CYH filing — read by section

Item 8. Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 

 Index to Financial Statements

 Page 
 
 Community Health Systems, Inc. Consolidated Financial Statements:
 
 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 )
 
 77
 
 Consolidated Statements of Income (Loss) for the Years Ended December 31, 2021, 2020 and 2019 
 
 79
 
 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2021, 2020 and 2019 
 
 80
 
 Consolidated Balance Sheets as of December 31, 2021 and 2020 
 
 81
 
 Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2021, 2020 and 2019 
 
 82
 
 Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019 
 
 83
 
 Notes to Consolidated Financial Statements 
 
 84
 
 76

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To the Stockholders and the Board of Directors of 

 Community Health Systems, Inc.

 Franklin, Tennessee

 Opinion on the Financial Statements

 We have audited the accompanying consolidated balance sheets of Community Health Systems, Inc. and subsidiaries (the “ Companyˮ) as of December 31, 2021 and 2020, the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ deficit, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “ financial statementsˮ). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

 We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 17, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

 Basis for Opinion

 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 Critical Audit Matters 

 The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 Patient Accounts Receivable — Refer to Note 1 to the financial statements

 Critical Audit Matter Description

 Patient accounts receivable are recorded net of implicit price concessions for insured and self-pay patients. Implicit price concessions related to self-pay patients require more extensive judgment and subjective assumptions. Self-pay price concessions relate primarily to amounts due directly from patients and are based upon management’s assessment of historical write-offs and expected net collections, business and economic conditions, trends in federal, state, and private employer health care coverage, and other collection indicators.

 Auditing management’s estimate of self-pay price concessions was complex and judgmental due to the significant data inputs and subjective assumptions utilized in determining related amounts. 

 77

 How the Critical Audit Matter Was Addressed in the Audit 

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

 • 
 
 We tested management’s internal controls that address the risks of material misstatement related to the Company’s estimation of implicit self-pay price concessions. 
 
 • 
 
 We evaluated management’s methodology and related assumptions, including cash collections, by comparing actual results to management’s historical estimates. 
 
 • 
 
 We tested the underlying data related to the recognition of patient level charges and the subsequent activities, including cash collections and non-cash adjustments. 
 
 • 
 
 We tested the mathematical accuracy of the estimates applied to period-end accounts receivable. 
 
 • 
 
 We evaluated the appropriateness of the industry, economic, and Company factors that were used in determining the net realizable value of self-pay accounts receivable. 
 
 Professional Liability Claims — Refer to Note 15 to the financial statements

 Critical Audit Matter Description

 The Company is self-insured for professional liability claims up to certain self-insured retention limits based on the policy year. Professional liabilities consist of the projected settlement value of reported and unreported claims. The self-insurance reserves are estimated based on the Company’s historical claims experience, supplemented with industry experience, as necessary, and is established using actuarial methods followed in the insurance industry. 

 Auditing management’s professional liability reserves was complex and judgmental due to the significant estimations required in determining the projected settlement value of reported and unreported claims.

 How the Critical Audit Matter Was Addressed in the Audit

 Our audit procedures related to the self-insured professional liability claims included the following, among others: 

 • 
 
 We tested management’s internal controls that address the risks of material misstatement related to professional liability claims, including those over the projection of the settlement value of reported and unreported claims. 
 
 • 
 
 We evaluated the assumptions used by management to estimate the self-insurance reserves by: 
 
 - 
 
 Testing the underlying data that served as the basis for the actuarial analysis, including historical claims, to test that the inputs to the actuarial estimate were reasonable.
 
 - 
 
 Comparing management’s prior-year assumptions of expected development and ultimate loss to actual amounts incurred during the current year to identify potential bias in the determination of the self-insurance reserves.
 
 • 
 
 With the assistance of our actuarial specialists, we developed independent estimates of the professional liability claims, including loss data and industry claim development factors, and compared our estimates to management’s estimates. 
 
 /s/ Deloitte & Touche LLP 

 Nashville, Tennessee 
February 17, 2022

 We have served as the Company’s auditor since 1996.

 78

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF INCOME (LOSS)

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 (In millions, except share and per share data)
 
 Net operating revenues
 
 $
 
 12,368 
 
 $
 
 11,789 
 
 $
 
 13,210 
 
 Operating costs and expenses:
 
 Salaries and benefits
 
 5,242 
 
 5,411 
 
 5,947 
 
 Supplies
 
 2,042 
 
 1,963 
 
 2,151 
 
 Other operating expenses
 
 2,958 
 
 2,957 
 
 3,303 
 
 Government and other legal settlements and related costs
 
 —
 
 —
 
 93 
 
 Electronic health records incentive reimbursement
 
 —
 
 —
 
 ( 1 
 
 )
 
 Lease cost and rent
 
 308 
 
 327 
 
 321 
 
 Pandemic relief funds
 
 ( 148 
 
 )
 
 ( 601 
 
 )
 
 —
 
 Depreciation and amortization
 
 540 
 
 558 
 
 608 
 
 Impairment and (gain) loss on sale of businesses, net
 
 24 
 
 48 
 
 138 
 
 Total operating costs and expenses
 
 10,966 
 
 10,663 
 
 12,560 
 
 Income from operations
 
 1,402 
 
 1,126 
 
 650 
 
 Interest expense, net of interest income of $ 3 in 2021, 2020 and 2019
 
 885 
 
 1,031 
 
 1,041 
 
 Loss (gain) from early extinguishment of debt
 
 79 
 
 ( 317 
 
 )
 
 54 
 
 Gain on sale of equity interests in Macon Healthcare, LLC
 
 ( 39 
 
 )
 
 —
 
 —
 
 Equity in earnings of unconsolidated affiliates
 
 ( 22 
 
 )
 
 ( 10 
 
 )
 
 ( 15 
 
 )
 
 Income (loss) before income taxes
 
 499 
 
 422 
 
 ( 430 
 
 )
 
 Provision for (benefit from) income taxes
 
 131 
 
 ( 185 
 
 )
 
 160 
 
 Net income (loss)
 
 368 
 
 607 
 
 ( 590 
 
 )
 
 Less: Net income attributable to noncontrolling interests
 
 138 
 
 96 
 
 85 
 
 Net income (loss) attributable to Community Health Systems, Inc. stockholders
 
 $
 
 230 
 
 $
 
 511 
 
 $
 
 ( 675 
 
 )
 
 Earnings (loss) per share attributable to Community Health Systems,

 Inc. stockholders:
 
 Basic
 
 $
 
 1.82 
 
 $
 
 4.43 
 
 $
 
 ( 5.93 
 
 )
 
 Diluted
 
 $
 
 1.76 
 
 $
 
 4.39 
 
 $
 
 ( 5.93 
 
 )
 
 Weighted-average number of shares outstanding:
 
 Basic
 
 126,754,852 
 
 115,491,022 
 
 113,739,046 
 
 Diluted
 
 130,597,410 
 
 116,544,561 
 
 113,739,046 
 
 See accompanying notes to the consolidated financial statements.

 79

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 (In millions)
 
 Net income (loss)
 
 $
 
 368 
 
 $
 
 607 
 
 $
 
 ( 590 
 
 )
 
 Other comprehensive (loss) income, net of income taxes:
 
 Net change in fair value of interest rate swaps, net of tax of $ 0 

 for the years ended December 31, 2021 and 2020 and $ 1 for the year

 ended December 31, 2019
 
 —
 
 ( 1 
 
 )
 
 ( 3 
 
 )
 
 Net change in fair value of available-for-sale debt securities, net of tax
 
 ( 5 
 
 )
 
 4 
 
 4 
 
 Amortization and recognition of unrecognized pension cost

 components, net of tax of $ 0 , $ 2 and $ 0 for the years ended

 December 31, 2021, 2020 and 2019, respectively
 
 3 
 
 ( 7 
 
 )
 
 —
 
 Other comprehensive (loss) income
 
 ( 2 
 
 )
 
 ( 4 
 
 )
 
 1 
 
 Comprehensive income (loss)
 
 366 
 
 603 
 
 ( 589 
 
 )
 
 Less: Comprehensive income attributable to noncontrolling interests
 
 138 
 
 96 
 
 85 
 
 Comprehensive income (loss) attributable to Community Health Systems,

 Inc. stockholders
 
 $
 
 228 
 
 $
 
 507 
 
 $
 
 ( 674 
 
 )
 
 See accompanying notes to the consolidated financial statements.

 80

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

 CONSOLIDATED BALANCE SHEETS

 December 31,

 2021
 
 December 31,

 2020
 
 (In millions, except share data)
 
 ASSETS
 
 Current assets:
 
 Cash and cash equivalents
 
 $
 
 507 
 
 $
 
 1,676 
 
 Patient accounts receivable (see Note 1)
 
 2,062 
 
 1,927 
 
 Supplies
 
 355 
 
 335 
 
 Prepaid income taxes
 
 94 
 
 50 
 
 Prepaid expenses and taxes
 
 192 
 
 184 
 
 Other current assets
 
 269 
 
 338 
 
 Total current assets
 
 3,479 
 
 4,510 
 
 Property and equipment
 
 Land and improvements
 
 534 
 
 515 
 
 Buildings and improvements
 
 6,050 
 
 5,749 
 
 Equipment and fixtures
 
 3,173 
 
 3,088 
 
 Property and equipment
 
 9,757 
 
 9,352 
 
 Less accumulated depreciation and amortization
 
 ( 4,204 
 
 )
 
 ( 4,030 
 
 )
 
 Property and equipment, net
 
 5,553 
 
 5,322 
 
 Goodwill
 
 4,219 
 
 4,219 
 
 Deferred income taxes
 
 53 
 
 59 
 
 Other assets, net of accumulated amortization of $ 1,216 and $ 1,118 at December 31, 2021

 and 2020, respectively
 
 1,913 
 
 1,896 
 
 Total assets
 
 $
 
 15,217 
 
 $
 
 16,006 
 
 LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 Current liabilities:
 
 Current maturities of long-term debt
 
 $
 
 31 
 
 $
 
 123 
 
 Current operating lease liabilities
 
 147 
 
 142 
 
 Accounts payable
 
 830 
 
 783 
 
 Accrued liabilities:
 
 Employee compensation
 
 655 
 
 637 
 
 Accrued interest
 
 225 
 
 150 
 
 Other
 
 476 
 
 980 
 
 Total current liabilities
 
 2,364 
 
 2,815 
 
 Long-term debt
 
 12,109 
 
 12,093 
 
 Deferred income taxes
 
 192 
 
 29 
 
 Long-term operating lease liabilities
 
 535 
 
 524 
 
 Other long-term liabilities
 
 827 
 
 1,599 
 
 Total liabilities
 
 16,027 
 
 17,060 
 
 Redeemable noncontrolling interests in equity of consolidated subsidiaries
 
 480 
 
 484 
 
 Commitments and contingencies (Note 15)
 
 STOCKHOLDERS’ DEFICIT
 
 Community Health Systems, Inc. stockholders’ deficit:
 
 Preferred stock, $ .01 par value per share, 100,000,000 shares authorized;

 none issued
 
 — 
 
 — 
 
 Common stock, $ .01 par value per share, 300,000,000 shares authorized;

 132,146,282 shares issued and outstanding at December 31, 2021, and

 129,612,117 shares issued and outstanding at December 31, 2020
 
 1 
 
 1 
 
 Additional paid-in capital
 
 2,118 
 
 2,094 
 
 Accumulated other comprehensive loss
 
 ( 14 
 
 )
 
 ( 13 
 
 )
 
 Accumulated deficit
 
 ( 3,477 
 
 )
 
 ( 3,707 
 
 )
 
 Total Community Health Systems, Inc. stockholders’ deficit
 
 ( 1,372 
 
 )
 
 ( 1,625 
 
 )
 
 Noncontrolling interests in equity of consolidated subsidiaries
 
 82 
 
 87 
 
 Total stockholders’ deficit
 
 ( 1,290 
 
 )
 
 ( 1,538 
 
 )
 
 Total liabilities and stockholders’ deficit
 
 $
 
 15,217 
 
 $
 
 16,006 
 
 See accompanying notes to the consolidated financial statements.

 81

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

 Community Health Systems, Inc. Stockholders
 
 Redeemable

 Noncontrolling
 
 Common Stock
 
 Additional

 Paid-in
 
 Accumulated

 Other

 Comprehensive
 
 Accumulated
 
 Noncontrolling
 
 Total

 Stockholders’
 
 Interests
 
 Shares
 
 Amount
 
 Capital
 
 Income (Loss)
 
 Deficit
 
 Interests
 
 Deficit
 
 (In millions, except share data)
 
 Balance, December 31, 2018
 
 $
 
 504 
 
 116,248,376 
 
 $
 
 1 
 
 $
 
 2,017 
 
 $
 
 ( 10 
 
 )
 
 $
 
 ( 3,543 
 
 )
 
 $
 
 72 
 
 $
 
 ( 1,463 
 
 )
 
 Comprehensive income (loss)
 
 52 
 
 -
 
 -
 
 -
 
 1 
 
 ( 675 
 
 )
 
 33 
 
 ( 641 
 
 )
 
 Contributions from noncontrolling interests
 
 3 
 
 -
 
 -
 
 -
 
 -
 
 -
 
 7 
 
 7 
 
 Distributions to noncontrolling interests
 
 ( 68 
 
 )
 
 -
 
 -
 
 -
 
 -
 
 -
 
 ( 31 
 
 )
 
 ( 31 
 
 )
 
 Purchase of subsidiary shares from noncontrolling interests
 
 ( 8 
 
 )
 
 -
 
 -
 
 3 
 
 -
 
 -
 
 ( 6 
 
 )
 
 ( 3 
 
 )
 
 Other reclassifications of noncontrolling interests
 
 ( 2 
 
 )
 
 -
 
 -
 
 -
 
 -
 
 -
 
 2 
 
 2 
 
 Adjustment to redemption value of redeemable noncontrolling interests
 
 21 
 
 -
 
 -
 
 ( 21 
 
 )
 
 -
 
 -
 
 -
 
 ( 21 
 
 )
 
 Cancellation of restricted stock for tax withholdings on vested shares
 
 -
 
 ( 298,182 
 
 )
 
 -
 
 ( 1 
 
 )
 
 -
 
 -
 
 -
 
 ( 1 
 
 )
 
 Income tax payable increase from vesting of restricted shares
 
 -
 
 333 
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 Stock-based compensation
 
 -
 
 1,872,104 
 
 -
 
 10 
 
 -
 
 -
 
 -
 
 10 
 
 Balance, December 31, 2019
 
 502 
 
 117,822,631 
 
 1 
 
 2,008 
 
 ( 9 
 
 )
 
 ( 4,218 
 
 )
 
 77 
 
 ( 2,141 
 
 )
 
 Comprehensive income (loss)
 
 58 
 
 -
 
 -
 
 -
 
 ( 4 
 
 )
 
 511 
 
 38 
 
 545 
 
 Contributions from noncontrolling interests
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 15 
 
 15 
 
 Distributions to noncontrolling interests
 
 ( 82 
 
 )
 
 -
 
 -
 
 -
 
 -
 
 -
 
 ( 34 
 
 )
 
 ( 34 
 
 )
 
 Purchase of subsidiary shares from noncontrolling interests
 
 ( 4 
 
 )
 
 -
 
 -
 
 3 
 
 -
 
 -
 
 -
 
 3 
 
 Other reclassifications of noncontrolling interests
 
 9 
 
 -
 
 -
 
 -
 
 -
 
 -
 
 ( 9 
 
 )
 
 ( 9 
 
 )
 
 Disposition of less-than-wholly owned hospital
 
 ( 14 
 
 )
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 Adjustment to redemption value of redeemable noncontrolling interests
 
 15 
 
 -
 
 -
 
 ( 15 
 
 )
 
 -
 
 -
 
 -
 
 ( 15 
 
 )
 
 Cancellation of restricted stock for tax withholdings on vested shares
 
 -
 
 ( 288,859 
 
 )
 
 -
 
 ( 1 
 
 )
 
 -
 
 -
 
 -
 
 ( 1 
 
 )
 
 Issuance of common stock in connection with the exercise of stock options
 
 -
 
 18,166 
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 Income tax payable increase from vesting of restricted shares
 
 -
 
 333 
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 Section 3(a)(9) exchange
 
 -
 
 10,000,000 
 
 86 
 
 86 
 
 Stock-based compensation
 
 -
 
 2,059,846 
 
 -
 
 13 
 
 -
 
 -
 
 -
 
 13 
 
 Balance, December 31, 2020
 
 484 
 
 129,612,117 
 
 1 
 
 2,094 
 
 ( 13 
 
 )
 
 ( 3,707 
 
 )
 
 87 
 
 ( 1,538 
 
 )
 
 Comprehensive income (loss)
 
 100 
 
 -
 
 -
 
 -
 
 ( 2 
 
 )
 
 230 
 
 38 
 
 266 
 
 Contributions from noncontrolling interests
 
 1 
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 Distributions to noncontrolling interests
 
 ( 82 
 
 )
 
 -
 
 -
 
 -
 
 -
 
 -
 
 ( 39 
 
 )
 
 ( 39 
 
 )
 
 Purchase of subsidiary shares from noncontrolling interests
 
 ( 32 
 
 )
 
 -
 
 -
 
 17 
 
 -
 
 -
 
 ( 4 
 
 )
 
 13 
 
 Other reclassifications of noncontrolling interests
 
 1 
 
 -
 
 -
 
 -
 
 1 
 
 -
 
 -
 
 1 
 
 Disposition of less-than-wholly owned hospital
 
 ( 7 
 
 )
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 Noncontrolling interests in acquired entity
 
 2 
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 Adjustment to redemption value of redeemable noncontrolling interests
 
 13 
 
 -
 
 -
 
 ( 13 
 
 )
 
 -
 
 -
 
 -
 
 ( 13 
 
 )
 
 Cancellation of restricted stock for tax withholdings on vested shares
 
 -
 
 ( 584,379 
 
 )
 
 -
 
 ( 5 
 
 )
 
 -
 
 -
 
 -
 
 ( 5 
 
 )
 
 Issuance of common stock in connection with the exercise of stock options
 
 -
 
 65,499 
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 Stock-based compensation
 
 -
 
 3,053,045 
 
 -
 
 25 
 
 -
 
 -
 
 -
 
 25 
 
 Balance, December 31, 2021
 
 $
 
 480 
 
 132,146,282 
 
 $
 
 1 
 
 $
 
 2,118 
 
 $
 
 ( 14 
 
 )
 
 $
 
 ( 3,477 
 
 )
 
 $
 
 82 
 
 $
 
 ( 1,290 
 
 )
 
 See accompanying notes to the consolidated financial statements.

