nine months ended September 30, 2024, as reflected in the table below, we completed the divestiture of one hospital in Tennessee.

This hospital represented annual net operating revenues in 2023 of approximately $188 million and we received total net proceeds of approximately $161 million in connection with this disposition.

The following table provides a summary of hospitals that we divested (or, in the case of Lutheran Rehabilitation Hospital, in which we sold a majority interest) during the nine months ended September 30, 2024 and the year ended December 31, 2023.

During the three months ended March 31, 2025, as reflected in the table below, we completed the divestiture of two hospitals in Florida and sold our 50% ownership interest in a hospital in Mississippi.

These hospitals represented annual net operating revenues in 2024 of approximately $359 million and we received total net proceeds of approximately $276 million in connection with these dispositions.

The following table provides a summary of hospitals that we divested (or, in the case of Merit Health Biloxi, in which we sold our 50% ownership interest) during the three months ended March 31, 2025 and the year ended December 31, 2024.

Effective Date

2024 Divestiture:

2025 Divestitures:

Merit Health Biloxi

Memorial Health System

Biloxi, Mississippi

February 1, 2025

ShorePoint Health - Port Charlotte

Port Charlotte, Florida

March 1, 2025

ShorePoint Health - Punta Gorda

Punta Gorda, Florida

March 1, 2025

2024 Divestitures:

Tennova Healthcare - Cleveland

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August 1, 2024

2023 Divestitures:

Greenbrier Valley Medical Center

Vandalia Health, Inc.

Ronceverte, WV

January 1, 2023

Plateau Medical Center

Vandalia Health, Inc.

April 1, 2023

Medical Center of South Arkansas

SARH Holdings, Inc.

El Dorado, AR

Lutheran Rehabilitation Hospital

Select Medical Corporation

Fort Wayne, IN

September 1, 2023

AllianceHealth Ponca City

Integris Health

Ponca City, OK

November 1, 2023

AllianceHealth Woodward

Integris Health

November 1, 2023

Bravera Health Brooksville

Tampa General Hospital

Brooksville, FL

December 1, 2023

Bravera Health Spring Hill

Tampa General Hospital

Spring Hill, FL

December 1, 2023

Bravera Health Seven Rivers

Tampa General Hospital

Crystal River, FL

December 1, 2023

In addition, on October 1, 2024, we completed the sale of substantially all of the assets of Davis Regional Medical Center (144 licensed beds) in Statesville, North Carolina, to Iredell Memorial Hospital, Inc.

pursuant to the terms of a definitive agreement which was entered into on August 16, 2024.

The net proceeds from this sale of approximately $13 million were received at a preliminary closing on September 30, 2024.

On July 30, 2024, we entered into a definitive agreement for the sale of substantially all of the assets of Regional Hospital of Scranton (186 licensed beds) and Moses Taylor Hospital (122 licensed beds) in Scranton, Pennsylvania as well as Wilkes-Barre General Hospital (369 licensed beds) in Wilkes-Barre, Pennsylvania, and certain related businesses to affiliates of WoodBridge Healthcare, Inc.

After giving effect to an amendment to this definitive agreement entered into on October 2, 2024 (which, among other things, reduced the purchase price payable to us by $5 million), the total purchase price payable to us at the closing will be $115 million (inclusive of a $10 million prepayment for services to be provided by us pursuant to an information transition services agreement), subject to certain purchase price adjustments.

For additional information about this potential disposition, see the Current Report on Form 8-K filed by us on July 30, 2024.

There can be no assurance that this potential disposition will be completed, or if this potential disposition is completed, the ultimate timing of the completion of this potential disposition.

Davis Regional Medical Center

Iredell Memorial Hospital

Statesville, NC

October 1, 2024

On April 1, 2025, we completed the sale of Lake Norman Regional Medical Center (123 licensed beds) in Mooresville, North Carolina, and related businesses, to Duke University Health System, Inc.

The net proceeds from this sale of approximately $284 million were received at a preliminary closing on March 31, 2025.

For additional information regarding this disposition, see the Current Report on Form 8-K filed by us on April 1, 2025.

In addition to hospitals divested as reflected above, we have entered into definitive agreements to sell our ownership interest in one hospital in Mississippi and our ownership interest in one hospital in Texas as further described below, where the divestitures have not yet been completed.

On January 29, 2025, we entered into a definitive agreement for the sale of 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.

On April 15, 2025, we entered into a definitive agreement to sell our collective 80% ownership interest in Cedar Park Regional Medical Center (126 licensed beds) and certain ancillary businesses located in Cedar Park, Texas, to subsidiaries of Ascension Health.

Ascension Health currently holds a 20% ownership interest in Cedar Park Regional Medical Center and would purchase the remaining ownership interest through this transaction.

The total purchase price payable to us at the closing of this transaction is $460 million, subject to certain purchase price adjustments.

For additional information regarding this definitive agreement, see the Current Report on Form 8-K filed by us on April 15, 2025.

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

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

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Overview of Operating Results

Net operating revenues increased from $3.086 billion for the three months ended September 30, 2023 to $3.090 billion for the three months ended September 30, 2024.

On a same-store basis, net operating revenues for the three months ended September 30, 2024 increased $150 million compared to the same period in 2023.

We had net loss of $(355) million during the three months ended September 30, 2024, compared to $(52) million for the same period in 2023.

Net loss for the three months ended September 30, 2024 included the following:

• an after-tax charge of $13 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 $223 million resulting from the impairment of certain long-lived assets that were idled, disposed of or held-for-sale as well as divestiture related costs, partially offset by the gain related to the sale of a hospital, and

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

Additionally, certain of our facilities in Florida, Georgia and Tennessee have experienced an interruption in their business and incurred additional costs as a direct result of Hurricane Helene, which made landfall in late September 2024 and Hurricane Milton, which made landfall in early October 2024.

Hurricane Helene resulted in an estimated loss of operating revenues together with incremental expenses directly related to hurricane response efforts of approximately $7 million on a pre-tax basis during the three months ended September 30, 2024.

No insurance proceeds related to Hurricane Helene were received or recognized during the three months ended September 30, 2024.

Further, taking into account the timing of these events, it is expected that additional net operating revenues will be lost and incremental operating expenses will be incurred for remediation and restoration efforts in the fourth quarter of 2024 and one or more future periods.

Insurance proceeds, which are expected to cover substantially all of our costs related to these events, are expected to be received in one or more future periods.

Net loss for the three months ended September 30, 2023 included the following:

• an after-tax charge of $18 million for expense related to government and other legal matters and related costs,

• an after-tax charge of $5 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 $24 million for the gain related to the sale of a hospital and the impairment of long-lived assets that were idled, disposed of or held-for-sale, and

• an after-tax charge of $1 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 three months ended September 30, 2024, decreased 4.1%, compared to the same period in 2023.

Consolidated adjusted admissions for the three months ended September 30, 2024, decreased 3.7%, compared to the same period in 2023.

Same-store inpatient admissions for the three months ended September 30, 2024, increased 2.4%, compared to the same period in 2023, and same-store adjusted admissions for the three months ended September 30, 2024, increased 2.6%, compared to the same period in 2023.

Net operating revenues increased from $9.308 billion for the nine months ended September 30, 2023 to $9.369 billion for the nine months ended September 30, 2024.

On a same-store basis, net operating revenues for the nine months ended September 30, 2024 increased $454 million compared to the same period in 2023.

We had net loss of $(334) million during the nine months ended September 30, 2024, compared to $(70) million for the same period in 2023.

Net loss for the nine months ended September 30, 2024 included the following:

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

• an after-tax charge of $33 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 $244 million resulting from the impairment of certain long-lived assets that were idled, disposed of or held-for-sale as well as divestiture related costs, partially offset by the gain related to the sale of a hospital, and

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

Net loss for the nine months ended September 30, 2023 included the following:

• an after-tax charge of $10 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 $26 million for expense related to government and other legal matters and related costs,

• an after-tax charge of $6 million resulting from a loss on the sale of one hospital and impairment of long-lived assets that were idled, disposed of or held-for-sale, partially offset by gains for the sale of three hospitals, and

• an after-tax charge of $9 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 nine months ended September 30, 2024, decreased 3.1%, compared to the same period in 2023.

Consolidated adjusted admissions for the nine months ended September 30, 2024, decreased 3.4%, compared to the same period in 2023.

Same-store inpatient admissions for the nine months ended September 30, 2024, increased 3.0%, compared to the same period in 2023, and same-store adjusted admissions for the nine months ended September 30, 2024, increased 2.5%, compared to the same period in 2023.

Self-pay revenues represented approximately 1.1% and 1.5% of net operating revenues for the three months ended September 30, 2024 and 2023, respectively, and 1.4% and 1.0% for the nine months ended September 30, 2024 and 2023, respectively.

The amount of foregone revenue related to providing charity care services as a percentage of net operating revenues was approximately 9.8% and 11.5% for the three months ended September 30, 2024 and 2023, respectively, and 9.7% and 10.8% for the nine months ended September 30, 2024 and 2023, respectively.

Direct and indirect costs incurred in providing charity care services as a percentage of net operating revenues was approximately 1.0% and 1.3% for the three months ended September 30, 2024 and 2023, respectively, and 1.0% and 1.2% for the nine months ended September 30, 2024 and 2023, respectively.

Net operating revenues increased from $3.140 billion for the three months ended March 31, 2024 to $3.159 billion for the three months ended March 31, 2025.

On a same-store basis, net operating revenues for the three months ended March 31, 2025 increased $94 million compared to the same period in 2024.

We had net income of $25 million during the three months ended March 31, 2025, compared to net loss of $(6) million for the same period in 2024.

Net income for the three months ended March 31, 2025 included the following:

• an after-tax charge of $7 million for expense related to costs associated with our multi-year initiative to modernize and consolidate technology platforms and associated processes, and

• an after-tax charge of $2 million resulting from a gain related to the sale of two hospitals, partially offset by a loss on the sale of our 50% ownership interest in one hospital and the impairment of certain long-lived assets that were idled, disposed of or held-for-sale as well as divestiture related costs.

Net loss for the three months ended March 31, 2024 included the following:

• an after-tax charge of $10 million for expense related to costs associated with our multi-year initiative to modernize and consolidate technology platforms and associated processes, and

• an after-tax charge of $13 million resulting from impairment of long-lived assets that were idled, disposed of or held-for-sale.

Consolidated inpatient admissions for the three months ended March 31, 2025, decreased 1.0%, compared to the same period in 2024.

Consolidated adjusted admissions for the three months ended March 31, 2025, decreased 2.3%, compared to the same period in 2024.

Same-store inpatient admissions for the three months ended March 31, 2025, increased 4.0%, compared to the same period in 2024, and same-store adjusted admissions for the three months ended March 31, 2025, increased 2.6%, compared to the same period in 2024.

Self-pay revenues represented approximately 0.6% and 1.4% for the three months ended March 31, 2025 and 2024, respectively.

The amount of foregone revenue related to providing charity care services as a percentage of net operating revenues was approximately 9.7% and 10.1% for the three months ended March 31, 2025 and 2024, respectively.

Direct and indirect costs incurred in providing charity care services as a percentage of net operating revenues was approximately 1.1% and 1.0% for the three months ended March 31, 2025 and 2024, respectively.

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.

President Trump has issued executive orders that impact or may impact the healthcare industry, including an order establishing a presidential advisory commission, the Department of Government Efficiency, or DOGE, focused on restructuring and streamlining government agencies and reducing or eliminating regulations and federal government programs and other expenditures, as well as a directive for agencies to identify and immediately repeal regulations determined to be unlawful.

In March 2025, in accordance with the President’s DOGE Workforce Optimization Initiative, the Department of Health and Human Services, or HHS, announced a significant agency restructuring that will reduce the HHS workforce and consolidate divisions of the agency.