 82

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 (In millions)
 
 Cash flows from operating activities:
 
 Net income (loss)
 
 $
 
 368 
 
 $
 
 607 
 
 $
 
 ( 590 
 
 )
 
 Adjustments to reconcile net income (loss) to net cash (used in) provided

 by operating activities:
 
 Depreciation and amortization
 
 540 
 
 558 
 
 608 
 
 Deferred income taxes
 
 170 
 
 ( 187 
 
 )
 
 203 
 
 Government and other legal settlements and related costs
 
 —
 
 —
 
 51 
 
 Stock-based compensation expense
 
 25 
 
 13 
 
 10 
 
 Impairment and (gain) loss on sale of businesses, net
 
 24 
 
 48 
 
 138 
 
 Loss (gain) from early extinguishment of debt
 
 79 
 
 ( 317 
 
 )
 
 54 
 
 Gain on sale of equity interests in Macon Healthcare, LLC
 
 ( 39 
 
 )
 
 —
 
 —
 
 Other non-cash expenses, net
 
 78 
 
 131 
 
 182 
 
 Changes in operating assets and liabilities, net of effects of acquisitions

 and divestitures:
 
 Patient accounts receivable
 
 ( 136 
 
 )
 
 309 
 
 93 
 
 Supplies, prepaid expenses and other current assets
 
 1 
 
 ( 15 
 
 )
 
 38 
 
 Medicare accelerated payments
 
 —
 
 1,158 
 
 —
 
 Repayment/derecognition of Medicare accelerated payments
 
 ( 1,081 
 
 )
 
 ( 77 
 
 )
 
 —
 
 Pandemic relief funds
 
 —
 
 104 
 
 —
 
 Accounts payable, accrued liabilities and income taxes
 
 16 
 
 ( 67 
 
 )
 
 ( 157 
 
 )
 
 Other
 
 ( 176 
 
 )
 
 ( 87 
 
 )
 
 ( 245 
 
 )
 
 Net cash (used in) provided by operating activities
 
 ( 131 
 
 )
 
 2,178 
 
 385 
 
 Cash flows from investing activities:
 
 Acquisitions of facilities and other related businesses
 
 ( 3 
 
 )
 
 ( 1 
 
 )
 
 ( 13 
 
 )
 
 Purchases of property and equipment
 
 ( 469 
 
 )
 
 ( 440 
 
 )
 
 ( 438 
 
 )
 
 Proceeds from disposition of hospitals and other ancillary operations
 
 17 
 
 648 
 
 604 
 
 Proceeds from sale of property and equipment
 
 10 
 
 4 
 
 3 
 
 Purchases of available-for-sale debt securities and equity securities
 
 ( 171 
 
 )
 
 ( 178 
 
 )
 
 ( 80 
 
 )
 
 Proceeds from sales of available-for-sale debt securities and equity

 securities
 
 102 
 
 194 
 
 92 
 
 Purchases of investments in unconsolidated affiliates
 
 ( 7 
 
 )
 
 ( 1 
 
 )
 
 ( 14 
 
 )
 
 Proceeds from sale of equity interests in Macon Healthcare, LLC
 
 110 
 
 —
 
 —
 
 Increase in other investments
 
 ( 113 
 
 )
 
 ( 49 
 
 )
 
 ( 156 
 
 )
 
 Net cash (used in) provided by investing activities
 
 ( 524 
 
 )
 
 177 
 
 ( 2 
 
 )
 
 Cash flows from financing activities:
 
 Repurchase of restricted stock shares for payroll tax withholding

 requirements
 
 ( 5 
 
 )
 
 ( 1 
 
 )
 
 ( 1 
 
 )
 
 Deferred financing costs and other debt-related costs
 
 ( 313 
 
 )
 
 ( 156 
 
 )
 
 ( 46 
 
 )
 
 Proceeds from noncontrolling investors in joint ventures
 
 —
 
 15 
 
 10 
 
 Redemption of noncontrolling investments in joint ventures
 
 ( 19 
 
 )
 
 ( 1 
 
 )
 
 ( 11 
 
 )
 
 Distributions to noncontrolling investors in joint ventures
 
 ( 121 
 
 )
 
 ( 116 
 
 )
 
 ( 99 
 
 )
 
 Proceeds from sale-lease back
 
 —
 
 2 
 
 60 
 
 Other borrowings
 
 60 
 
 53 
 
 37 
 
 Issuance of long-term debt
 
 4,310 
 
 4,262 
 
 3,042 
 
 Proceeds from ABL Facility
 
 —
 
 540 
 
 202 
 
 Repayments of long-term indebtedness
 
 ( 4,426 
 
 )
 
 ( 5,493 
 
 )
 
 ( 3,557 
 
 )
 
 Net cash used in financing activities
 
 ( 514 
 
 )
 
 ( 895 
 
 )
 
 ( 363 
 
 )
 
 Net change in cash and cash equivalents
 
 ( 1,169 
 
 )
 
 1,460 
 
 20 
 
 Cash and cash equivalents at beginning of period
 
 1,676 
 
 216 
 
 196 
 
 Cash and cash equivalents at end of period
 
 $
 
 507 
 
 $
 
 1,676 
 
 $
 
 216 
 
 Supplemental disclosure of cash flow information:
 
 Interest payments
 
 $
 
 ( 778 
 
 )
 
 $
 
 ( 1,039 
 
 )
 
 $
 
 ( 1,011 
 
 )
 
 Income tax (payments) refunds, net
 
 $
 
 ( 4 
 
 )
 
 $
 
 ( 2 
 
 )
 
 $
 
 3 
 
 See accompanying notes to the consolidated financial statements.

 83

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES 
 
 Business. Community Health Systems, Inc. is a holding company and operates no business in its own name. On a consolidated basis, Community Health Systems, Inc. and its subsidiaries (collectively the “Company”) own, lease and operate general acute care hospitals as well as outpatient facilities in communities across the country. As of December 31, 2021, the Company owned or leased 83 hospitals, including two stand-alone rehabilitation or psychiatric hospitals, licensed for 13,289 beds in 16 states. Throughout these notes to the consolidated financial statements, Community Health Systems, Inc. (the “Parent”) and its consolidated subsidiaries are referred to on a collective basis as the “Company.” This drafting style is not meant to indicate that the publicly-traded Parent or any particular subsidiary of the Parent owns or operates any asset, business, or property. The hospitals, operations and businesses described in this filing are owned and operated, and management services provided, by distinct and indirect subsidiaries of Community Health Systems, Inc. 

 As of December 31, 2021, Indiana, Florida, Texas and Alabama represent the only areas of significant geographic concentration. Net operating revenues generated by the Company’s hospitals in Indiana, as a percentage of consolidated net operating revenues, were 16.4 % in 2021, 15.0 % in 2020 and 13.7 % in 2019. Net operating revenues generated by the Company’s hospitals in Florida, as a percentage of consolidated net operating revenues, were 12.2 % in 2021, 13.0 % in 2020 and 14.3 % in 2019. Net operating revenues generated by the Company’s hospitals in Texas, as a percentage of consolidated net operating revenues, were 11.0 % in 2021 and 12.2 % in both 2020 and 2019. Net operating revenues generated by the Company’s hospitals in Alabama, as a percentage of consolidated net operating revenues, were 13.0 % in 2021, 12.1 % in 2020 and 10.6 % in 2019. 
 
 Use of Estimates . The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results could differ from these estimates under different assumptions or conditions. 
 
 Principles of Consolidation . The consolidated financial statements include the accounts of the Parent, its subsidiaries, all of which are controlled by the Parent through majority voting control, and variable interest entities for which the Company is the primary beneficiary. All intercompany accounts, profits and transactions have been eliminated. Noncontrolling interests in less-than-wholly-owned consolidated subsidiaries of the Parent are presented as a component of total equity to distinguish between the interests of the Parent and the interests of the noncontrolling owners. Revenues, expenses and income from these subsidiaries are included in the consolidated amounts as presented on the consolidated statements of income (loss), along with a net income measure that separately presents the amounts attributable to the controlling interests and the amounts attributable to the noncontrolling interests for each of the periods presented. Noncontrolling interests that are redeemable or may become redeemable at a fixed or determinable price at the option of the holder or upon the occurrence of an event outside of the control of the Company are presented in mezzanine equity on the consolidated balance sheets. 
 
 Reclassifications . Certain prior period amounts have been reclassified to conform to the current period presentation within the consolidated statements of cash flows. 
 
 Cost of Revenue . Substantially all of the Company’s operating costs and expenses are “cost of revenue” items. Operating costs that could be classified as general and administrative by the Company would include the Company’s corporate office costs at its Franklin, Tennessee office which were collectively $ 222 million, $ 190 million and $ 184 million for the years ended December 31, 2021, 2020 and 2019, respectively. Included in these corporate office costs is stock-based compensation of $ 25 million, $ 13 million and $ 10 million for the years ended December 31, 2021, 2020 and 2019, respectively. Operating costs for the year ended December 31, 2021 reflect increased stock compensation expense and annual cash incentive compensation expense compared to the years ended December 31, 2020 and 2019. 
 
 Cash Equivalents . The Company considers highly liquid investments with original maturities of three months or less to be cash equivalents. 
 
 Supplies. Supplies, principally medical supplies, are stated at the lower of cost (first-in, first-out basis) or market. 
 
 Marketable Securities. The Company’s marketable securities consist of debt securities that are classified as trading or available-for-sale and equity securities. Available-for-sale debt securities are reported at fair value as determined by quoted market prices, with unrealized gains and losses reported as a separate component of stockholders’ deficit. Trading securities are reported at fair value with unrealized gains and losses included in earnings. Other comprehensive loss, net of tax, included an unrealized loss of $ 5 million during the year ended December 31, 2021, and an unrealized gain of $ 4 million for both of the years ended December 31, 2020 and 2019 related to these available-for-sale debt securities. 
 
 84

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 Property and Equipment . Property and equipment are recorded at cost. Depreciation is recognized using the straight-line method over the estimated useful lives of the land and improvements ( 3 to 20 years ), buildings and improvements ( 5 to 40 years ) and equipment and fixtures ( 3 to 18 years ). Costs capitalized as construction in progress were $ 225 million and $ 194 million at December 31, 2021 and 2020, respectively. Expenditures for renovations and other significant improvements are capitalized; however, maintenance and repairs which do not improve or extend the useful lives of the respective assets are charged to operations as incurred. Interest capitalized related to construction in progress was $ 13 million, $ 15 million and $ 20 million for the years ended December 31, 2021, 2020 and 2019, respectively. Purchases of property and equipment and internal-use software accrued in accounts payable and not yet paid were $ 105 million and $ 100 million at December 31, 2021 and 2020, respectively. 
 
 The Company also leases certain facilities and equipment under finance leases (see Note 9). Such assets are amortized on a straight-line basis over the lesser of the term of the lease or the remaining useful lives of the applicable assets. During the year ended December 31, 2021, the Company had non-cash investing activity of $ 166 million related to certain facility and equipment additions that were financed through finance leases and other debt.
 
 Goodwill. Goodwill represents the excess of the fair value of the consideration conveyed in the acquisition over the fair value of net assets acquired. Goodwill arising from business combinations is not amortized. Goodwill is required to be evaluated for impairment at the same time every year and when an event occurs or circumstances change such that it is more likely than not that impairment may exist. The Company performs its annual testing of impairment for goodwill in the fourth quarter of each year. There was no goodwill impairment charge during the years ended December 31, 2021, 2020 and 2019 as a result of the Company’s annual impairment evaluation. 

 Other Assets. Other assets consist of the insurance recovery receivable from excess insurance carriers related to the Company’s self-insured malpractice general liability and workers’ compensation insurance liability; costs to recruit physicians to the Company’s markets, which are deferred and expensed over the term of the respective physician recruitment contract, generally three years , and included in amortization expense; equity method investments; and capitalized internal-use software costs, which are expensed over the expected useful life, which is generally three years for routine software, and included in amortization expense. 
 
 Revenue Recognition. 
 
 Net Operating Revenues 

 Net operating revenues are recorded at the transaction price estimated by the Company to reflect the total consideration due from patients and third-party payors in exchange for providing goods and services in patient care. These services are considered to be a single performance obligation and have a duration of less than one year. Revenues are recorded as these goods and services are provided. The transaction price, which involves significant estimates, is determined based on the Company’s standard charges for the goods and services provided, with a reduction recorded for price concessions related to third party contractual arrangements as well as patient discounts and other patient price concessions. During each of the years ended December 31, 2021, 2020 and 2019, the impact of changes to the inputs used to determine the transaction price was considered immaterial.

 Currently, several states utilize supplemental reimbursement programs for the purpose of providing reimbursement to providers that is not specifically tied to an individual’s care, some of which offsets a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from the Centers for Medicare & Medicaid Services (“CMS”) and are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. Under these supplemental programs, the Company recognizes revenue and related expenses in the period in which amounts are estimable and payment is reasonably assured. Reimbursement under these programs is reflected in net operating revenues and fees, taxes or other program-related costs are reflected in other operating expenses. 
 
 85

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 The Company’s net operating revenues during the years ended December 31, 2021, 2020 and 2019 have been presented in the following table based on an allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage (in millions):

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Medicare
 
 $
 
 2,650 
 
 $
 
 2,813 
 
 $
 
 3,331 
 
 Medicaid
 
 1,671 
 
 1,578 
 
 1,736 
 
 Managed Care and other third-party payors
 
 7,937 
 
 7,400 
 
 8,014 
 
 Self-pay
 
 110 
 
 ( 2 
 
 )
 
 129 
 
 Total
 
 $
 
 12,368 
 
 $
 
 11,789 
 
 $
 
 13,210 
 
 Patient Accounts Receivable 

 Patient accounts receivable are recorded at net realizable value based on certain assumptions determined by each payor. For third-party payors including Medicare, Medicaid, and Managed Care, the net realizable value is based on the estimated contractual reimbursement percentage, which is based on current contract prices or historical paid claims data by payor. For self-pay accounts receivable, which includes patients who are uninsured and the patient responsibility portion for patients with insurance, the net realizable value is determined using estimates of historical collection experience without regard to aging category. These estimates are adjusted for estimated conversions of patient responsibility portions, expected recoveries and any anticipated changes in trends. 