HHS also announced a change in its policy on public participation in rulemaking that may negatively affect the ability of industry participants to receive advance notice of and offer feedback on some policy changes.

In addition, recent actions by the presidential administration have resulted in holds on or cancellations of congressionally authorized spending as well as interruptions in the distribution of government funds.

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 Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively, 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 American Rescue Plan Act of 2021, or the ARPA, temporarily enhanced subsidies for individuals eligible to purchase coverage through Affordable Care Act marketplaces.

Subsequent legislation extended these enhanced subsidies, but absent further congressional action, the enhanced subsidies will expire at the end of 2025.

In addition, COVID-related legislation enacted during the early stages of the pandemic required states to maintain continuous Medicaid enrollment, among other conditions, in order 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 disenrollments.

Although it was originally anticipated that states would complete unwinding-related Medicaid renewals by June 2024, the Centers for Medicare & Medicaid Services, or CMS, required certain states to pause procedural disenrollments due to noncompliant renewal systems, and CMS has approved state implementation of other flexibilities and mitigation strategies that extended timelines for completion.

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 obtained.

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 been those that 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.

Of the 15 states in which we operated hospitals as of September 30, 2024, nine states have taken action to expand their Medicaid programs.

The other six states have not, including Florida, Alabama, Tennessee, Mississippi and Texas, where we operated a significant number of hospitals as of September 30, 2024.

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).

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 Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or, collectively, 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.

Federal actions may impact funding for, or the structure of, the Medicaid program and may shape provider reimbursement rates, eligibility and coverage policies and other aspects of the state Medicaid programs in a manner that could materially and adversely affect us.

Currently, the federal government pays a percentage match for state Medicaid expenditures that varies by state and other factors, with no pre-set limit on federal spending.

However, some members of Congress and the presidential administration have raised, and Congress may in the future adopt, proposals intended to reduce Medicaid expenditures such as restructuring the Medicaid program to give states a “block grant” or fixed amount of overall funding for their respective Medicaid programs or to impose spending caps such as per Medicaid beneficiary limits on federal contributions.

Reductions in federal funding or changes to the federal funding formula for Medicaid could have a particularly significant impact in states that expanded Medicaid under the Affordable Care Act, 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.

Of the 15 states in which we operated hospitals as of March 31, 2025, nine states have taken action to expand their Medicaid programs.

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 as of March 31, 2025.

In addition to changes related to federal funding, Centers for Medicare & Medicaid Services, or CMS, administrators may 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 accountable care organizations 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 the regulations 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.

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 April 2032.

Further, the ARPA 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.

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

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

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 nine months ended September 30, 2024, and do not expect to receive or recognize any significant level of payments or benefits under the CARES Act and other existing legislation related to COVID-19 in future periods.

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 nine months ended September 30, 2024, and the reduction to the outpatient PPS conversion factor as noted above is anticipated to adversely impact our future results.

In June 2024, the U.S.

Supreme Court issued decisions affecting judicial review of federal agency-related actions that 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.

In particular, in Loper Bright Enterprises v.

Raimondo, the U.S.

Supreme Court overruled its prior ruling

in Chevron U.S.A., Inc.

Natural Resources Defense Council, Inc., which held that when a statute is ambiguous or silent, courts should not substitute their own judgments regarding the actions of those agencies so long as the agencies’ interpretation of the enabling federal statute was reasonable.

In Loper Bright, the U.S.

Supreme Court held that courts must instead exercise their independent judgment when deciding whether an agency has acted within its statutory authority, and that courts may not defer to an agency interpretation simply because a statute is ambiguous.

The Loper Bright decision, as well as certain other recent decisions of the U.S.

Supreme Court, could have significant impacts on government agency regulation, particularly within the heavily-regulated healthcare industry, and may have broad implications for our business.

As a result of these decisions, there may be an increase in legal challenges to regulations and guidance issued by federal agencies responsible for regulating various aspects of our business.

These potential legal challenges, if successful, could have a negative or positive impact on our business, and any such impact could be material.

In addition to potential changes to regulations and agency guidance as a result of legal challenges, these recent U.S.

Supreme Court decisions may result in increased regulatory uncertainty, inconsistent judicial interpretations, and delays in and other impacts to the agency rulemaking process, any of which could adversely impact our business and operations.

This reduction to payment rates adversely affected our results for the three months ended March 31, 2025, 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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Three Months Ended

Nine Months Ended

September 30,

Medicare Managed Care

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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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We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the periods that such adjustments become known.

Contractual allowance adjustments related to final settlements and previous program reimbursement estimates impacted net operating revenues by an insignificant amount in each of the three- and nine-month periods ended September 30, 2024 and 2023.

allowance adjustments related to final settlements and previous program reimbursement estimates impacted net operating revenues by an insignificant amount in each of the three-month periods ended March 31, 2025 and 2024.

The payment rates under the Medicare program for hospital inpatient and outpatient acute care services are based on prospective payment systems, which depend upon a patient’s diagnosis or the clinical complexity of services provided to a patient, among other factors.

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

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%.

In its 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, CMS increased 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.

Hospitals that do not submit required patient quality data are subject to payment reductions.

We are complying with this data submission requirement.

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Three Months Ended

Nine Months Ended

September 30,

Operating results, as a percentage of net operating revenues:

3 unchanged sentences

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

(Loss) income from operations

Income from operations

Interest expense, net

Gain from early extinguishment of debt

Equity in earnings of unconsolidated affiliates

(Loss) income before income taxes

Benefit from (provision for) income taxes

Income before income taxes

Provision for income taxes

Net income (loss)

Net income attributable to noncontrolling interests

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Systems, Inc.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Percentage increase (decrease) from prior year:

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These metrics provide useful insight to investors about the volume and acuity of services we provide, which aid in evaluating our financial results.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Net operating revenues increased to $3.090 billion for the three months ended September 30, 2024, compared to $3.086 billion for the same period in 2023.

Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased $150 million, or 5.1%, during the three months ended September 30, 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 $146 million during the three months ended September 30, 2024, compared to the same period in 2023, due to the divestiture of hospitals in 2024 and 2023.