 Patient accounts receivable can be impacted by the effectiveness of the Company’s collection efforts. Additionally, significant changes in payor mix, business office operations, economic conditions or trends in federal and state governmental healthcare coverage could affect the net realizable value of accounts receivable. The Company also continually reviews the net realizable value of accounts receivable by monitoring historical cash collections as a percentage of trailing net operating revenues, as well as by analyzing current period net revenue 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, the impact of recent acquisitions and dispositions and the impact of current economic and other events.

 Final settlements for some payors and programs are subject to adjustment based on administrative review and audit by third parties. As a result of these final settlements, the Company has recorded amounts due to third-party payors of $ 118 million and $ 98 million as of December 31, 2021 and 2020, respectively, and these amounts are included in accrued liabilities-other in the accompanying consolidated balance sheets. Amounts due from third-party payors were $ 114 million and $ 136 million as of December 31, 2021 and 2020, respectively, and are included in other current assets in the accompanying consolidated balance sheets. Substantially all Medicare and Medicaid cost reports are final settled through 2017.
 
 Charity Care 

 In the ordinary course of business, the Company renders services to patients who are financially unable to pay for hospital care. The Company’s policy is to not pursue collections for such amounts; therefore, the related charges for those patients who are financially unable to pay and that otherwise do not qualify for reimbursement from a governmental program are not reported in net operating revenues, and are thus classified as charity care. The Company determines amounts that qualify for charity care based on the patient’s household income relative to the federal poverty level guidelines, as established by the federal government. 

 These charity care services are estimated to be $ 1.1 billion, $ 1.0 billion and $ 540 million for the years ended December 31, 2021, 2020 and 2019, respectively, representing the value (at the Company’s standard charges) of these charity care services that are excluded from net operating revenues. The estimated cost incurred by the Company to provide these charity care services to patients who are unable to pay was approximately $ 123 million, $ 122 million and $ 66 million for the years ended December 31, 2021, 2020 and 2019, respectively. The estimated cost of these charity care services was determined using a ratio of cost to gross charges and applying that ratio to the gross charges associated with providing care to charity patients for the period. The Company determines amounts that qualify for charity care based on the patient’s household income relative to the federal poverty level guidelines, as established by the federal government. The Company updated its policy during the year ended December 31, 2020 in a manner which increased the number of accounts qualifying for charity care. This resulted in an increase in charity care services during the years ended December 31, 2020 and 2021 compared to 2019 and previous years.
 
 Leases. The right-of-use (“ROU”) asset recorded at commencement of the lease represents the right to use the underlying asset over the lease term in exchange for the lease payments. Leases with an initial term of 12 months or less that do not have an option to 
 
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 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 purchase the underlying asset that is deemed reasonably certain to be exercised are not recorded on the balance sheet; rather, rent expense for these leases is recognized on a straight-line basis over the lease term, or when incurred if a month-to-month lease. When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments. For leases where the implicit rate is not readily determinable, the Company’s incremental borrowing rate is utilized. The Company calculates its incremental borrowing rate on a quarterly basis using a third-party financial model that estimates the rate of interest the Company would have to pay to borrow an amount equal to the total lease payments on a collateralized basis over a term similar to the lease. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. 
 
 Physician Income Guarantees . The Company enters into physician recruiting agreements under which it supplements physician income to a minimum amount over a period of time, typically one year , while the physicians establish themselves in the community. As part of the agreements, the physicians are committed to practice in the community for a period of time, typically three years , which extends beyond their income guarantee period. The Company records an asset and liability for the estimated fair value of minimum revenue guarantees on new agreements and the asset is amortized over the life of each respective agreement. Adjustments to the ultimate value of the guarantee paid to physicians are recognized in the period that the change in estimate is identified. As of December 31, 2021 and 2020, the unamortized portion of these physician income guarantees was $ 13 million and $ 16 million, respectively, and is recorded in other assets in the consolidated balance sheets. 
 
 Concentrations of Credit Risk . The Company grants unsecured credit to its patients, most of whom reside in the service area of the Company’s facilities and are insured under third-party payor agreements. Because of the economic diversity of the Company’s facilities and non-governmental third-party payors, Medicare represents the only significant concentration of credit risk from payors. Accounts receivable, net of contractual allowances, from Medicare was $ 211 million and $ 232 million at December 31, 2021 and 2020, respectively, representing 5 % and 6 % of consolidated net accounts receivable at December 31, 2021 and 2020, respectively. 
 
 Accounting for the Impairment or Disposal of Long-Lived Assets. During the year ended December 31, 2021, the Company recorded a net loss on disposal of approximately $ 24 million, of which (i) approximately $ 29 million was recorded to adjust the carrying value of long-lived assets at several hospitals that were sold at a sales price below carrying value, (ii) approximately $ 3 million was recorded related to divestiture related expenses, and (iii) approximately $ 8 million of gain was recorded related to the disposal of the Company’s majority interest in a surgery center that was sold on January 1, 2021. Approximately $ 5 million of goodwill was allocated to facilities disposed of during the year ended December 31, 2021. 

 During the year ended December 31, 2020, the Company recorded a total combined net impairment charge and loss on disposal of approximately $ 48 million, of which (i) approximately $ 59 million was recorded to reduce the carrying value of closed hospitals and certain hospitals that have been sold or deemed held for sale based on the difference between the carrying value of the hospital disposal groups compared to estimated fair value less costs to sell , (ii) approximately $ 74 million was recorded primarily to adjust the carrying value of other long-lived assets at several underperforming hospitals or where the Company was in discussions with potential buyers for divestiture at a sales price that indicated a fair value below carrying value , (iii) approximately $ 3 million was recorded related to a hospital that closed on September 30, 2020, and (iv) approximately $ 1 million was recorded related to a shared service center that closed on July 31, 2020. The impairment charge was partially offset by a gain of approximately $ 89 million related primarily to three hospitals sold on January 1, 2020, one hospital sold on July 1, 2020 and two hospitals sold on October 27, 2020. During the year ended December 31, 2020, a net allocation of approximately $ 110 million of goodwill was allocated from the hospital operations reporting unit based on a calculation of each disposal groups’ relative fair value compared to the total reporting unit. The Company will continue to evaluate the potential for further impairment of the long-lived assets of underperforming hospitals as well as evaluate offers for potential sales. Based on such analysis, additional impairment charges may be recorded in the future.
 
 Income Taxes. The Company accounts for income taxes under the asset and liability method, in which deferred income tax assets and liabilities are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of income (loss) during the period in which the tax rate change becomes law. 
 
 Comprehensive Loss . Comprehensive loss is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. 
 
 Segment Reporting . A public company is required to report annual and interim financial and descriptive information about its reportable operating segments. Operating segments, as defined, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Aggregation of similar operating segments into a single reportable operating segment is permitted if the businesses have similar economic characteristics and meet the criteria established by U.S. GAAP. The Company operates a single 
 
 87

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 operating segment represented by hospital operations (which includes the Company's acute care hospitals and related healthcare entities that provide inpatient and outpatient healthcare services). 
 
 COVID-19 Pandemic. COVID-19, a disease caused by a novel strain of coronavirus, materially affected the Company’s results of operations during 2020 and continued to affect the Company’s results of operations during the year ended December 31, 2021. Federal and state governments have passed legislation, promulgated regulations and taken other administrative actions intended to assist healthcare providers in providing care to COVID-19 and other patients during the public health emergency. Sources of relief include the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), the Paycheck Protection Program and Health Care Enhancement Act (the “PPPHCE Act”), the Consolidated Appropriations Act, 2021 (the “CAA”), and the American Rescue Plan Act of 2021 (the “ARPA”). Together, these stimulus laws authorize over $ 186 billion in funding to be distributed to hospitals and other healthcare providers through the Public Health and Social Services Emergency Fund (the “PHSSEF” or “Provider Relief Fund”). In addition to the relief funding, the CARES Act provided for an expansion of the Medicare Accelerated and Advance Payment Program whereby inpatient acute care hospitals and other eligible providers were able to request accelerated payment of up to 100 % of their Medicare payment amount for a six-month period. Providers are required to repay accelerated payments beginning one year after the payment was issued. Repayments occur through withholding of future Medicare fee-for-service payments. Various state and local programs also exist to provide relief, either independently or through distribution of monies received via the CARES Act and other enacted federal legislation. The Company’s accounting policies for the recognition of these stimulus monies are as follows: 

 Pandemic Relief Funds 

 Through December 31, 2021, net of amounts that have been repaid to the respective federal, state, or local agency, the Company received approximately $ 763 million in payments through the PHSSEF and various state and local programs on a cumulative basis since their enactment. Of the net amount received through December 31, 2021, approximately $ 705 million was received during the year ended December 31, 2020 and the remainder was received during the year ended December 31, 2021. 

 The recognition of amounts received is conditioned upon the provision of care for individuals with possible or actual cases of COVID-19 after January 31, 2020, certification that payment will be used to prevent, prepare for and respond to coronavirus (such amounts shall reimburse the recipient only for healthcare-related expenses or lost revenues, as defined by the U.S. Department of Health and Human Services Agency (“ HHS”), that are attributable to coronavirus), and receipt of the funds. Amounts are recognized as a reduction to operating costs and expenses only to the extent the Company is reasonably assured that underlying conditions have been met. Amounts recognized are denoted by the caption “pandemic relief funds” within the consolidated statements of income (loss). 

 The Company’s assessment of whether the terms and conditions for amounts received are reasonably assured of having been met is updated each reporting period and considers, among other things, the requirements set forth in the CARES Act and subsequent relief legislation, responses to all applicable frequently asked questions and other interpretive guidance issued by HHS, including the various Post-Payment Notices of Reporting Requirements, the Company’s expenses incurred attributable to the coronavirus, the Company’s results of operations during such period as compared to the Company’s 2020 budget, and the allocation of general and targeted fund distribution payments among subsidiaries of the Company during such period. The HHS guidance, specifically the various Post-Payment Notices of Reporting Requirements and frequently asked questions, set forth the allowable methods for quantifying eligible healthcare related expenses and lost revenues. Only healthcare related expenses attributable to coronavirus that another source has not reimbursed and is not obligated to reimburse are eligible to be claimed. The use of funds calculation takes into account expenses attributable to each respective entity, which for the Company primarily relate to incremental labor and supply costs, as well as lost revenues. The deadlines for using and required timelines for reporting on the use of funds depend on the dates of receipt of the funds. Pandemic relief funds of approximately $ 148 million and $ 601 million were recognized during the years ended December 31, 2021 and 2020, respectively. 

 Amounts received through the PHSSEF or state and local programs that have not yet been recognized or otherwise have not been refunded to HHS or the various state and local agencies as of December 31, 2021, total approximately $ 14 million and are reflected within accrued liabilities-other in the consolidated balance sheets. Such unrecognized amounts may either be returned to HHS or the respective state or local agency, as applicable, or may be recognized in future periods if the underlying conditions for recognition are reasonably assured of having been met. HHS’ interpretation of the underlying terms and conditions of such PHSSEF payments, including auditing and reporting requirements, continues to evolve. Additional guidance or new and amended interpretations of existing guidance on the terms and conditions of such PHSSEF payments may result in changes in the Company’s estimate of amounts for which the terms and conditions are reasonably assured of being met, and any such changes may be material. Additionally, any such changes may result in the Company’s inability to recognize additional PHSSEF payments or may result in the derecognition of amounts previously recognized, which (in any such case) may be material.
 
 88

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 Medicare Acceler ated Payments 

 With respect to the Medicare Accelerated and Advanced Payment Program, the Company received Medicare accelerated payments of approximately $ 1.2 billion in April 2020. No additional Medicare accelerated payments have been received by the Company since such time. In addition, because CMS is no longer accepting new applications for accelerated payments, the Company does not expect to receive additional Medicare accelerated payments. CMS began recouping Medicare accelerated payments in April 2021. As of December 31, 2021, all Medicare accelerated payments received by the Company have been recouped or repaid to CMS or assumed by buyers related to hospitals the Company divested. Approximately $ 1.1 billion and $ 77 million of Medicare accelerated payments received by the Company were recouped or repaid to CMS or assumed by buyers related to hospitals the Company divested during the years ended December 31, 2021 and 2020, respectively . 
 
 New Accounting Pronouncements . In November 2021, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance.” This ASU provides specific authoritative guidance for the disclosure of government assistance including the nature of assistance received, the accounting for and presentation of assistance received and the significant terms and conditions, including commitments and contingences. This ASU is effective for all entities for financial statements issued for annual periods beginning after December 15, 2021 and may be early adopted. The Company early adopted this ASU beginning with this Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2021. 

 The Company has evaluated all other recently issued, but not yet effective, ASUs and does not expect the eventual adoption of these ASUs to have a material impact on its consolidated financial position or results of operations.
 
 2. ACCOUNTING FOR STOCK-BASED COMPENSATION 

 Stock-based compensation awards have been granted under the Community Health Systems, Inc. Amended and Restated 2009 Stock Option and Award Plan, which was amended and restated as of March 17, 2021 and approved by the Company’s stockholders at the annual meeting of stockholders held on May 11, 2021 (the “2009 Plan”).

 The 2009 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code (“IRC”) and for the grant of stock options which do not so qualify, stock appreciation rights, restricted stock, restricted stock units, performance-based shares or units and other share awards. Persons eligible to receive grants under the 2009 Plan include the Company’s directors, officers, employees and consultants. To date, all options granted under the 2009 Plan have been “nonqualified” stock options for tax purposes. Generally, these options vest in one-third increments on each of the first three anniversaries of the award date and have a 10 -year contractual term. As of December 31, 2021, 12,522,282 shares of unissued common stock were reserved for future grants under the 2009 Plan.

 The exercise price of all options granted under the 2009 Plan is equal to the fair value of the Company’s common stock on the option grant date. 
 
 The following table reflects the impact of total compensation expense related to stock-based equity plans on the reported operating results for the respective periods (in millions):

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Effect on income (loss) before income taxes
 
 $
 
 ( 25 
 
 )
 
 $
 
 ( 13 
 
 )
 
 $
 
 ( 10 
 
 )
 
 Effect on net income (loss)
 
 $
 
 ( 20 
 
 )
 
 $
 
 ( 10 
 
 )
 
 $
 
 ( 8 
 
 )
 
 At December 31, 2021, $ 27 million of unrecognized stock-based compensation expense related to outstanding unvested stock options, restricted stock and restricted stock units (the terms of which are summarized below) was expected to be recognized over a weighted-average period of 22 months. Of that amount, $ 4 million related to outstanding unvested stock options was expected to be recognized over a weighted-average period of 22 months and $ 23 million related to outstanding unvested restricted stock and restricted stock units was expected to be recognized over a weighted-average period of 22 months. There were no modifications to awards during the years ended December 31, 2021, 2020 and 2019.
 
 89

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 The fair value of stock options was estimated using the Black Scholes option pricing model with the following assumptions and weighted-average fair values during the years ended December 31, 2021, 2020 and 2019:

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Expected volatility
 
 84.3% - 88.9%
 
 73.5 %
 
 68.4 
 
 %
 
 Expected dividends
 
 —
 
 —
 
 —
 
 Expected term
 
 3.0 - 6.0 years 
 
 6.0 years
 
 5.6 years
 
 Risk-free interest rate
 
 0.3% - 0.9%
 
 1.0 %
 
 2.6 
 
 %
 
 In determining the expected term, the Company examined concentrations of option holdings and historical patterns of option exercises and forfeitures, as well as forward-looking factors, in an effort to determine if there were any discernable employee populations. From this analysis, the Company identified two primary employee populations, one consisting of certain senior executives and the other consisting of substantially all other recipients. 

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

 The expected term computation is based on historical exercise and cancellation patterns and forward-looking factors, where present, for each population identified. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The pre-vesting forfeiture rate is based on historical rates and forward-looking factors for each population identified. The Company adjusts the estimated forfeiture rate to its actual experience. 
 
 Options outstanding and exercisable under the 2009 Plan as of December 31, 2021, and changes during each of the years in the three-year period prior to December 31, 2021, were as follows (in millions, except share and per share data):

 Shares
 
 Weighted-

 Average

 Exercise

 Price
 
 Weighted-

 Average

 Remaining

 Contractual

 Term
 
 Aggregate

 Intrinsic

 Value as of

 December 31,

 2021
 
 Outstanding at December 31, 2018
 
 624,938 
 
 $
 
 31.21 
 
 Granted
 
 658,500 
 
 4.95 
 
 Exercised
 
 —
 
 —
 
 Forfeited and cancelled
 
 ( 173,304 
 
 )
 
 23.04 
 
 Outstanding at December 31, 2019
 
 1,110,134 
 
 16.90 
 
 Granted
 
 946,500 
 
 4.93 
 
 Exercised
 
 ( 18,166 
 
 )
 
 4.99 
 
 Forfeited and cancelled
 
 ( 220,943 
 
 )
 
 33.52 
 
 Outstanding at December 31, 2020
 
 1,817,525 
 
 8.77 
 
 Granted
 
 749,250 
 
 8.81 
 
 Exercised
 
 ( 65,499 
 
 )
 
 5.03 
 
 Forfeited and cancelled
 
 ( 199,523 
 
 )
 
 33.14 
 
 Outstanding at December 31, 2021
 
 2,301,753 
 
 $
 
 6.77 
 
 8.0 years
 
 $
 
 16 
 
 Exercisable at December 31, 2021
 
 730,828 
 
 $
 
 6.76 
 
 6.8 years
 
 $
 
 5 
 
 The weighted-average grant date fair value of stock options granted during the years ended December 31, 2021, 2020 and 2019, respectively, was $ 6.22 , $ 3.17 and $ 3.05 . The aggregate intrinsic value (calculated as the number of in-the-money stock options multiplied by the difference between the Company’s closing stock price on the last trading day of the reporting period ($ 13.31 ) and the exercise price of the respective stock options) in the table above represents the amount that would have been received by the option holders had all option holders exercised their options on December 31, 2021. This amount changes based on the market value of the Company’s common stock. The aggregate intrinsic value of options exercised during the years ended December 31, 2021 and 2020 was less than $ 1 million for both years. There were no options exercised during the year ended December 31, 2019. The aggregate intrinsic value of options vested and expected to vest approximates that of the outstanding options. 
 
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 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 The Company has also awarded restricted stock under the 2009 Plan to employees of certain subsidiaries. With respect to time-based vesting restricted stock that has been awarded under the 2009 Plan, the restrictions on these shares have generally lapsed in one-third increments on each of the first three anniversaries of the award date . In addition, certain of the restricted stock awards granted to the Company’s senior executives have contained performance objectives required to be met in addition to any time-based vesting requirements. If the applicable performance objectives are not attained, these awards will be forfeited in their entirety. For performance-based awards, the performance objectives are measured cumulatively over a three-year period. If the applicable target performance objective is met at the end of the three-year period, then the restricted stock award subject to such performance objective will vest in full on the third anniversary of the award date. Additionally, for these performance-based awards, based on the level of achievement for the applicable performance objective within the parameters specified in the award agreement, the number of shares to be issued in connection with the vesting of the award may be adjusted to decrease or increase the number of shares specified in the original award. Notwithstanding the above-mentioned performance objectives and vesting requirements, the restrictions with respect to restricted stock granted under the 2009 Plan may lapse earlier in the event of death, disability or termination of employment by the Company for any reason other than for cause of the holder of the restricted stock, or change in control of the Company. On March 1, 2021, restricted stock awards subject to performance objectives granted on March 1, 2018 vested at 200 % of the shares originally granted based on the Company’s cumulative performance compared to objectives for the 2018 through 2020 performance period. Restricted stock awards subject to performance objectives that have not yet been satisfied are not considered outstanding for purposes of determining diluted earnings per share unless the performance objectives have been satisfied on the basis of results through the end of each respective reporting period.
 
 Restricted stock outstanding under the 2009 Plan as of December 31, 2021, and changes during each of the years in the three-year period prior to December 31, 2021, were as follows:

 Shares
 
 Weighted-

 Average Grant

 Date Fair Value
 
 Unvested at December 31, 2018
 
 3,308,907 
 
 $
 
 7.00 
 
 Granted
 
 1,989,000 
 
 4.94 
 
 Vested
 
 ( 1,160,667 
 
 )
 
 8.89 
 
 Forfeited
 
 ( 279,838 
 
 )
 
 5.60 
 
 Unvested at December 31, 2019
 
 3,857,402 
 
 5.47 
 
 Granted
 
 2,205,500 
 
 4.90 
 
 Vested
 
 ( 1,123,329 
 
 )
 
 5.84 
 
 Forfeited
 
 ( 383,838 
 
 )
 
 8.58 
 
 Unvested at December 31, 2020
 
 4,555,735 
 
 4.84 
 
 Granted
 
 2,929,250 
 
 8.16 
 
 Vested
 
 ( 2,312,328 
 
 )
 
 4.68 
 
 Forfeited
 
 ( 177,343 
 
 )
 
 6.33 
 
 Unvested at December 31, 2021
 
 4,995,314 
 
 6.30 
 
 Restricted stock units (“RSUs”) have been granted to the Company’s non-management directors under the 2009 Plan. Each of the Company’s then serving non-management directors received grants under the 2009 Plan of 34,068 RSUs, 34,483 RSUs and 19,296 RSUs on March 1, 2019, 2020 and 2021, respectively, except for the non-management director who was newly appointed in September 2021 who will begin receiving RSUs effective March 1, 2022. Each of the 2019, 2020 and 2021 grants had a grant date fair value of approximately $ 170,000 . Vesting of these RSUs occurs in one-third increments on each of the first three anniversaries of the award date or upon the director’s earlier cessation of service on the board, other than for cause. Beginning with the 2020 grant, each non-management director may elect, prior to the beginning of the calendar year in which the award is granted, to defer the receipt of shares of the Company’s common stock issuable upon vesting until either his or her (i) separation from service with the Company or (ii) attainment of an age specified in advance by the non-management director. A total of four directors elected to defer the receipt of RSUs granted on March 1, 2021 to a future date, and a total of five directors elected to defer the receipt of RSUs granted on March 1, 2020 to a future date. 
 
 91

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 RSUs outstanding under the 2009 Plan as of December 31, 2021, and changes during each of the years in the three-year period prior to December 31, 2021, were as follows:

 Shares
 
 Weighted-

 Average Grant

 Date Fair Value
 
 Unvested at December 31, 2018
 
 397,906 
 
 $
 
 6.17 
 
 Granted
 
 306,612 
 
 4.99 
 
 Vested
 
 ( 162,942 
 
 )
 
 7.42 
 
 Forfeited
 
 —
 
 —
 
 Unvested at December 31, 2019
 
 541,576 
 
 5.13 
 
 Granted
 
 310,347 
 
 4.93 
 
 Vested
 
 ( 238,184 
 
 )
 
 5.47 
 
 Forfeited
 
 —
 
 —
 
 Unvested at December 31, 2020
 
 613,739 
 
 4.89 
 
 Granted
 
 173,664 
 
 8.81 
 
 Vested
 
 ( 300,805 
 
 )
 
 5.09 
 
 Forfeited
 
 —
 
 —
 
 Unvested at December 31, 2021
 
 486,598 
 
 6.17 
 
 3. ACQUISITIONS AND DIVESTITURES 
 
 Acquisitions

 The Company accounts for all transactions that represent business combinations using the acquisition method of accounting, where the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquired entity are recognized and measured at their fair values on the date the Company obtains control in the acquiree. Such fair values that are not finalized for reporting periods following the acquisition date are estimated and recorded as provisional amounts. Adjustments to these provisional amounts during the measurement period (defined as the date through which all information required to identify and measure the consideration transferred, the assets acquired, the liabilities assumed and any noncontrolling interests has been obtained, limited to one year from the acquisition date) are recorded when identified. Goodwill is determined as the excess of the fair value of the consideration conveyed in the acquisition over the fair value of the net assets acquired. 
 
 Effective June 1, 2019, one or more subsidiaries of the Company completed the acquisition of Northwest Mississippi Medical Center in Clarksdale, Mississippi. This healthcare system includes 181 licensed beds and other outpatient and ancillary services. The total cash consideration paid for operating assets was approximately $ 2 million with additional consideration of $ 9 million in assumed liabilities, for a total consideration of $ 11 million. This hospital was acquired in conjunction with the bankruptcy proceedings for the previous owner that acquired the hospital from the Company in 2017 as part of an agreement with the local county government associated with its lease of the hospital building. Based on the Company’s final purchase price allocation relating to this acquisition as of December 31, 2019, no goodwill has been recorded. Prior to the completion of the acquisition, the Company initiated a plan to sell this hospital and as such the hospital was classified as held for sale at December 31, 2019 and 2020. This disposition was completed on February 1, 2021.

 Other Acquisitions

 During the years ended December 31, 2021, 2020 and 2019, one or more subsidiaries of the Company paid approximately $ 3 million, $ 1 million and $ 8 million, respectively, to acquire the operating assets and related businesses of certain physician practices, clinics and other ancillary businesses that operate within the communities served by the Company’s affiliated hospitals. In connection with these acquisitions, during the year ended December 31, 2021, the Company allocated the purchase price to property and equipment, working capital, noncontrolling interests and goodwill, and d uring the year ended December 31, 2020, t he Company allocated the majority of the purchase price to goodwill. In connection with these acquisitions, during the year ended December 31, 2019, the Company allocated approximately $ 4 million of the consideration paid to property and equipment and net working capital and the remainder, approximately $ 4 million consisting of intangible assets that do not qualify for separate recognition, to goodwill. 
 
 92

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 Divestitures 

 The following table provides a summary of hospitals that the Company divested during the years ended December 31, 2021, 2020 and 2019. 
 
 Hospital
 
 Buyer
 
 City, State
 
 Licensed

 Beds
 
 Effective Date
 
 2021 Divestitures: 
 
 Lea Regional Medical Center
 
 Covenant Health System
 
 Hobbs, NM
 
 84 
 
 January 1, 2021 
 
 Tennova Healthcare - Tullahoma
 
 Vanderbilt University Medical Center
 
 Tullahoma, TN
 
 135 
 
 January 1, 2021 
 
 Tennova Healthcare - Shelbyville
 
 Vanderbilt University Medical Center
 
 Shelbyville, TN
 
 60 
 
 January 1, 2021 
 
 Northwest Mississippi Medical Center
 
 Delta Health System
 
 Clarksdale, MS
 
 181 
 
 February 1, 2021 
 
 AllianceHealth Midwest
 
 SSM Health Care of Oklahoma, Inc.
 
 Midwest City, OK
 
 255 
 
 April 1, 2021 
 
 2020 Divestitures: 
 
 Berwick Hospital Center
 
 Fayette Holdings, Inc.
 
 Berwick, PA
 
 90 
 
 December 1, 2020 
 
 Brownwood Regional Medical Center
 
 Hendrick Health System
 
 Brownwood, TX
 
 188 
 
 October 27, 2020 
 
 Abilene Regional Medical Center
 
 Hendrick Health System
 
 Abilene, TX
 
 231 
 
 October 27, 2020 
 
 San Angelo Community Medical Center
 
 Shannon Health System
 
 San Angelo, TX
 
 171 
 
 October 24, 2020 
 
 Bayfront Health St. Petersburg
 
 Orlando Health, Inc.
 
 St. Petersburg, FL
 
 480 
 
 October 1, 2020 
 
 Hill Regional Hospital
 
 AHRK Holdings, LLC
 
 Hillsboro, TX
 
 25 
 
 August 1, 2020 
 
 St. Cloud Regional Medical Center
 
 Orlando Health, Inc.
 
 St. Cloud, FL
 
 84 
 
 July 1, 2020 
 
 Northern Louisiana Medical Center
 
 Allegiance Health Management, Inc.
 
 Ruston, LA
 
 130 
 
 July 1, 2020 
 
 Shands Live Oak Regional Medical Center
 
 HCA
 
 Live Oak, FL
 
 25 
 
 May 1, 2020 
 
 Shands Starke Regional Medical Center
 
 HCA
 
 Starke, FL
 
 49 
 
 May 1, 2020 
 
 Southside Regional Medical Center
 
 Bon Secours Mercy Health System
 
 Petersburg, VA
 
 300 
 
 January 1, 2020 
 
 Southampton Memorial Hospital
 
 Bon Secours Mercy Health System
 
 Franklin, VA
 
 105 
 
 January 1, 2020 
 
 Southern Virginia Regional Medical Center
 
 Bon Secours Mercy Health System
 
 Emporia, VA
 
 80 
 
 January 1, 2020 
 
 2019 Divestitures: 
 
 Bluefield Regional Medical Center
 
 Princeton Community Hospital Association
 
 Bluefield, WV
 
 92 
 
 October 1, 2019 
 
 Lake Wales Medical Center
 
 Adventist Health System
 
 Lake Wales, FL
 
 160 
 
 September 1, 2019 
 
 Heart of Florida Regional Medical Center
 
 Adventist Health System
 
 Davenport, FL
 
 193 
 
 September 1, 2019 
 
 College Station Medical Center
 
 St. Joseph Regional Health Center
 
 College Station, TX
 
 167 
 
 August 1, 2019 
 
 Tennova Healthcare - Lebanon
 
 Vanderbilt University Medical Center
 
 Lebanon, TN
 
 245 
 
 August 1, 2019 
 
 Chester Regional Medical Center
 
 Medical University Hospital Authority
 
 Chester, SC
 
 82 
 
 March 1, 2019 
 
 Carolinas Hospital System - Florence
 
 Medical University Hospital Authority
 
 Florence, SC
 
 396 
 
 March 1, 2019 
 
 Springs Memorial Hospital
 
 Medical University Hospital Authority
 
 Lancaster, SC
 
 225 
 
 March 1, 2019 
 
 Carolinas Hospital System - Marion
 
 Medical University Hospital Authority
 
 Mullins, SC
 
 124 
 
 March 1, 2019 
 
 Memorial Hospital of Salem County
 
 Community Healthcare Associates, LLC
 
 Salem, NJ
 
 126 
 
 January 31, 2019 
 
 Mary Black Health System - Spartanburg
 
 Spartanburg Regional Healthcare System
 
 Spartanburg, SC
 
 207 
 
 January 1, 2019 
 
 Mary Black Health System - Gaffney
 
 Spartanburg Regional Healthcare System
 
 Gaffney, SC
 
 125 
 
 January 1, 2019 
 
 The following table discloses amounts included in the consolidated balance sheets for the hospitals classified as held for sale as of December 31, 2020 (in millions). Other assets, net primarily includes the net property and equipment for hospitals held for sale. No hospitals were classified as held for sale as of December 31, 2021 and no divestitures or potential divestitures meet the criteria for reporting as a discontinued operation as of December 31, 2021, 2020, or 2019. 
 
 December 31,
 
 2020
 
 Other current assets
 
 $
 
 12 
 
 Other assets, net
 
 11 
 
 Accrued liabilities
 
 16 
 
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 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 Financial and statistical data reported in th is Form 10-K includes operating results for the hospitals that were divested during 20 21, 2020 and 201 9 through the effective date of each respective transaction . Summary financial results of these hospitals for the periods included in the accompanying consolidated statements of income (loss) are as follows (in millions): 
 
 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 (Loss) income before income taxes
 
 $
 
 ( 36 
 
 )
 
 $
 
 83 
 
 $
 
 ( 61 
 
 )
 
 Less: Loss attributable to noncontrolling interests
 
 —
 
 ( 6 
 
 )
 
 ( 8 
 
 )
 
 (Loss) income from operations before income taxes attributable
 
 to Community Health Systems, Inc. stockholders
 
 $
 
 ( 36 
 
 )
 
 $
 
 89 
 
 $
 
 ( 53 
 
 )
 
 The operating results for these divested hospitals included net impairment charges and (gain) loss on disposal of approximately $ 29 million, $( 80 ) million and $( 5 ) million during the years ended December 31, 2021, 2020 and 2019, respectively. 

 On November 30, 2020, one or more subsidiaries of the Company completed the sale of 50 % ownership interest in Merit Health Biloxi ( 153 licensed beds) and its associated healthcare businesses in Biloxi, Mississippi to Memorial Properties, Inc., an affiliate of Memorial Hospital of Gulfport pursuant to the terms of a definitive agreement which was entered into on October 12, 2020 . Merit Health Biloxi and its associated healthcare businesses remain consolidated entities of the Company.