On a consolidated basis, inpatient admissions decreased by 4.1% and adjusted admissions decreased by 3.7% during the three months ended September 30, 2024, compared to the same period in 2023.

On a same-store basis, net operating revenues per adjusted admission increased 2.5%, while inpatient admissions increased by 2.4% and adjusted admissions increased by 2.6% for the three months ended September 30, 2024, compared to the same period in 2023.

Operating expenses, as a percentage of net operating revenues, increased from 94.4% during the three months ended September 30, 2023 to 106.6% during the three months ended September 30, 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 89.5% for the three months ended September 30, 2023 to 94.2% for the three months ended September 30, 2024.

Salaries and benefits, as a percentage of net operating revenues, increased from 43.4% for the three months ended September 30, 2023 to 44.0% for the three months ended September 30, 2024, primarily due to inflationary wage increases.

Supplies, as a percentage of net operating revenues, decreased from 15.8% for the three months ended September 30, 2023 to 15.2% for the three months ended September 30, 2024, primarily due to changes in the mix of services and the benefit of cost savings initiatives.

Other operating expenses, as a percentage of net operating revenues, increased from 27.7% for the three months ended September 30, 2023 to 32.6% for the three months ended September 30, 2024, primarily due to a change in estimate for the professional liability claims accrual and increased costs for outsourced medical specialists, partially offset by decreased costs for contract labor.

Lease cost and rent, as a percentage of net operating revenues, decreased from 2.6% for the three months ended September 30, 2023 to 2.4% for the three months ended September 30, 2024.

Depreciation and amortization, as a percentage of net operating revenues, decreased from 4.1% for three months ended September 30, 2023 to 3.8% for the three months ended September 30, 2024, primarily due to a reduction in the amortization of capitalized internal-use software.

Impairment and (gain) loss on sale of businesses, net was an expense of $267 million for the three months ended September 30, 2024, compared to $26 million for the same period in 2023.

The expense recognized during the three months ended September 30, 2024 was comprised of (i) an approximate $259 million impairment charge recorded to reduce the carrying value of four hospitals that were 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 (ii) an approximate $12 million impairment charge recorded to reduce the carrying value of several assets that were idled, disposed of or held-for-sale, partially offset by of a gain of approximately $4 million related to the sale of one hospital.

The expense recognized during the three months ended September 30, 2023 related primarily to divestiture activity during the respective period as discussed more specifically under “Acquisition, Divestiture and Closure Activity” herein.

Interest expense, net, increased by $8 million to $216 million for the three months ended September 30, 2024, compared to $208 million for the same period in 2023 due primarily to financing activities in 2023 and 2024.

Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, remained consistent at 0.1% for both of the three-month periods ended September 30, 2024 and 2023.

The net results of the above-mentioned changes resulted in loss before income taxes increasing $386 million to $(419) million for the three months ended September 30, 2024 from $(33) million for the same period in 2023.

Our (benefit from) provision for income taxes for the three months ended September 30, 2024 and 2023 was $(64) million and $19 million, respectively, and the effective tax rates were 15.3% and (57.6)% for the three months ended September 30, 2024 and 2023, respectively.

The decrease in the (benefit from) provision for income taxes and the difference in our effective tax rate for the three months ended September 30, 2024, compared to the same period in 2023 was due to an increase in tax benefit associated with impairment and (gain) loss on sale of businesses, net for the three months ended September 30, 2024 compared to the same period in 2023.

Net loss, as a percentage of net operating revenues, was (11.5)% for the three months ended September 30, 2024, compared to (1.7)% 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 three-month periods ended September 30, 2024 and 2023.

Net loss attributable to Community Health Systems, Inc.

stockholders was $(391) million for the three months ended September 30, 2024, compared to $(91) million for the same period in 2023.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net operating revenues increased to $9.369 billion for the nine months ended September 30, 2024, compared to $9.308 billion for the same period in 2023.

Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased $454 million, or 5.2%, during the nine months ended September 30, 2024, compared to the same period in 2023.

Non-same-store net operating revenues decreased $393 million during the nine months ended September 30, 2024, compared to the same period in 2023, due to the divestiture of hospitals in 2024 and 2023.

On a consolidated basis, inpatient admissions decreased by 3.1% and adjusted admissions decreased by 3.4% during the nine months ended September 30, 2024, compared to the same period in 2023.

On a same-store basis, net operating revenues per adjusted admission increased 2.6%, while inpatient admissions increased by 3.0% and adjusted admissions increased by 2.5% for the nine months ended September 30, 2024, compared to the same period in 2023.

Operating expenses, as a percentage of net operating revenues, increased from 93.2% during the nine months ended September 30, 2023 to 97.2% during the nine months ended September 30, 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 89.2% for the nine months ended September 30, 2023 to 90.3% for the nine months ended September 30, 2024.

Salaries and benefits, as a percentage of net operating revenues, decreased from 43.4% for the nine months ended September 30, 2023 to 43.3% for the nine months ended September 30, 2024.

Supplies, as a percentage of net operating revenues, decreased from 16.1% for the nine months ended September 30, 2023 to 15.4% for the nine months ended September 30, 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 27.1% for the nine months ended September 30, 2023 to 29.2% for the nine months ended September 30, 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 nine months ended September 30, 2023 to 2.4% for the nine months ended September 30, 2024.

Depreciation and amortization, as a percentage of net operating revenues, decreased to 3.8% for the nine months ended September 30, 2024 from 4.1% for the same period in 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 an expense of $294 million for the nine months ended September 30, 2024, compared to a gain of approximately $9 million for the same period in 2023.

The expense recognized during the nine months ended September 30, 2024 was comprised of (i) an approximate $259 million impairment charge recorded to reduce the carrying value of four hospitals that were 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 (ii) an approximate $39 million impairment charge recorded to reduce the carrying value of several assets that were idled, disposed of or held-for-sale, partially offset by of a gain of approximately $4 million related to the sale of one hospital.