 Other Hospital Closures

 Effective September 30, 2020, one or more affiliates of the Company finalized an agreement to terminate the lease and cease operations of Shands Lake Shore Regional Medical Center ( 99 licensed beds) in Lake City, Florida, including transferring leased assets back to the landlord, the Lake Shore Hospital Authority. The Company recorded an impairment charge of approximately $ 3 million during the year ended December 31, 2020 in conjunction with exiting the lease to operate this hospital. 
 
 4. GOODWILL AND OTHER INTANGIBLE ASSETS 

 Goodwill
 
 The changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020 are as follows (in millions):

 Balance, beginning balance
 
 2021
 
 2020
 
 Goodwill
 
 $
 
 7,033 
 
 $
 
 7,142 
 
 Accumulated impairment losses
 
 ( 2,814 
 
 )
 
 ( 2,814 
 
 )
 
 4,219 
 
 4,328 
 
 Goodwill acquired as part of acquisitions during current year
 
 5 
 
 1 
 
 Goodwill allocated to hospitals divested or held for sale
 
 ( 5 
 
 )
 
 ( 110 
 
 )
 
 Balance, end of year
 
 Goodwill
 
 7,033 
 
 7,033 
 
 Accumulated impairment losses
 
 ( 2,814 
 
 )
 
 ( 2,814 
 
 )
 
 $
 
 4,219 
 
 $
 
 4,219 
 
 Goodwill is allocated to each identified reporting unit, which is defined as an operating segment or one level below the operating segment (referred to as a component of the entity). Management has determined that the Company’s operating segment meets the criteria to be classified as a reporting unit. At December 31, 2021, after giving effect to 2021 acquisition and divestiture activity, the Company had approximately $ 4.2 billion of goodwill recorded. 

 Goodwill is evaluated for impairment annually and when an event occurs or circumstances change that, more likely than not, reduce the fair value of the reporting unit below its carrying value. The Company performed its last annual goodwill impairment evaluation during the fourth quarter of 2021 using an October 31, 2021 measurement date, which indicated no impairment.

 The Company estimates the fair value of the reporting unit using both a discounted cash flow model as well as a market multiple model. The cash flow forecasts are adjusted by an appropriate discount rate based on the Company’s estimate of a market participant’s weighted-average cost of capital. These models are both based on the Company’s best estimate of future revenues and operating costs 
 
 94

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 and are reconciled to the Company’s consolidated market capitalization, with consideration of the amount a potential acquirer would be required to pay, in the form of a control premium, in order to gain sufficient ownership to set policies, direct operations and control management decisions. 

 The determination of fair value in the Company’s goodwill impairment analysis is based on an estimate of fair value for the reporting unit utilizing known and estimated inputs at the evaluation date. Some of those inputs include, but are not limited to, the most recent price of the Company’s common stock and fair value of long-term debt, estimates of future revenue and expense growth, estimated market multiples, expected capital expenditures, income tax rates, and costs of invested capital. A detailed evaluation of potential impairment indicators was performed as of December 31, 2021, which specifically considered the volatility of the fair market value of the Company’s outstanding senior secured and unsecured notes and common stock during the year ended December 31, 2021. On the basis of available evidence as of December 31, 2021, no indicators of impairment were identified. 

 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 a decline in the Company’s stock price and the fair value of its long-term debt, an increase in the volatility of the Company’s stock price and the fair value of its long-term debt, lower than expected hospital volumes and/or net operating revenues, higher market interest rates or increased operating costs. Such changes impacting the calculation of fair value, the risks of which may be amplified by the COVID-19 pandemic, could result in a material impairment charge in the future.

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

 Intangible Assets

 No intangible assets other than goodwill were acquired during the years ended December 31, 2021 and 2020. The gross carrying amount of the Company’s other intangible assets subject to amortization was $ 1 million at both December 31, 2021 and 2020, and the net carrying amount was less than $ 1 million at both December 31, 2021 and 2020. The carrying amount of the Company’s other intangible assets not subject to amortization was $ 54 million and $ 53 million at December 31, 2021 and 2020, respectively. Other intangible assets are included in other assets, net on the Company’s consolidated balance sheets. Substantially all of the Company’s intangible assets are contract-based intangible assets related to operating licenses, management contracts, or non-compete agreements entered into in connection with prior acquisitions. 

 The weighted-average remaining amortization period for the intangible assets subject to amortization is approximately three years. There are no expected residual values related to these intangible assets. Amortization expense on these intangible assets was less than $ 1 million, less than $ 1 million and $ 1 million during the years ended December 31, 2021, 2020 and 2019, respectively. Amortization expense on intangible assets is estimated to be less than $ 1 million in 2022. 

 The gross carrying amount of capitalized software for internal use was approximately $ 992 million and $ 1.1 billion at December 31, 2021 and 2020, respectively, and the net carrying amount was approximately $ 215 million and $ 251 million at December 31, 2021 and 2020, respectively. The estimated amortization period for capitalized internal-use software is generally three years . There is no expected residual value for capitalized internal-use software. At December 31, 2021, there were approximately $ 79 million of capitalized costs for internal-use software that is currently in the development stage and will begin amortization once the software project is complete and ready for its intended use. Amortization expense on capitalized internal-use software was $ 108 million, $ 123 million and $ 121 million during the years ended December 31, 2021, 2020 and 2019, respectively. Amortization expense on capitalized internal-use software is estimated to be $ 90 million in 2022, $ 62 million in 2023, $ 40 million in 2024, $ 9 million in 2025, $ 7 million in 2026 and $ 7 million thereafter. 
 
 95

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 5. INCOME TAXES 
 
 The provision for (benefit from) income taxes consists of the following (in millions):

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Current:
 
 Federal
 
 $
 
 ( 46 
 
 )
 
 $
 
 ( 1 
 
 )
 
 $
 
 ( 38 
 
 )
 
 State
 
 6 
 
 3 
 
 ( 5 
 
 )
 
 ( 40 
 
 )
 
 2 
 
 ( 43 
 
 )
 
 Deferred:
 
 Federal
 
 161 
 
 ( 162 
 
 )
 
 179 
 
 State
 
 10 
 
 ( 25 
 
 )
 
 24 
 
 171 
 
 ( 187 
 
 )
 
 203 
 
 Total provision for (benefit from) income taxes for income (loss)
 
 $
 
 131 
 
 $
 
 ( 185 
 
 )
 
 $
 
 160 
 
 The following table reconciles the differences between the statutory federal income tax rate and the effective tax rate (dollars in millions):

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Amount
 
 %
 
 Amount
 
 %
 
 Amount
 
 %
 
 Provision for (benefit from) income taxes at statutory federal rate
 
 $
 
 105 
 
 21.0 
 
 %
 
 $
 
 89 
 
 21.0 
 
 %
 
 $
 
 ( 90 
 
 )
 
 21.0 
 
 %
 
 State income taxes, net of federal income tax benefit
 
 44 
 
 8.7 
 
 ( 15 
 
 )
 
 ( 3.6 
 
 )
 
 ( 104 
 
 )
 
 24.3 
 
 Net income attributable to noncontrolling interests
 
 ( 29 
 
 )
 
 ( 5.8 
 
 )
 
 ( 20 
 
 )
 
 ( 4.7 
 
 )
 
 ( 18 
 
 )
 
 4.2 
 
 Change in valuation allowance
 
 33 
 
 6.8 
 
 ( 267 
 
 )
 
 ( 63.2 
 
 )
 
 340 
 
 ( 79.2 
 
 )
 
 Nondeductible goodwill
 
 —
 
 —
 
 41 
 
 9.8 
 
 11 
 
 ( 2.6 
 
 )
 
 Amended return adjustments
 
 ( 22 
 
 )
 
 ( 4.4 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 Nondeductible loss on divestiture
 
 —
 
 —
 
 ( 15 
 
 )
 
 ( 3.4 
 
 )
 
 15 
 
 ( 3.5 
 
 )
 
 Other
 
 —
 
 —
 
 2 
 
 0.3 
 
 6 
 
 ( 1.4 
 
 )
 
 Provision for (benefit from) income taxes and effective tax rate for income (loss)
 
 $
 
 131 
 
 26.3 
 
 %
 
 $
 
 ( 185 
 
 )
 
 ( 43.8 
 
 )%
 
 $
 
 160 
 
 ( 37.2 
 
 )%
 
 The Company’s effective tax rates were 26.3 %, ( 43.8 )% and ( 37.2 )% for the years ended December 31, 2021, 2020 and 2019, respectively. The increase in the Company’s effective tax rate for the year ended December 31, 2021, when compared to the year ended December 31, 2020, was primarily due to a decrease in the valuation allowance in 2020 as a result of an increase to the deductible interest expense allowed for 2019 and 2020 under the CARES Act; the CARES Act related benefits for deductibility of interest recognized in 2020 did not reoccur in 2021. The decrease in the Company’s effective tax rate for the year ended December 31, 2020, when compared to the year ended December 31, 2019, was primarily due to a decrease in the valuation allowance recognized on IRC Section 163(j) interest carryforwards and original issue discount deferred tax asset as a result of (i) an increase to the deductible interest expense allowed for 2019 and 2020 under the CARES Act and (ii) tax impacts of 2020 financing activity .
 
 96

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 Deferred income taxes are based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities under the provisions of the enacted tax laws. Deferred income taxes as of December 31, 2021 and 2020 consist of (in millions):

 December 31,
 
 2021
 
 2020
 
 Assets
 
 Liabilities
 
 Assets
 
 Liabilities
 
 Net operating loss and credit carryforwards
 
 $
 
 833 
 
 $
 
 —
 
 $
 
 873 
 
 $
 
 —
 
 Property and equipment
 
 —
 
 343 
 
 —
 
 300 
 
 Self-insurance liabilities
 
 49 
 
 —
 
 58 
 
 —
 
 Prepaid expenses
 
 —
 
 30 
 
 —
 
 29 
 
 Intangibles
 
 —
 
 144 
 
 —
 
 127 
 
 Investments in unconsolidated affiliates
 
 —
 
 58 
 
 —
 
 57 
 
 Other liabilities
 
 —
 
 9 
 
 —
 
 9 
 
 IRC Section 481(a) - mixed service cost
 
 —
 
 —
 
 —
 
 106 
 
 Long-term debt and interest
 
 48 
 
 —
 
 154 
 
 —
 
 Accounts receivable
 
 22 
 
 —
 
 52 
 
 —
 
 IRC Section 163(j) interest limitation
 
 329 
 
 —
 
 108 
 
 —
 
 Accrued vacation
 
 22 
 
 —
 
 22 
 
 —
 
 Accrued bonus
 
 31 
 
 —
 
 32 
 
 —
 
 Other comprehensive income
 
 5 
 
 —
 
 6 
 
 —
 
 Right-of-use assets
 
 —
 
 137 
 
 —
 
 150 
 
 Right-of-use liability
 
 142 
 
 —
 
 155 
 
 —
 
 Stock-based compensation
 
 4 
 
 —
 
 4 
 
 —
 
 Deferred compensation
 
 64 
 
 —
 
 69 
 
 —
 
 IRC Section 481(a) Adjustments
 
 —
 
 191 
 
 —
 
 —
 
 Other
 
 38
 
 —
 
 57 
 
 —
 
 Total
 
 1,587 
 
 912
 
 1,590 
 
 778
 
 Valuation allowance
 
 ( 814 
 
 )
 
 —
 
 ( 781 
 
 )
 
 —
 
 Total deferred income taxes
 
 $
 
 773 
 
 $
 
 912 
 
 $
 
 809 
 
 $
 
 778 
 
 The Company believes that the net deferred tax assets will ultimately be realized, except as noted below. Its conclusion is based on its estimate of future taxable income and the expected timing of temporary difference reversals. The Company has gross federal net operating loss carryforwards of approximately $ 763 million and state net operating loss carryforwards of approximately $ 9.4 billion, which expire from 2022 to 2041. The Company’s tax affected federal and state net operating loss and credit carryforwards are approximately $ 195 million and $ 638 million, respectively. A valuation allowance of approximately $ 814 million has been recognized for state net operating loss carryforwards, state credit carryforwards and federal and state deferred tax assets that the Company does not expect to be able to utilize prior to the expiration of the carryforward period. With respect to the deferred tax liability pertaining to intangibles, as included above, goodwill purchased in connection with certain of the Company’s business acquisitions is amortizable for income tax reporting purposes. However, for financial reporting purposes, there is no corresponding amortization allowed with respect to such purchased goodwill.

 The valuation allowance for federal and state jurisdictions where the Company concluded that the associated deferred tax assets would not be realized increased by $ 64 million and decreased by $ 31 million, respectively, for the year ended December 31, 2021, and decreased by $ 265 million and $ 2 million, respectively, for the year ended December 31, 2020.

 The total amount of unrecognized benefit that would affect the effective tax rate, if recognized, was less than $ 1 million as of December 31, 2021. A total of less than $ 1 million of interest and penalties is included in the amount of the liability for uncertain tax positions at December 31, 2021. It is the Company’s policy to recognize interest and penalties related to unrecognized benefits in its consolidated statements of income (loss) as income tax expense. 

 It is possible the amount of unrecognized tax benefit could change in the next 12 months as a result of a lapse of the statute of limitations and settlements with taxing authorities; however, the Company does not anticipate the change will have a material impact on the Company’s consolidated results of operations or consolidated financial position.
 
 97

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 The following is a tabular reconciliation of the total amount of unrecognized tax benefit for the years ended December 31, 2021, 2020 and 2019 (in millions):

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Unrecognized tax benefit, beginning of year
 
 $
 
 45 
 
 $
 
 26 
 
 $
 
 29 
 
 Gross increases — tax positions in current period
 
 5 
 
 19 
 
 10 
 
 Reductions — tax positions in prior period
 
 ( 8 
 
 )
 
 —
 
 —
 
 Settlements
 
 —
 
 —
 
 ( 13 
 
 )
 
 Unrecognized tax benefit, end of year
 
 $
 
 42 
 
 $
 
 45 
 
 $
 
 26 
 
 The Company’s income tax return for the 2018 tax year remains under examination by the Internal Revenue Service. The Company believes the result of this examination will not be material to its consolidated results of operations or consolidated financial position. The Company has extended the federal statute of limitations through June 30, 2022 for Community Health Systems, Inc. for the tax periods ended December 31, 2014 and 2015. In addition, the Company has extended the federal statute of limitations through December 31, 2023 for the tax period ended December 31, 2018. 

 Cash paid for income taxes, net of refunds received, resulted in net cash paid of $ 4 million, net cash paid of $ 2 million and net cash refund of $ 3 million during the years ended December 31, 2021, 2020 and 2019, respectively. 
 
 6. LONG-TERM DEBT 
 
 Long-term debt, net of unamortized debt issuance costs and discounts or premiums, consists of the following (in millions):

 December 31,
 
 2021
 
 2020
 
 6⅞ % Senior Notes due 2022 
 
 $
 
 —
 
 $
 
 126 
 
 6¼ % Senior Secured Notes due 2023 
 
 —
 
 95 
 
 8⅝ % Senior Secured Notes due 2024 
 
 —
 
 1,033 
 
 6⅝ % Senior Secured Notes due 2025 
 
 1,462 
 
 1,462 
 
 8 % Senior Secured Notes due 2026 
 
 2,101 
 
 2,101 
 
 8 % Senior Secured Notes due 2027 
 
 700 
 
 700 
 
 5⅝ % Senior Secured Notes due 2027 
 
 1,900 
 
 1,900 
 
 6⅞ % Senior Notes due 2028 
 
 767 
 
 767 
 
 6 % Senior Secured Notes due 2029 
 
 900 
 
 900 
 
 4¾ % Senior Secured Notes due 2031 
 
 1,095 
 
 —
 
 9⅞ % Junior-Priority Secured Notes due 2023 
 
 —
 
 1,769 
 
 8⅛ % Junior-Priority Secured Notes due 2024 
 
 —
 
 1,348 
 
 6⅞ % Junior-Priority Secured Notes due 2029 
 
 1,775 
 
 —
 
 6⅛ % Junior-Priority Secured Notes due 2030 
 
 1,440 
 
 —
 
 ABL Facility
 
 —
 
 —
 
 Finance lease and financing obligations
 
 398 
 
 239 
 
 Other
 
 37 
 
 26 
 
 Less: Unamortized deferred debt issuance costs and note premium
 
 ( 435 
 
 )
 
 ( 250 
 
 )
 
 Total debt
 
 12,140 
 
 12,216 
 
 Less: Current maturities
 
 ( 31 
 
 )
 
 ( 123 
 
 )
 
 Total long-term debt
 
 $
 
 12,109 
 
 $
 
 12,093 
 
 6⅞% Senior Notes due 2022

 On January 27, 2014 , CHS/Community Health Systems, Inc. (“CHS”) completed a private offering of $ 3.0 billion aggregate principal amount of 6⅞% Senior Notes due February 1, 2022 (the “6⅞% Senior Notes due 2022”). The net proceeds from this issuance were used to finance the Company’s acquisition by merger of Health Management Associates, Inc. (“HMA”). The 6⅞% Senior Notes due 2022 bore interest at a rate of 6.875 % per annum, payable semiannually in arrears on February 1 and August 1 of each year. Interest on the 6⅞% Senior Notes due 2022 accrued from the date of original issuance. Interest was calculated on the basis 
 
 98

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 of a 360-day year comprised of twelve 30-day months. T he 6⅞% Senior Notes due 2022 were unconditionally guaranteed on a senior-priority unsecured basis by the Company and each of the CHS current and future domestic subsidiaries that provide guarantees under the revolving asset-based loan facility (the “ ABL Facility ”) , any capital market debt securities of CHS (including CHS᾿ outstanding senior notes) and certain other long-term debt of CHS. 
 
 CHS was entitled, at its option, to redeem all or a portion of the 6⅞% Senior Notes due 2022 upon not less than 30 nor more than 60 days’ notice, at a redemption price of 100 % (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed prior to the maturity date. 
 
 Pursuant to a registration rights agreement entered into at the time of the issuance of the 6⅞% Senior Notes due 2022, as a result of an exchange offer made by CHS, all of the 6⅞% Senior Notes due 2022 issued in January 2014 were exchanged in October 2014 for new notes (the “6⅞% Exchange Notes”) having terms substantially identical in all material respects to the 6⅞% Senior Notes due 2022 (except that the exchange notes were issued under a registration statement pursuant to the 1933 Act). References to the 6⅞% Senior Notes due 2022 shall be deemed to be the 6⅞% Exchange Notes unless the context provides otherwise.

 On June 22, 2018, CHS issued approximately $ 276 million aggregate principal amount of the 8⅛% Junior-Priority Secured Notes due 2024 in exchange for approximately $ 368 million of 6⅞% Senior Notes due 2022. 

 On November 19, 2019, CHS issued approximately $ 700 million aggregate principal amount of 8 % Senior Secured Notes due December 15, 2027 and approximately $ 1.7 billion aggregate principal amount of 6⅞% Senior Notes due April 1, 2028 in exchange for approximately $ 2.4 billion of 6⅞% Senior Notes due 2022 (the “2019 Exchange Offer”). Following the 2019 Exchange Offer, CHS had approximately $ 231 million aggregate principal amount of 6⅞% Senior Notes due 2022 outstanding.

 During the year ended December 31, 2020, the Company extinguished $ 34 million in principal related to the 6⅞% Senior Notes due 2022 through open market repurchases and approximately $ 72 million via a tender offer which commenced on October 30, 2020 , and expired on November 30, 2020 . On March 1, 2021, the Company redeemed the remaining principal amount of the 6⅞% Senior Notes due 2022 using cash on hand.

 6¼% Senior Secured Notes due 2023 

 On March 16, 2017 , CHS completed a public offering of $ 2.2 billion aggregate principal amount of 6¼% Senior Secured Notes due March 31, 2023 (the “6¼% Senior Secured Notes due 2023”). The net proceeds from this issuance were used to finance the purchase or redemption of $ 700 million aggregate principal amount of CHS’ then outstanding 5⅛% Senior Secured Notes due 2018 and related fees and expenses, and the repayment of $ 1.445 billion of the then outstanding Term F Facility. On May 12, 2017, CHS completed a tack-on offering of $ 900 million aggregate principal amount of 6¼% Senior Secured Notes due 2023, increasing the total aggregate principal amount of 6¼% Senior Secured Notes due 2023 to $ 3.1 billion. A portion of the net proceeds from this issuance were used to finance the repayment of approximately $ 713 million aggregate principal amount of CHS’ then outstanding Term A Facility and related fees and expenses. The tack-on notes had identical terms, other than issue date and issue price, as the 6¼% Senior Secured Notes due 2023 issued on March 16, 2017. The 6¼% Senior Secured Notes due 2023 bore interest at a rate of 6.250 % per annum, payable semiannually in arrears on March 31 and September 30 of each year. Interest on the 6¼% Senior Secured Notes due 2023 accrued from the date of original issuance. Interest was calculated on the basis of a 360-day year comprised of twelve 30-day months. The 6¼% Senior Secured Notes due 2023 are scheduled to mature on March 31, 2023. The 6¼% Senior Secured Notes due 2023 were unconditionally guaranteed on a senior-priority secured basis by the Company and each of the CHS current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS᾿ outstanding senior notes) and certain other long-term debt of CHS.

 The 6¼% Senior Secured Notes due 2023 and the related guarantees were secured by shared (i) first-priority liens on the collateral (the “Non-ABL Priority Collateral”) that also secures on a first-priority basis CHS’s senior-priority secured notes and (ii) second-priority liens on the collateral (the “ABL-Priority Collateral”), in each case subject to permitted liens described in the indenture governing the 6¼% Senior Secured Notes due 2023. 

 CHS was entitled, at its option, to redeem all or a portion of the 6¼% Senior Secured Notes due 2023 at any time prior to March 31, 2020, upon not less than 30 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 6¼% Senior Secured Notes due 2023 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 6¼% Senior Secured Notes due 2023. In addition, CHS had the option to redeem up to 40 % of the aggregate principal amount of the 6¼% Senior Secured Notes due 2023 at any time prior to March 31, 2020 using the net proceeds from certain 
 
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 equity offerings at the redemption price of 106.250 % of the principal amount of the 6¼% Senior Secured Notes due 2023 redeemed, plus accrued and unpaid interest, if any. 
 
 CHS had the option to redeem some or all of the 6¼% Senior Secured Notes due 2023 at any time on or after March 31, 2020 upon not less than 30 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the periods set forth below: 

 Period
 
 Redemption Price
 
 March 31, 2020 to March 30, 2021
 
 103.125 
 
 %
 
 March 31, 2021 to March 30, 2022
 
 101.563 
 
 %
 
 March 31, 2022 to March 30, 2023
 
 100.000 
 
 %
 
 Approximately $ 426 million aggregate principal amount of 6¼% Senior Secured Notes due 2023 were purchased in one or more privately negotiated transactions on February 6, 2020. 

 On December 28, 2020, the Company redeemed approximately $ 2.579 billion of the 6¼% Senior Secured Notes due 2023 using proceeds from the issuance of $ 1.9 billion aggregate principal amount of 5⅝% Senior Secured Notes due 2027 and $ 900 million aggregate principal amount of 6% Senior Secured Notes due 2029. The remaining principal value of 6¼% Senior Secured Notes due 2023 that were not redeemed on December 28, 2020 of approximately $ 95 million were redeemed on January, 28, 2021 using cash on hand. 

 9⅞% Junior-Priority Secured Notes due 2023 

 On June 22, 2018 , CHS completed a private offering of $ 1.770 billion aggregate principal amount of the 9⅞% Junior-Priority Secured Notes due June 30, 2023 (the “9⅞% Junior-Priority Secured Notes due 2023”) in exchange for the same amount of 8% Senior Notes due 2019. The 9⅞% Junior-Priority Secured Notes due 2023 bore interest at a rate of 11.000 % per annum, solely for the period from the issue date of such 9⅞% Junior-Priority Secured Notes due 2023 to, but excluding, June 22, 2019, after which they bore interest at a rate of 9.875 % per annum. Interest was payable semi-annually in arrears on June 30 and December 31 of each year. The 9⅞% Junior-Priority Secured Notes due 2023 were scheduled to mature on June 20, 2023. The 9⅞% Junior-Priority Secured Notes due 2023 were unconditionally guaranteed on a junior-priority secured basis by the Company and each of the CHS current and future domestic subsidiaries that provide guarantees under CHS᾿ ABL Facility, any capital market debt securities of CHS (including CHS᾿ outstanding senior notes) and certain other long-term debt of CHS. 

 The 9⅞% Junior-Priority Secured Notes due 2023 and the related guarantees were secured by shared (i) second-priority liens on the Non-ABL Priority Collateral that secures on a first-priority basis the CHS’s senior-priority secured notes and (ii) third-priority liens on the ABL-Priority Collateral that secures on a first-priority basis the ABL Facility (and also secures on a second-priority basis CHS’s senior-priority secured notes), in each case subject to permitted liens described in the indenture governing the 9⅞% Junior-Priority Secured Notes due 2023.

 Prior to June 30, 2020, CHS may redeem some or all of the 9⅞% Junior-Priority Secured Notes due 2023 at a redemption price equal to 100 % of the principal amount of the notes redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 9⅞% Junior-Priority Secured Notes due 2023. In addition, at any time prior to June 30, 2020, CHS had the option to redeem up to 40 % of the aggregate principal amount of the 9⅞% Junior-Priority Secured Notes due 2023 with the proceeds from certain equity offerings at the redemption price of 109.875 %, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. 
 
 After June 30, 2020, CHS was entitled, at its option, to redeem all or a portion of the 9⅞% Junior-Priority Secured Notes due 2023 upon not less than 15 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the periods set forth below: 

 Period
 
 Redemption Price
 
 June 30, 2020 to June 29, 2021
 
 107.406 
 
 %
 
 June 30, 2021 to June 29, 2022
 
 103.703 
 
 %
 
 June 30, 2022 to June 29, 2023
 
 100.000 
 
 %
 
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 The Company redeemed approximately $ 2 million of the 9⅞% Junior-Priority Secured Notes due 2023 via a tender offer which commenced on October 30, 2020 , and expired on November 30, 2020 . 

 In conjunction with the issuance of $ 1.775 billion aggregate principal amount of 6⅞% Junior-Priority Secured Notes due 2029, all remaining 9⅞% Junior-Priority Secured Notes due 2023 were purchased pursuant to a tender offer on February 2, 2021 or, to the extent not tendered, pursuant to a notice of redemption as completed on February 4, 2021.

 8⅛% Junior-Priority Secured Notes due 2024

 On June 22, 2018 , CHS completed a private offering of $ 1.355 billion aggregate principal amount of the 8⅛% Junior-Priority Secured Notes due June 30, 2024 (the “8⅛% Junior-Priority Secured Notes due 2024”) in exchange for approximately $ 1.079 billion of 7⅛% Senior Notes due 2020 and approximately $ 368 million of 6⅞% Senior Notes due 2022. The 8⅛% Junior-Priority Secured Notes due 2024 bore interest at a rate of 8.125 % per annum, payable semi-annually in arrears on June 30 and December 31 of each year. The 8⅛% Junior-Priority Secured Notes due 2024 were scheduled to mature on June 20, 2024. The 8⅛% Junior-Priority Secured Notes due 2024 were unconditionally guaranteed on a junior-priority secured basis by the Company and each of the CHS current and future domestic subsidiaries that provide guarantees under CHS᾿ ABL Facility, any capital market debt securities of CHS (including CHS᾿ outstanding senior notes) and certain other long-term debt of CHS.

 The 8⅛% Junior-Priority Secured Notes due 2024 and the related guarantees were secured by shared (i) second-priority liens on the Non-ABL Priority Collateral that secures on a first-priority basis the CHS’s senior-priority secured notes and (ii) third-priority liens on the ABL-Priority Collateral that secures on a first-priority basis the ABL Facility (and also secures on a second-priority basis CHS’s senior-priority secured notes), in each case subject to permitted liens described in the indenture governing the 8⅛% Junior-Priority Secured Notes due 2024.

 Prior to June 30, 2021, CHS had the option to redeem some or all of the 8⅛% Junior-Priority Secured Notes due 2024 at a redemption price equal to 100 % of the principal amount of the notes redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 8⅛% Junior-Priority Secured Notes due 2024. In addition, at any time prior to June 30, 2021, CHS had the option to redeem up to 40 % of the aggregate principal amount of the 8⅛% Junior-Priority Secured Notes due 2024 with the proceeds from certain equity offerings at the redemption price of 108.125 %, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.
 
 After June 30, 2021, CHS was entitled, at its option, to redeem all or a portion of the 8⅛% Junior-Priority Secured Notes due 2024 upon not less than 15 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the periods set forth below:

 Period
 
 Redemption Price
 
 June 30, 2021 to June 29, 2022
 
 104.063 
 
 %
 
 June 30, 2022 to June 29, 2023
 
 102.031 
 
 %
 
 June 30, 2023 to June 29, 2024
 
 100.000 
 
 %
 
 The indentures governing each of the 9⅞% Junior-Priority Secured Notes due 2023 and 8 ⅛ % Junior-Priority Secured Notes due 2024 also prohibited CHS from purchasing, repurchasing, redeeming, defeasing or otherwise acquiring or retiring any outstanding 7⅛% Senior Notes due 2020 with: (a) cash or cash equivalents on hand as of the consummation of such 2018 exchange offers; (b) cash generated from operations; (c) proceeds from assets sales; or (d) proceeds from the issuance of, or in exchange for, secured debt, in each case, prior to May 15, 2020. CHS received a waiver from requisite holders of each series of the 9⅞% Junior-Priority Secured Notes due 2023 and 8 ⅛ % Junior-Priority Secured Notes due 2024 waiving these restrictions prior to consummating the 2019 Exchange Offer. 

 During the year ended December 31, 2020, the Company extinguished $ 1 million in principal related to the 8⅛% Junior-Priority Secured Notes due 2024 through open market repurchases and approximately $ 6 million via a tender offer which commenced on October 30, 2020 , and expired on November 30, 2020 .
 On May 19, 2021 , CHS redeemed the remaining principal amount of the 8⅛% Junior-Priority Secured Notes due 2024 using proceeds from the issuance of the 6⅛% Junior-Priority Secured Notes due 2030 on May 19, 2021.
 
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 8⅝% Senior Secured Notes due 2024 

 On July 6, 2018 , CHS completed a private offering of $ 1.033 billion aggregate principal amount of 8⅝% Senior Secured Notes due January 15, 2024 (the “8⅝% Senior Secured Notes due 2024”). The 8⅝% Senior Secured Notes due 2024 bore interest at a rate of 8.625 % per annum payable semi-annually in arrears on January 15 and July 15 of each year. The 8⅝% Senior Secured Notes due 2024 were unconditionally guaranteed on a senior-priority secured basis by the Company and each of the CHS current and future domestic subsidiaries that provide guarantees under CHS᾿ ABL Facility, any capital market debt securities of CHS (including CHS᾿ outstanding senior notes) and certain other long-term debt of CHS. 

 The 8⅝% Senior Secured Notes due 2024 and the related guarantees were secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 8⅝% Senior Secured Notes due 2024. 

 Prior to January 15, 2021, CHS had the option to redeem some or all of the 8⅝% Senior Secured Notes due 2024 at a redemption price equal to 100 % of the principal amount of the notes redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 8⅝% Senior Secured Notes due 2024. In addition, at any time prior to January 15, 2021, CHS had the option to redeem up to 40 % of the aggregate principal amount of the 8⅝% Senior Secured Notes due 2024 with the proceeds from certain equity offerings at the redemption price of 108.625 %, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.
 
 After January 15, 2021, CHS was entitled, at its option, to redeem all or a portion of the 8⅝% Senior Secured Notes due 2024 upon not less than 15 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the periods set forth below:

 Period
 
 Redemption Price
 
 January 15, 2021 to January 14, 2022
 
 104.313 
 
 %
 
 January 15, 2022 to January 14, 2023
 
 102.156 
 
 %
 
 January 15, 2023 to January 14, 2024
 
 100.000 
 
 %
 
 In conjunction with the issuance of $ 1.095 billion aggregate principal amount of 4¾% Senior Secured Notes due February 15, 2031, all remaining 8⅝% Senior Secured Notes due 2024 were redeemed on February 9, 2021.