The gain recognized during the nine months ended September 30, 2023 related primarily to divestiture activity during the respective period as discussed more specifically under “Acquisition, Divestiture and Closure Activity” herein.

Interest expense, net, increased by $22 million to $643 million for the nine months ended September 30, 2024, compared to $621 million for the same period in 2023 due primarily to financing activities in 2023 and 2024.

Gain from early extinguishment of debt of $25 million was recognized during the nine months ended September 30, 2024 as a result of the refinancing and extinguishment of certain of our outstanding notes as discussed further under "Liquidity" below.

There were no financing transactions during the nine months ended September 30, 2023.

Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, remained consistent at 0.1% for both of the nine-month periods ended September 30, 2024 and 2023.

The net results of the above-mentioned changes resulted in (loss) income before income taxes decreasing $361 million to a loss of $(347) million for the nine months ended September 30, 2024 from income of $14 million for the same period in 2023.

Our (benefit from) provision for income taxes for the nine months ended September 30, 2024 and 2023 was $(13) million and $84 million, respectively, and the effective tax rates were 3.7% and 600.0% for the nine months ended September 30, 2024 and 2023, respectively.

The decrease in the (benefit from) provision for income taxes and the difference in our effective tax rate for the nine months ended September 30, 2024, compared to the same period in 2023 was due to an increase in tax benefit associated with impairment and (gain) loss on sale of businesses, net for the nine months ended September 30, 2024 compared to the same period in 2023.

Net loss, as a percentage of net operating revenues, was (3.6)% for the nine months ended September 30, 2024, compared to (0.8)% for the same period in 2023.

Net income attributable to noncontrolling interests as a percentage of net operating revenues was 1.2% for the nine months ended September 30, 2024, compared to 1.1% for the same period in 2023.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Net operating revenues increased to $3.159 billion for the three months ended March 31, 2025, compared to $3.140 billion for the same period in 2024.

Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased $94 million, or 3.1%, during the three months ended March 31, 2025, compared to the same period in 2024.

On a period-over-period basis, the increase in same-store net operating revenues was primarily attributable to higher volumes, increased reimbursement rates and supplemental reimbursement program revenue, partially offset by declines in acuity and non-patient revenue and increased patient claim denials.

Non-same-store net operating revenues decreased $75 million during the three months ended March 31, 2025, compared to the same period in 2024, due to the divestiture of hospitals in 2025 and 2024.

On a consolidated basis, inpatient admissions decreased by 1.0% and adjusted admissions decreased by 2.3% during the three months ended March 31, 2025, compared to the same period in 2024.

On a same-store basis, net operating revenues per adjusted admission increased 0.5%, while inpatient admissions increased by 4.0% and adjusted admissions increased by 2.6% for the three months ended March 31, 2025, compared to the same period in 2024.

Operating expenses, as a percentage of net operating revenues, decreased from 92.6% during the three months ended March 31, 2024 to 91.0% during the three months ended March 31, 2025.

Operating expenses, excluding depreciation and amortization and impairment and (gain) loss on sale of businesses, as a percentage of net operating revenues, increased from 88.4% for the three months ended March 31, 2024 to 88.5% for the three months ended March 31, 2025.

Salaries and benefits, as a percentage of net operating revenues, decreased from 43.5% for the three months ended March 31, 2024 to 43.4% for the three months ended March 31, 2025.

Supplies, as a percentage of net operating revenues, remained consistent at 15.5% for both of the three months ended March 31, 2025 and 2024.

Other operating expenses, as a percentage of net operating revenues, increased from 26.9% for the three months ended March 31, 2024 to 27.4% for the three months ended March 31, 2025, primarily due to higher medical specialist fees and increased supplemental reimbursement program expense, partially offset by reduced expense for contract labor.

Lease cost and rent, as a percentage of net operating revenues, decreased from 2.5% for the three months ended March 31, 2024 to 2.2% for the three months ended March 31, 2025.

Depreciation and amortization, as a percentage of net operating revenues, decreased from 3.7% for three months ended March 31, 2024 to 3.3% for the three months ended March 31, 2025, primarily due to an increase in net operating revenues and the impact of hospital divestitures in 2025 and 2024.

Impairment and (gain) loss on sale of businesses, net was a gain of $24 million for the three months ended March 31, 2025, compared to expense of $17 million for the same period in 2024.

The net gain recognized during the three months ended March 31, 2025 was comprised of a gain of approximately $50 million related to the sale of two hospitals, partially offset by (i) an approximate $10 million impairment charge recorded to reduce the carrying value of a hospital that was deemed held-for-sale based on the difference between the carrying value of the hospital disposal group compared to the estimated fair value less costs to sell, (ii) an approximate $11 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, and (iii) an approximate $5 million impairment charge recorded to reduce the carrying value of several assets that were idled, disposed of or held-for-sale.

The expense recognized during the three months ended March 31, 2024 was recorded to reduce the carrying value of several assets that were idled, disposed of or held-for-sale.

Interest expense, net, increased by $8 million to $219 million for the three months ended March 31, 2025, compared to $211 million for the same period in 2024 due primarily to financing activities in 2024.

Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, remained consistent at 0.1% for both of the three-month periods ended March 31, 2025 and 2024.

The net results of the above-mentioned changes resulted in income before income taxes increasing $45 million to $67 million for the three months ended March 31, 2025, compared to $22 million for the same period in 2024.

Our provision for income taxes for the three months ended March 31, 2025 and 2024 was $42 million and $28 million, respectively, and the effective tax rates were 62.7% and 127.3% for the three months ended March 31, 2025 and 2024, respectively.

The increase in the provision for income taxes for the three months ended March 31, 2025, compared to the same period in 2024 was due to an increase in non-deductible goodwill related to divested hospitals.

The difference in our effective tax rate for the three months ended March 31, 2025, compared to the same period in 2024 is due to an increase in income before taxes and the aforementioned increase in the provision for income taxes.

Net income, as a percentage of net operating revenues, was 0.8% for the three months ended March 31, 2025, compared to a net loss of (0.2)% for the same period in 2024.