 6⅝% Senior Secured Notes due 2025

 On February 6, 2020 , CHS completed a private offering of $ 1.462 billion aggregate principal amount of 6⅝% Senior Secured Notes due February 15, 2025 (the “6⅝% Senior Secured Notes due 2025”). CHS used the net proceeds of the offering of the 6⅝% Senior Secured Notes due 2025 to (i) purchase any and all of its 5⅛% Senior Secured Notes due 2021 validly tendered and not validly withdrawn in the cash tender offer announced on January 23, 2020, (ii) redeem all of the 5⅛% Senior Secured Notes due 2021 that were not purchased pursuant to such tender offer, (iii) purchase in one or more privately negotiated transactions approximately $ 426 million aggregate principal amount of its 6¼% Senior Secured Notes due 2023 and (iv) pay related fees and expenses. 

 The 6⅝% Senior Secured Notes due 2025 bear interest at a rate of 6.625 % per annum, payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2020. The 6⅝% Senior Secured Notes are scheduled to mature on February 15, 2025. The 6⅝% Senior Secured Notes due 2025 are unconditionally guaranteed on a senior-priority secured basis by the Company and each of the CHS current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS. The 6⅝% Senior Secured Notes due 2025 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 6⅝% Senior Secured Notes due 2025.

 At any time prior to February 15, 2022, CHS may redeem some or all of the 6⅝% Senior Secured Notes due 2025 at a price equal to 100 % of their principal amount plus accrued and unpaid interest, if any, to, but excluding the applicable redemption date plus a make-whole premium as defined in the indenture agreement dated February 6, 2020. After February 15, 2022, CHS is entitled, at its option, to redeem some or all of the 6⅝% Senior Secured Notes at a redemption price equal to the percentage of principal amount 
 
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 below plus accrued and unpaid interest, if any, to, but excluding the applicable redemption date, if redeemed during the twelve-month period beginning on February 15 of the years set forth below: 
 
 Period
 
 Redemption Price
 
 February 15, 2022 to February 14, 2023
 
 103.313 
 
 %
 
 February 15, 2023 to February 14, 2024
 
 101.656 
 
 %
 
 February 15, 2024 to February 14, 2025
 
 100.000 
 
 %
 
 As further described in Note 16 and in conjunction with the issuance of $ 1.535 billion aggregate principal amount of 5¼% Senior Secured Notes due May 15, 2030 , all 6⅝% Senior Secured Notes due 2025 were redeemed on February 4, 2022 .

 8% Senior Secured Notes due 2026

 On March 6, 2019 , CHS completed a private offering of $ 1.601 billion aggregate principal amount of the 8% Senior Secured Notes due March 15, 2026 (the “8% Senior Secured Notes due 2026”). The net proceeds from this issuance were used to finance the repayment of approximately $ 1.557 billion aggregate principal amount of CHS’ then outstanding Term H Facility and related fees and expenses. On November 19, 2019, CHS completed a tack-on offering of $ 500 million aggregate principal amount of the Additional 2026 Notes, increasing the total aggregate principal amount of the 8% Senior Secured Notes due 2026 to $ 2.101 billion. CHS used the proceeds from the Additional 2026 Notes to repay amounts outstanding under the Revolving Facility, redeem all $ 121 million aggregate principal amount of CHS’ then outstanding 7⅛% Senior Notes due 2020 and repay borrowings outstanding under the ABL Facility. The Additional 2026 Notes have identical terms, other than issue date, issue price and the date from which interest initially accrued, as the 8% Senior Secured Notes due 2026 issued on March 6, 2019. The 8% Senior Secured Notes due 2026 bear interest at a rate of 8.000 % per annum, payable semi-annually in arrears on March 15 and September 15 of each year. Interest on the 8% Senior Secured Notes due 2026 accrues from the initial issuance date of the 8% Senior Secured Notes due 2026. Interest is calculated on the basis of a 360-day year comprised of twelve 30-day months. The 8% Senior Secured Notes due 2026 are scheduled to mature on March 15, 2026. 

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

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

 Prior to March 15, 2022, CHS may redeem some or all of the 8% Senior Secured Notes due 2026 at a redemption price equal to 100% of the principal amount of the notes redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 8% Senior Secured Notes due 2026. In addition, at any time prior to March 15, 2022, CHS may redeem up to 40 % of the aggregate principal amount of the 8% Senior Secured Notes due 2026 with the proceeds from certain equity offerings at the redemption price of 108.000 %, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.
 
 After March 15, 2022, CHS is entitled, at its option, to redeem all or a portion of the 8% Senior Secured Notes due 2026 upon not less than 15 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the periods set forth below:

 Period
 
 Redemption Price
 
 March 15, 2022 to March 14, 2023
 
 104.000 
 
 %
 
 March 15, 2023 to March 14, 2024
 
 102.000 
 
 %
 
 March 15, 2024 to March 14, 2026
 
 100.000 
 
 %
 
 8% Senior Secured Notes due 2027

 On November 19, 2019, CHS issued approximately $ 700 million aggregate principal amount of the 8% Senior Secured Notes due December 15, 2027 (the “8% Senior Secured Notes due 2027”) in connection with the 2019 Exchange Offer. No cash proceeds were received from the 2019 Exchange Offer. The 8% Senior Secured Notes due 2027 bear interest at a rate of 8.000 % per annum, payable 
 
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 semi-annually in arrears on June 15 and December 15 of each year. Interest on the 8% Senior Secured Notes due 2027 accrues from the initial issuance date of the 8% Senior Secured Notes due 2027. Interest is calculated on the basis of a 360-day year comprised of twelve 30-day months. The 8% Senior Secured Notes due 2027 are scheduled to mature on December 15, 2027. The 8% Senior Secured Notes due 2027 are unconditionally guaranteed on a senior-priority secured basis by the Company and each of CHS ’ current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt se curities of CHS (including CHS᾿ outstanding senior notes) and certain other long-term debt of CHS. 

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

 CHS is entitled, at its option, to redeem all or a portion of the 8% Senior Secured Notes due 2027 at any time prior to December 15, 2022, upon not less than 15 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 8% Senior Secured Notes due 2027 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 8% Senior Secured Notes due 2027. In addition, CHS may redeem up to 40 % of the aggregate principal amount of the 8% Senior Secured Notes due 2027 at any time prior to December 15, 2022 using the net proceeds from certain equity offerings at the redemption price of 108.000 % of the principal amount of the 8% Senior Secured Notes due 2027 redeemed, plus accrued and unpaid interest, if any.
 
 CHS may redeem some or all of the 8% Senior Secured Notes due 2027 at any time on or after December 15, 2022 upon not less than 15 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the periods set forth below:

 Period
 
 Redemption Price
 
 December 15, 2022 to December 14, 2023
 
 104.000 
 
 %
 
 December 15, 2023 to December 14, 2024
 
 102.000 
 
 %
 
 December 15, 2024 to December 14, 2027
 
 100.000 
 
 %
 
 5⅝% Senior Secured Notes due 2027

 On December 28, 2020 , CHS completed a private offering of $ 1.9 billion aggregate principal amount of 5⅝% Senior Secured Notes due March 15, 2027 (the “5⅝% Senior Secured Notes due 2027”). The proceeds of the offering were used to repurchase approximately $ 2.579 billion of the outstanding principal amount of 6¼% Senior Secured Notes due 2023 that were validly tendered and accepted for purchase pursuant to the early tender deadline of a tender offer that launched on December 11, 2020, and to pay related fees. The remaining principal value of 6¼% Senior Secured Notes due 2023 that were not validly tendered as of the early tender deadline were redeemed or repurchased via the completion of the tender offer on January 11, 2021 or redemption on January, 28, 2021. The 5⅝% Senior Secured Notes due 2027 , which mature on March 15, 2027 , bear interest at a rate of 5⅝% per year payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2021. The 5⅝% Senior Secured Notes due 2027 are unconditionally guaranteed on a senior-priority secured basis by the Company and each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS. 

 The 5⅝% Senior Secured Notes due 2027 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 5⅝% Senior Secured Notes due 2027. 

 CHS is entitled, at its option, to redeem all or a portion of the 5⅝% Senior Secured Notes due 2027 at any time prior to December 15, 2023, upon not less than 15 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 5⅝% Senior Secured Notes due 2027 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 5⅝% Senior Secured Notes due 2027. In addition, CHS may redeem up to 40 % of the aggregate principal amount of the 5⅝% Senior Secured Notes due 2027 at any time prior to December 15, 2023 using the net proceeds from certain equity offerings at the redemption price of 105.625 % of the principal amount of the 5⅝% Senior Secured Notes due 2027 redeemed, plus accrued and unpaid interest, if any.
 
 At any time and from time to time on or after December 15, 2023, CHS may redeem the 5⅝% Senior Secured Notes due 2027 in whole or in part, upon not less than 15 no more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 5⅝% Senior Secured Notes due 2027 redeemed, to, 
 
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 but excluding, the applicable date of redemption, if redeemed during the twelve-month period beginning on December 15 of the years indicated below: 

 Period
 
 Redemption Price
 
 December 15, 2023 to December 14, 2024
 
 102.813 
 
 %
 
 December 15, 2024 to December 14, 2025
 
 101.406 
 
 %
 
 December 15, 2025 to December 14, 2027
 
 100.000 
 
 %
 
 6⅞% Senior Notes due 2028

 On November 19, 2019, CHS issued approximately $ 1.7 billion aggregate principal amount of the 6⅞% Senior Notes due April 1, 2028 (“the 6⅞% Senior Notes due 2028”) in connection with the 2019 Exchange Offer. No cash proceeds were received in the 2019 Exchange Offer. The 6⅞% Senior Notes due 2028 bear interest at a rate of 6.875 % per annum, payable semi-annually in arrears on April 1 and October 1 of each year. Interest on the 6⅞% Senior 2028 Notes accrues from the initial issuance date of the 6⅞% Senior Notes due 2028. Interest is calculated on the basis of a 360-day year comprised of twelve 30-day months. The 6⅞% Senior Notes due 2028 are scheduled to mature on April 1, 2028 .

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

 CHS is entitled, at its option, to redeem all or a portion of the 6⅞% Senior Notes due 2028 at any time prior to April 1, 2023, upon not less than 15 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 6⅞% Senior Notes due 2028 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 6⅞% Senior Notes due 2028. In addition, the Issuer may redeem up to 40 % of the aggregate principal amount of the 6⅞% Senior Notes due 2028 at any time prior to April 1, 2023 using the net proceeds from certain equity offerings at the redemption price of 106.875 % of the principal amount of the 6⅞% Senior Notes due 2028 redeemed, plus accrued and unpaid interest, if any.
 
 CHS may redeem some or all of the 6⅞% Senior Notes due 2028 at any time on or after April 1, 2023 upon not less than 15 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the periods set forth below:

 Period
 
 Redemption Price
 
 April 1, 2023 to March 31, 2024
 
 103.438 
 
 %
 
 April 1, 2024 to March 31, 2025
 
 101.719 
 
 %
 
 April 1, 2025 to March 31, 2028
 
 100.000 
 
 %
 
 On December 7, 2020, CHS entered into a privately negotiated agreement with a multi-asset investment manager who has certain funds and accounts which are holders (the “Holders”) of the 6⅞% Senior Notes due 2028. Pursuant to the agreement, the Company exchanged $ 700 million aggregate principal amount of the 6⅞% Senior Notes due 2028 for an aggregate consideration of $ 400 million of cash and 10 million newly issued shares of the Company’s common stock. The exchange transaction was completed on December 9, 2020 and the shares of common stock issued in the exchange were not, and are not required to be, registered under the Securities Act of 1933 pursuant to an exemption from registration provisions via Section 3(a)(9) of the Securities Act of 1933. A gain from early extinguishment of debt of approximately $ 205 million was recognized associated with this exchange. 

 During the year ended December 31, 2020, the Company extinguished $ 226 million in principal of the 6⅞% Senior Notes due 2028 through open market repurchases and approximately $ 7 million via a tender offer which commenced on October 30, 2020 and expired on November 30, 2020 .

 6% Senior Secured Notes due 2029

 On December 28, 2020, CHS completed a private offering of $ 900 million aggregate principal amount of 6% Senior Secured Notes due January 15, 2029 (the “6% Senior Secured Notes due 2029”). The proceeds of the offering were used, together with proceeds from the 5⅝% Senior Secured Notes due 2027 described above, to repurchase approximately $ 2.579 billion of the outstanding principal amount of 6¼% Senior Secured Notes due 2023 that were validly tendered and accepted for purchase pursuant to the early tender deadline of a tender offer that launched on December 11, 2020, and to pay related fees. The remaining principal value of 6¼% Senior 
 
 105

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 Secured Notes due 2023 that were not validly tendered as of the early tender deadline were redeemed or repurchased via the completion of the tender offer on January 11, 2021 or redemption on January, 28, 2021. The 6% Senior Secured Notes due 2029 , which mature on January 15, 2029 , bear interest at a rate of 6% per year payable semi-annually in arrears on January 15 and July 15 of each year, commencing on July 15, 2021. The 6 % Senior Secured Notes due 2029 are unconditionally guaranteed on a senior-priority secured basis by each of CHS’ current and future domestic subsidiaries that pr ovide guarantees under the ABL F acility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS. 

 The 6% Senior Secured Notes due 2029 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 6% Senior Secured Notes due 2029. 

 CHS is entitled, at its option, to redeem all or a portion of the 6% Senior Secured Notes due 2029 at any time prior to January 15, 2024, upon not less than 15 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 6% Senior Secured Notes due 2029 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 6% Senior Secured Notes due 2029. In addition, CHS may redeem up to 40 % of the aggregate principal amount of the 6% Senior Secured Notes due 2029 at any time prior to January 15, 2024 using the net proceeds from certain equity offerings at the redemption price of 106.000 % of the principal amount of the 6% Senior Secured Notes due 2029 redeemed, plus accrued and unpaid interest, if any.
 
 At any time and from time to time on or after January 15, 2024, CHS may redeem the 6% Senior Secured Notes due 2029 in whole or in part, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 6% Senior Secured Notes due 2029 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the twelve-month period beginning on January 15 of the years indicated below:

 Period
 
 Redemption Price
 
 January 15, 2024 to January 14, 2025
 
 103.000 
 
 %
 
 January 15, 2025 to January 14, 2026
 
 101.500 
 
 %
 
 January 15, 2026 to January14, 2029
 
 100.000 
 
 %
 
 4¾% Senior Secured Notes due 2031

 On February 9, 2021 , CHS completed a private offering of $ 1.095 billion aggregate principal amount of 4¾ % Senior Secured Notes due February 15, 2031 (the “4¾% Senior Secured Notes due 2031 ”). The proceeds of the offering, together with cash on hand, were used to redeem the 8⅝ % Senior Secured Notes due 2024 on February 9, 2021, and to pay related fees and expenses. The 4¾% Senior Secured Notes due 2031 bear interest at a rate of 4.750% per year payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2021. The 4¾% Senior Secured Notes due 2031 are unconditionally guaranteed on a senior-priority secured basis by each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS. 

 The 4¾% Senior Secured Notes due 2031 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 4¾% Senior Secured Notes due 2031. 

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

 CHS may redeem up to 40 % of the aggregate principal amount of the 4¾ % Senior Secured Notes due 2031 at any time prior to February 15, 2024 using the net proceeds from certain equity offerings at a redemption price of 104.750 % of the principal amount of the 4¾% Senior Secured Notes due 2031 redeemed, plus accrued and unpaid interest, if any. In addition, any time prior to February 15, 2026, but not more than once during each twelve-month period , CHS may redeem up to 10 % of the original aggregate principal amount of the 4¾ % Senior Secured Notes due 2031 at a redemption price equal to 103 % of the principal amount of the 4¾ % Senior Secured Notes due 2031 to be redeemed, plus accrued and unpaid interest, if any.
 
 106

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

 Period
 
 Redemption

 Price
 
 February 15, 2026 to February 14, 2027
 
 102.375 
 
 %
 
 February 15, 2027 to February 14, 2028
 
 101.583 
 
 %
 
 February 15, 2028 to February 14, 2029
 
 100.792 
 
 %
 
 February 15, 2029 to February 14, 2031
 
 100.000 
 
 %
 
 6⅞% Junior-Priority Secured Notes due 2029

 On February 2, 2021 , CHS completed a private offering of $ 1.775 billion aggregate principal amount of 6⅞ % Junior-Priority Secured Notes due April 15, 2029 (the “6⅞% Junior-Priority Secured Notes due 2029 ”). The proceeds of the offering, together with cash on hand, were used to redeem the 9⅞ % Junior-Priority Secured Notes due 2023 in February 2021 and to pay related fees and expenses. The 6⅞ % Junior-Priority Secured Notes due 2029 bear interest at a rate of 6.875 % per year payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2021. The 6⅞ % Junior-Priority Secured Notes due 2029 are unconditionally guaranteed on a junior-priority secured basis by the Company and each of the current and future domestic subsidiaries of CHS that provide guarantees under CHS’ ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS.