Net income attributable to noncontrolling interests as a percentage of net operating revenues was 1.2% for the three months ended March 31, 2025, compared to 1.1% for the same period in 2024.

Net loss attributable to Community Health Systems, Inc.

stockholders was $(446) million for the nine months ended September 30, 2024, compared to $(180) million for the same period in 2023.

stockholders was $(13) million for the three months ended March 31, 2025, compared to $(41) million for the same period in 2024.

Liquidity and Capital Resources

Net cash provided by operating activities increased $144 million, from approximately $120 million for the nine months ended September 30, 2023, to approximately $264 million for the nine months ended September 30, 2024.

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.

Cash paid for interest was $562 million during the nine months ended September 30, 2024, compared to $583 million for the same period in 2023.

Cash paid for income taxes, net of refunds received, resulted in a net payment of $132 million and $61 million during the nine months ended September 30, 2024 and 2023.

Net cash used in investing activities was approximately $132 million for the nine months ended September 30, 2024, compared to approximately $206 million for the same period in 2023.

Net cash used in investing activities during the nine months ended September 30, 2024 was impacted by a decrease of $106 million in cash used for the purchase of property and equipment and an increase of $51 million in cash proceeds from dispositions of hospitals and other ancillary operations, partially offset by a decrease of $95 million in cash from the net impact of the purchases and sales of available-for-sale debt and equity securities.

Our net cash used in financing activities was approximately $137 million for the nine months ended September 30, 2024, compared to net cash provided by financing activities of approximately $59 million for the same period in 2023, a change of $196 million.

This was primarily due to the net impact of our debt borrowings and repayments during the nine months ended September 30, 2024, compared to the same period in 2023.

Net working capital was approximately $1.0 billion at September 30, 2024 and $1.1 billion at December 31, 2023.

Net working capital decreased by approximately $84 million between December 31, 2023 and September 30, 2024.

The decrease is primarily due to decreases in patient accounts receivable, supplies and prepaid expenses and taxes and increases in accrued interest and other current liabilities during the nine months ended September 30, 2024, partially offset by increases in prepaid income taxes and other current assets and decreases in accounts payable, current operating lease liabilities and accrued liabilities for employee compensation.

Net cash provided by operating activities increased $24 million, from approximately $96 million for the three months ended March 31, 2024, to approximately $120 million for the three months ended March 31, 2025.

The increase in cash provided by operating activities is primarily due to an increase in accounts payable, partially offset by an increase in accounts receivable.

Cash paid for interest was $229 million during the three months ended March 31, 2025, compared to $149 million for the same period in 2024.

Cash paid for income taxes, net of refunds received, resulted in a net refund of $80 million and a payment of less than $1 million during the three months ended March 31, 2025 and 2024, respectively.

Net cash provided by investing activities was approximately $444 million for the three months ended March 31, 2025, compared to net cash used in investing activities of approximately $99 million for the same period in 2024.

Net cash used in investing activities during the three months ended March 31, 2025 was impacted by a decrease of $8 million in cash used for the purchase of property and equipment and an increase of $563 million in cash proceeds from dispositions of hospitals and other ancillary operations, partially offset by a decrease of $7 million in cash from the net impact of the purchases and sales of available-for-sale debt and equity securities and an increase of $25 million in cash used for other investments, which includes capitalized software costs and physician recruitment costs.

Our net cash used in financing activities was approximately $170 million for the three months ended March 31, 2025, compared to net cash provided by financing activities of approximately $13 million for the same period in 2024, a change of $183 million.

This was primarily due to the net impact of our debt borrowings and repayments during the three months ended March 31, 2025, compared to the same period in 2024.

Net working capital was approximately $1.0 billion at March 31, 2025 and approximately $956 million at December 31, 2024.

Net working capital increased by approximately $81 million between December 31, 2024 and March 31, 2025.

The increase is primarily due to increases in cash, patient accounts receivable and prepaid expenses and taxes and decreases in accrued interest and accrued liabilities for employee compensation during the three months ended March 31, 2025, partially offset by decreases in prepaid income taxes and other current assets and increases in current maturities of long-term debt, accounts payable and income tax 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, 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, or ABL Facility.

The maximum aggregate amount under the ABL Facility is $1.0 billion, subject to

borrowing base capacity.

At September 30, 2024, we had outstanding borrowings of $372 million and approximately $438 million of additional borrowing capacity (after taking into consideration $66 million of outstanding letters of credit) under the ABL Facility.

The maximum aggregate amount under the ABL Facility is $1.0 billion, subject to borrowing base capacity.

At March 31, 2025, we had outstanding borrowings of $200 million and approximately $651 million of additional borrowing capacity (after taking into consideration $67 million of outstanding letters of credit) under the ABL Facility.

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

Letters of credit were reduced during the nine months ended September 30, 2024 by $15 million, primarily in relation to a professional liability claim that was settled and funded during the nine months ended September 30, 2024.

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

2025 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.

For additional information regarding the issuance of the Tack-On Notes and the amendment of the ABL Credit Agreement, see the Current Report on Form 8-K filed by us on June 5, 2024.

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

On April 23, 2025, CHS undertook certain financing-related actions including:

(1) the commencement of a tender offer for any and all of its outstanding 6⅞% Senior Unsecured Notes due 2028 that will be funded using cash on hand, (2) entered into a privately negotiated agreement with a multi-asset investment manager to issue and sell $700 million aggregate principal amount of 10¾% Senior Secured Notes due 2033, and (3) the issuance of a notice of conditional redemption to redeem all of its outstanding 8% Senior Secured Notes due 2027 at par value plus accrued and unpaid interest.

The Company expects to use the net proceeds from issuance of the 10¾% Senior Secured Notes due 2033, together with cash on hand, to redeem the 8% Senior Secured Notes due 2027 and to pay related fees and expenses.

The completion of the tender offer and the consummation of the sale of the 10¾% Senior Secured Notes due 2033 and associated redemption of the 8% Senior Secured Notes due 2027, as described above, are expected to be completed in May 2025.

For additional information regarding the tender offer, the sale of the 10¾% Senior Secured Notes due 2033 and the conditional redemption notice with respect to the 8% Senior Secured Notes due 2027, see the Current Reports on Form 8-K filed by the Company on April 23, 2025.

Additional Liquidity Information

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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 September 30, 2024, approximately $20 million of our outstanding debt of approximately $11.5 billion is due within the next 12 months.

As of March 31, 2025, approximately $29 million of our outstanding debt of approximately $11.3 billion is due within the next 12 months.

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.

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.

As noted above, during the three months ended September 30, 2024, we extinguished a portion of a series of our outstanding notes through open market purchases, and we may elect from time to time to continue to purchase our outstanding debt, including through open market purchases, privately negotiated transactions or otherwise.

However, ongoing negative economic conditions (including in relation to inflationary pressures, elevated interest rate levels and impacts from the imposition of, or changes in, tariffs) 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.

We may elect from time to time to continue to purchase our outstanding debt, including through open market purchases, privately negotiated transactions or otherwise.

Any such debt repurchases will depend upon prevailing market conditions, our liquidity requirements, contractual restrictions, applicable securities law requirements and other factors.

There have been no material changes outside of the ordinary course of business to our upcoming cash obligations during the three months ended September 30, 2024, from those disclosed under “Capital Resources” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2023 Form 10-K.

There have been no material changes outside of the ordinary course of business to our upcoming cash obligations during the three months ended March 31, 2025, from those disclosed under “Capital Resources” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2024 Form 10-K.

Capital Resources

Cash expenditures for purchases of facilities and other related businesses were approximately $1 million for the nine months ended September 30, 2024, compared to $35 million for the same period in 2023.

Our expenditures for the nine months ended September 30, 2024 and 2023 were primarily related to physician practices and clinics.

Cash expenditures for purchases of facilities and other related businesses were less than $1 million for the three months ended March 31, 2025, compared to approximately $1 million for the same period in 2024.

Our expenditures for the three months ended March 31, 2025 and 2024 were primarily related to physician practices and clinics.

Capital expenditures relate primarily to expansion and renovation of existing facilities, construction of additional access points such as free-standing 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.

In addition, we have incurred costs for hurricane-related repairs and expect to incur costs for capital expenditures needed to remediate damage sustained during hurricanes Helene and Milton.

An estimate of total capital expenditures for such remedial efforts, the majority of which is expected to be covered by insurance, is not currently known.

Capital expenditures totaled $251 million and $357 million for the nine months ended September 30, 2024 and 2023, respectively.

Capital expenditures totaled $85 million and $93 million for the three months ended March 31, 2025 and 2024, respectively.

We expect total capital expenditures of approximately $350 million to $400 million in 2025.

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.

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 is to be completed by September 30, 2026.

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Reimbursement, Legislative and Regulatory Changes

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.

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.

Ongoing presidential actions, legislative and regulatory efforts and judicial interpretations could reduce or otherwise adversely affect the amount of payments we receive from Medicare and Medicaid and other payors, including through holds on or cancellations of congressionally authorized spending.

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

It is unclear how the restructuring efforts within HHS or broader governmental deregulatory initiatives will impact administration of or payment under the Medicare and Medicaid programs.

Legal challenges to healthcare regulations and agency guidance, including those related to Medicare and Medicaid payment policies, may also adversely affect payments, and we expect legal challenges 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 might, in the future, 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.

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.

We cannot predict whether additional reimbursement reductions will be made or whether any such changes or other restructuring of the financing and delivery of healthcare would have a material adverse effect on our business, financial conditions, results of operations, cash flow, capital resources and liquidity.

Moreover, we cannot predict whether additional reimbursement reductions, including as a result of the factors described above, will be made or whether any such changes or other restructuring of the financing and delivery of healthcare would have a material adverse effect on our business, financial conditions, results of operations, cash flow, capital resources and liquidity.

Critical Accounting Policies

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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 the Consolidated Financial Statements included under Part II, Item 8 of the 2023 Form 10-K.

The following information should be read in conjunction with our significant accounting policies included in Note 1 - Basis of Presentation and Significant Accounting Policies of the Notes to the Consolidated Financial Statements included under Part II, Item 8 of the 2024 Form 10-K.

Revenue Recognition

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Amounts we receive for treatment of patients covered by these programs are generally less than our standard billing rates.

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.

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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 September 30, 2024 from our estimated reimbursement percentage, net loss for the nine months ended September 30, 2024 would have changed by approximately $99 million, and net accounts receivable at September 30, 2024 would have changed by $127 million.

If the actual contractual reimbursement percentage under government programs and managed care contracts differed by 1% at March 31, 2025 from our estimated reimbursement percentage, net loss for the three months ended March 31, 2025 would have changed by approximately $103 million, and net accounts receivable at March 31, 2025 would have changed by approximately $132 million.

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

We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the periods that such adjustments become known.

Contractual allowance adjustments related to final settlements and previous program reimbursement estimates impacted net operating revenues by an insignificant amount for the three- and nine-month periods ended September 30, 2024 and 2023.

Patient Accounts Receivable

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We believe that we collect substantially all of our third-party insured receivables, which include receivables from governmental agencies.

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 Condensed Consolidated Financial Statements included under Part I, Item 1 of this Form 10-Q, numerous factors may affect the net realizable value of accounts receivable.

If the actual collection percentage differed by 1% at September 30, 2024 from our estimated collection percentage as a result of a change in expected recoveries, net loss for the nine months ended September 30, 2024 would have changed by $38 million, and net accounts receivable at September 30, 2024 would have changed by $48 million.

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 - Basis of Presentation and Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Form 10-Q, numerous factors may affect the net realizable value of accounts receivable.

If the actual collection percentage differed by 1% at March 31, 2025 from our estimated collection percentage as a result of a change in expected recoveries, net loss for the three months ended March 31, 2025 would have changed by approximately $37 million, and net accounts receivable at March 31, 2025 would have changed by approximately $48 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 $1.5 billion at September 30, 2024 and $1.7 billion at December 31, 2023, being pursued by various outside collection agencies.

We had approximately $1.5 billion at March 31, 2025 and $1.6 billion at December 31, 2024, 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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Patient accounts receivable from our hospitals represent approximately 98% of our total consolidated accounts receivable.

Days revenue outstanding, adjusted for the impact of receivables for state Medicaid supplemental payment programs and divested facilities, was 58 days at both September 30, 2024 and December 31, 2023.

Total gross accounts receivable (prior to allowance for contractual adjustments and implicit price concessions) was approximately $17.1 billion and $16.8 billion as of September 30, 2024 and December 31, 2023, respectively.

Days revenue outstanding, adjusted for the impact of receivables for state Medicaid supplemental payment programs and divested facilities, was 56 days and 55 days at March 31, 2025 and December 31, 2024, respectively.

Total gross accounts receivable (prior to allowance for contractual adjustments and implicit price concessions) was approximately $17.5 billion and $17.3 billion as of March 31, 2025 and December 31, 2024, 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:

As of September 30, 2024:

At March 31, 2025:

% of Gross Receivables

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Managed Care and other third-party payors

As of December 31, 2023:

At December 31, 2024:

% of Gross Receivables

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

September 30,

Insured receivables

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 90% at September 30, 2024 and 91% at December 31, 2023.

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 September 30, 2024 and December 31, 2023.

At September 30, 2024, we had approximately $3.9 billion of goodwill recorded, all of which resides at our hospital operations reporting unit.

At March 31, 2025, we had approximately $3.8 billion of goodwill recorded, all of which resides at our hospital operations reporting unit.

Goodwill represents the excess of the fair value of the consideration conveyed in an acquisition over the fair value of net assets acquired.

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Some of those inputs include, but are not limited to, the most recent price of our common stock and fair value of our long-term debt, our recent financial results, estimates of future revenue and expense growth, estimated market multiples, expected capital expenditures, income tax rates, costs of invested capital and a discount rate.

our long-term debt, lower than expected hospital volumes and/or net operating revenues, higher market interest rates, increased operating costs or other adverse impacts on our financial results.

Future estimates of fair value could be adversely affected if the actual outcome of one or more of the assumptions described above changes materially in the future, including as a result of any decline in or increased volatility of our stock price and the fair value of our long-term debt, lower than expected hospital volumes and/or net operating revenues, higher market interest rates, increased operating costs or other adverse impacts on our financial results.

Such changes impacting the calculation of our fair value could result in a material impairment charge in the future.

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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 includes an amount for the losses covered by our excess insurance.

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.

We also record a receivable for the expected reimbursement of losses covered by our excess insurance.

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 a weighted-average risk-free rate of approximately 3.8% and 3.7% at September 30, 2024 and December 31, 2023, respectively.

The net present value of the projected payments was discounted using a weighted-average risk-free rate of 3.7% at both March 31, 2025 and December 31, 2024.

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

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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 September 30, 2024 would have increased or decreased the reserve by approximately $10 million.

A 1% change in assumptions for either severity or frequency as of March 31, 2025 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.

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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.

During the three months ended September 30, 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 we have 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 our actuarially determined estimate for the resolution of professional liability claims and resulted in an upward revision to our estimate of the professional liability claims accrual in the amount of $149 million during the three months ended September 30, 2024, the majority of which increase in estimate related to divested locations.

We are primarily self-insured for professional liability claims;

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

There were no significant changes in our estimate of the reserve for professional liability claims during the three months ended March 31, 2025.

We must make estimates in recording provision for income taxes, including determination of deferred tax assets and deferred tax liabilities and any valuation allowances that might be required against the deferred tax assets.

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 $46 million at September 30, 2024.

A total of $4 million of interest and penalties is included in the amount of liability for uncertain tax positions at September 30, 2024.

The total amount of unrecognized benefit that would impact the effective tax rate, if recognized, was $43 million at March 31, 2025.

A total of $6 million of interest and penalties is included in the amount of liability for uncertain tax positions at March 31, 2025.

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

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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.

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 March 31, 2026 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 condensed 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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The amendments in this ASU should be applied on a prospective basis and early adoption is permitted.

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

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 such ASUs to have a material impact on our consolidated financial position or results of operations.

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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 impact of current negative macroeconomic conditions, inflationary conditions, 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 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 of challenging macroeconomic conditions and inflationary pressures, the current high interest rate environment, current geopolitical instability, and impacts from the imposition of, or changes in tariffs, as well as the potential impact on us of uncertain 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 and changes in the structure and administration of federal and state agencies and 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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• 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;

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• 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 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;

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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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• timeliness of reimbursement payments received under government programs;

• effects related to pandemics, epidemics, or outbreaks of infectious diseases 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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• any changes in or interpretations of income tax laws and regulations;

• the risk factors set forth in our 2023 Form 10-K and our other filings filed with the SEC.

Although we believe that these forward-looking statements are based upon reasonable assumptions, these assumptions are inherently subject to significant regulatory, economic and competitive uncertainties and contingencies, which are difficult or impossible to predict accurately and may be beyond our control.

• the risk factors set forth in our 2024 Form 10-K and our other public filings with the SEC.

Although we believe that these forward-looking statements are based on reasonable assumptions, these assumptions are inherently subject to significant regulatory, economic and competitive uncertainties and contingencies, which are difficult or impossible to predict accurately and may be beyond our control.

Accordingly, we cannot give any assurance that our expectations will in fact occur, and we caution that actual results may differ materially from those in the forward-looking statements.

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Quantitative and Qualitat ive Disclosures about Market Risk

During the three months ended September 30, 2024, there have been no material changes in the quantitative and qualitative disclosures set forth in Item 7A.

During the three months ended March 31, 2025, there have been no material changes in the quantitative and qualitative disclosures set forth in Item 7A.

Quantitative and Qualitative Disclosures about Market Risk in our 2024 Form 10-K.

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-Q

Item 2. Management’s Discussion and Analysis