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

 At any time and from time to time prior to April 15, 2024 , CHS may redeem the 6⅞ % Junior-Priority Secured Notes due 2029 in whole or in part, at its option, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to 100 % of the principal amount of the 6⅞ % Junior-Priority Secured Notes due 2029 to be redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 6⅞% Junior-Priority Secured Notes due 2029 . In addition, CHS may redeem up to 40 % of the aggregate principal amount of the 6⅞% Junior-Priority Secured Notes due 2029 at any time prior to April 15, 2024 using the net proceeds from certain equity offerings at a redemption price of 106.875 % of the principal amount of the 6⅞% Junior-Priority Secured Notes due 2029 redeemed, plus accrued and unpaid interest, if any.

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

 Period
 
 Redemption

 Price
 
 April 15, 2024 to April 14, 2025
 
 103.438 
 
 %
 
 April 15, 2025 to April 14, 2026
 
 101.719 
 
 %
 
 April 15, 2026 to April 14, 2029
 
 100.000 
 
 %
 
 6⅛% Junior-Priority Secured Notes due 2030

 On May 19, 2021 , CHS completed a private offering of $ 1.440 billion aggregate principal amount of 6⅛ % Junior-Priority Secured Notes due April 1, 2030 (the “6⅛% Junior-Priority Secured Notes due 2030 ”). The proceeds of the offering, together with cash on hand, were used to redeem the 8⅛% Junior-Priority Secured Notes due 2024 on May 19, 2021, and to pay related fees and expenses. The 6⅛% Junior-Priority Secured Notes due 2030 bear interest at a rate of 6.125% per year payable semi-annually in arrears on April 1 and October 1, commencing on October 1, 2021 . The 6⅛% Junior-Priority Secured Notes due 2030 are unconditionally guaranteed on a junior-priority secured basis by each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL 
 
 107

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 F acility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS. 

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

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

 CHS may redeem up to 40 % of the aggregate principal amount of the 6⅛% Junior-Priority Secured Notes due 2030 at any time prior to May 15, 2024 using the net proceeds from certain equity offerings at a redemption price of 106.125 % of the principal amount of the 6⅛% Junior-Priority Secured Notes due 2030 redeemed, plus accrued and unpaid interest, if any. 
 
 At any time and from time to time on or after April 1, 2025 , CHS may redeem the 6⅛% Junior-Priority Secured Notes due 2030 in whole or in part, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 6⅛% Junior-Priority Secured Notes due 2030 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the twelve-month period beginning on April 1 of the years indicated below:

 Period
 
 Redemption

 Price
 
 April 1, 2025 to March 31, 2026
 
 103.063 
 
 %
 
 April 1, 2026 to March 31, 2027
 
 101.531 
 
 %
 
 April 1, 2027 to March 31, 2030
 
 100.000 
 
 %
 
 ABL Facility

 On November 22, 2021, the Company and CHS entered into an amendment and restatement agreement (the “Amendment”) to refinance and replace the asset-based loan (ABL) credit agreement (the “ABL Credit Agreement” and, as amended by the Amendment, the “Amended and Restated ABL Credit Agreement”), dated as of April 3, 2018, with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other agents party thereto. Pursuant to the Amended and Restated ABL Credit Agreement, the lenders have extended to CHS a revolving asset-based loan facility in the maximum aggregate principal amount of $ 1.0 billion, subject to borrowing base capacity. The ABL Facility includes borrowing capacity available for letters of credit of $ 200 million. CHS and all domestic subsidiaries of CHS that guarantee CHS’ other outstanding senior and senior secured indebtedness guarantee the obligations of CHS under the ABL Facility. Subject to certain exceptions, all obligations under the ABL Facility and the related guarantees are secured by a perfected first-priority security interest in substantially all of the receivables, deposit, collection and other accounts and contract rights, books, records and other instruments related to the foregoing of the Company, CHS and the guarantors, as well as a perfected junior-priority security interest in substantially all of the other assets of the Company, CHS and the guarantors, subject to customary exceptions and intercreditor arrangements. At December 31, 2021, the available borrowing base under the ABL Facility was $ 1.0 billion, of which $ 103 million was reserved for outstanding letters of credit and $ 897 million represented excess availability. The Company had no outstanding borrowings as of December 31, 2021. The issued letters of credit were primarily in support of potential insurance-related claims and certain bonds.

 Borrowings under the ABL Facility bear interest at a rate per annum equal to an applicable percentage, plus, at the Borrower’s option, either (a) a base rate or (b) the Federal Reserve’s secured overnight financing rate (the “SOFR” rate). The applicable margin under the ABL Facility is determined based on excess availability as a percentage of the maximum commitment amount under the ABL Facility at a rate per annum of 0.75 %, 1.00 % and 1.25 % for loans based on the base rate and 1.75 %, 2.00 % and 2.25 % for loans based on the SOFR rate. The applicable commitment fee rate under the ABL Facility is determined based on average utilization as a percentage of the maximum commitment amount under the ABL Facility at a rate per annum of either 0.25 % or 0.375 % times the unused portion of the ABL Facility. 

 Principal amounts outstanding under the ABL Facility will be due and payable in full on November 22, 2026. The ABL Facility includes a 91-day springing maturity applicable if more than $ 350 million in the aggregate principal amount of the 6⅝% Senior Secured Notes due 2025, 8% Senior Secured Notes due 2026 or 5⅝% Senior Secured Notes due 2027 or any indebtedness incurred to 
 
 108

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 refinance the foregoing are scheduled to mature or similarly become due on a date prior to November 22, 2026 . In such event, principal amounts outstanding under the ABL Facility will be accelerated and all amounts outstanding under the ABL Facility will become immediately due and payable. 

 The ABL Facility contains customary representations and warranties, subject to limitations and exceptions, and customary covenants restricting the Company’s ability, subject to certain exceptions, to, among other things (1) declare dividends, make distributions or redeem or repurchase capital stock, (2) prepay, redeem or repurchase other debt, (3) incur liens or grant negative pledges, (4) make loans and investments and enter into acquisitions and joint ventures, (5) incur additional indebtedness or provide certain guarantees, (6) engage in mergers, acquisitions and asset sales, (7) conduct transactions with affiliates, (8) alter the nature of the Company’s, CHS’ or the guarantors’ businesses, (9) grant certain guarantees with respect to physician practices, (10) engage in sale and leaseback transactions or (11) change the Company’s fiscal year. The Company is also required to comply with a consolidated fixed coverage ratio, upon certain triggering events described below, and various affirmative covenants. The consolidated fixed coverage ratio is calculated as the ratio of (x) consolidated EBITDA (as defined in the ABL Facility) less capital expenditures to (y) the sum of consolidated interest expense (as defined in the ABL Facility), scheduled principal payments, income taxes and restricted payments made in cash or in permitted investments. For purposes of calculating the consolidated fixed charge coverage ratio, the calculation of consolidated EBITDA as defined in the ABL Facility is a trailing 12-month calculation that begins with the Company’s consolidated net income, with certain adjustments for interest, taxes, depreciation and amortization, net income attributable to noncontrolling interests, stock compensation expense, restructuring costs, and the financial impact of other non-cash or non-recurring items recorded during any such 12-month period. The consolidated fixed charge coverage ratio is a required covenant only in periods where the total borrowings outstanding under the ABL Facility reduce the amount available in the facility to less than the greater of (i) $ 95 million and (ii) 10 % of the calculated borrowing base. As a result, in the event the Company has less than $ 95 million available under the ABL Facility, the Company would need to comply with the consolidated fixed charge coverage ratio. At December 31, 2021, the Company is not subject to the consolidated fixed charge coverage ratio as such triggering event had not occurred during the last twelve months ended December 31, 2021.

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

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

 Financing and repayment transactions discussed above resulted in a pre-tax and after-tax loss from early extinguishment of debt of $ 79 million and $ 116 million, respectively, for year ended December 31, 2021, a pre-tax and after-tax gain from early extinguishment of $ 317 million and $ 352 million, respectively, for the year ended December 31, 2020, and a pre-tax and after-tax loss from early extinguishment of $ 54 million and $ 42 million, respectively, for the year ended December 31, 2019. 
 
 As of December 31, 2021, the scheduled maturities of long-term debt outstanding, including finance lease and financing obligations for each of the next four years and thereafter are as follows (in millions):

 Year Ending December 31,
 
 Amount
 
 2022
 
 $
 
 31 
 
 2023
 
 14 
 
 2024
 
 10 
 
 2025
 
 1,471 
 
 2026
 
 2,109 
 
 Thereafter
 
 8,940 
 
 Total maturities
 
 12,575 
 
 Less: Deferred debt issuance costs
 
 ( 421 
 
 )
 
 Plus: Unamortized note premium
 
 ( 14 
 
 )
 
 Total long-term debt
 
 $
 
 12,140 
 
 109

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 The Company paid interest of $ 778 million on borrowings for the year ended December 31, 2021 and approximately $ 1.0 billion on borrowings during both of the years ended December 31, 2020 and 2019.

 Various financing transactions were completed subsequent to December 31, 2021 which are set forth in Note 16. 
 
 7. FAIR VALUE OF FINANCIAL INSTRUMENTS 
 
 The fair value of financial instruments has been estimated by the Company using available market information as of December 31, 2021 and 2020, and valuation methodologies considered appropriate. The estimates presented in the table below are not necessarily indicative of amounts the Company could realize in a current market exchange (in millions):

 December 31, 2021
 
 December 31, 2020
 
 Carrying
 
 Estimated

 Fair
 
 Carrying
 
 Estimated

 Fair
 
 Amount
 
 Value
 
 Amount
 
 Value
 
 Assets:
 
 Cash and cash equivalents
 
 $
 
 507 
 
 $
 
 507 
 
 $
 
 1,676 
 
 $
 
 1,676 
 
 Investments in equity securities
 
 144 
 
 144 
 
 129 
 
 129 
 
 Available-for-sale debt securities
 
 178 
 
 178 
 
 110 
 
 110 
 
 Trading securities
 
 13 
 
 13 
 
 12 
 
 12 
 
 Liabilities:
 
 6⅞% Senior Notes due 2022 
 
 —
 
 —
 
 125 
 
 125 
 
 6¼% Senior Secured Notes due 2023 
 
 —
 
 —
 
 95 
 
 99 
 
 8⅝% Senior Secured Notes due 2024 
 
 —
 
 —
 
 1,025 
 
 1,080 
 
 6⅝% Senior Secured Notes due 2025 
 
 1,434 
 
 1,517 
 
 1,427 
 
 1,543 
 
 8 % Senior Secured Notes due 2026 
 
 2,078 
 
 2,210 
 
 2,074 
 
 2,275 
 
 8 % Senior Secured Notes due 2027 
 
 692 
 
 758 
 
 692 
 
 760 
 
 5⅝% Senior Secured Notes due 2027 
 
 1,819 
 
 2,011 
 
 1,809 
 
 2,048 
 
 6⅞% Senior Notes due 2028 
 
 759 
 
 758 
 
 758 
 
 618 
 
 6 % Senior Secured Notes due 2029 
 
 860 
 
 966 
 
 857 
 
 973 
 
 4¾% Senior Secured Notes due 2031 
 
 1,090 
 
 1,108 
 
 —
 
 —
 
 9⅞% Junior-Priority Secured Notes due 2023 
 
 —
 
 —
 
 1,756 
 
 1,861 
 
 8⅛% Junior-Priority Secured Notes due 2024 
 
 —
 
 —
 
 1,336 
 
 1,408 
 
 6⅞% Junior-Priority Secured Notes due 2029 
 
 1,625 
 
 1,823 
 
 —
 
 —
 
 6⅛% Junior-Priority Secured Notes due 2030 
 
 1,352 
 
 1,431 
 
 —
 
 —
 
 ABL Facility and other debt
 
 32 
 
 32 
 
 23 
 
 23 
 
 The carrying value of the Company’s long-term debt in the above table is presented net of unamortized deferred debt issuance costs. The estimated fair value is determined using the methodologies discussed below in accordance with accounting standards related to the determination of fair value based on the U.S. GAAP fair value hierarchy as discussed in Note 8 . The estimated fair value for financial instruments with a fair value that does not equal its carrying value is considered a Level 1 valuation. The Company utilizes the market approach and obtains indicative pricing through publicly available subscription services such as Bloomberg to determine fair values where relevant.

 Cash and cash equivalents. The carrying amount approximates fair value due to the short-term maturity of these instruments (less than three months). 

 Investments in equity securities. Estimated fair value is based on closing price as quoted in public markets. 

 Available-for-sale debt securities. Estimated fair value is based on closing price as quoted in public markets or other various valuation techniques. 

 Trading securities. Estimated fair value is based on closing price as quoted in public markets. 

 Senior Notes, Senior Secured Notes and Junior-Priority Secured Notes. Estimated fair value is based on the closing market price for these notes. 
 
 110

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

 Fair Value Hierarchy 
 
 Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Company utilizes the U.S. GAAP fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumption about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

 The inputs used to measure fair value are classified into the following fair value hierarchy:

 Level 1: Quoted market prices in active markets for identical assets or liabilities. 

 Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. 

 Level 3: Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 includes values determined using pricing models, discounted cash flow methodologies, or similar techniques reflecting the Company’s own assumptions. 
 
 In instances where the determination of the fair value hierarchy measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment of factors specific to the asset or liability. Transfers between levels within the fair value hierarchy are recognized by the Company on the date of the change in circumstances that requires such transfer. There were no transfers between levels during the years ending December 31, 2021 or December 31, 2020.
 
 The following table sets forth, by level within the fair value hierarchy, the financial assets recorded at fair value on a recurring basis as of December 31, 2021 and 2020 (in millions):

 December 31,

 2021
 
 Level 1
 
 Level 2
 
 Level 3
 
 Investments in equity securities
 
 $
 
 144 
 
 $
 
 144 
 
 $
 
 —
 
 $
 
 —
 
 Available-for-sale debt securities
 
 178 
 
 —
 
 178 
 
 —
 
 Trading securities
 
 13 
 
 —
 
 13 
 
 —
 
 Total assets
 
 $
 
 335 
 
 $
 
 144 
 
 $
 
 191 
 
 $
 
 —
 
 December 31,

 2020
 
 Level 1
 
 Level 2
 
 Level 3
 
 Investments in equity securities
 
 $
 
 129 
 
 $
 
 129 
 
 $
 
 —
 
 $
 
 —
 
 Available-for-sale debt securities
 
 110 
 
 —
 
 110 
 
 —
 
 Trading securities
 
 12 
 
 —
 
 12 
 
 —
 
 Total assets
 
 $
 
 251 
 
 $
 
 129 
 
 $
 
 122 
 
 $
 
 —
 
 Investments in Equity Securities, Available-for-Sale Debt Securities and Trading Securities 

 Investments in equity securities and trading securities classified as Level 1 are measured using quoted market prices. Level 2 available-for-sale debt securities and trading securities primarily consisted of bonds and notes issued by the United States government and its agencies and domestic and foreign corporations. The estimated fair values of these securities are determined using various valuation techniques, including a multi-dimensional relational model that incorporates standard observable inputs and assumptions such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids/offers and other pertinent reference data.
 
 111

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

 Gross
 
 Gross
 
 Estimated
 
 Amortized
 
 Unrealized
 
 Unrealized
 
 Fair
 
 Cost
 
 Gains
 
 Losses
 
 Values
 
 As of December 31, 2021:
 
 Government
 
 $
 
 83 
 
 $
 
 1 
 
 $
 
 ( 1 
 
 )
 
 $
 
 83 
 
 Corporate
 
 62 
 
 —
 
 ( 1 
 
 )
 
 61 
 
 Mortgage and asset-backed securities
 
 34 
 
 —
 
 —
 
 34 
 
 Total available-for-sale debt securities
 
 $
 
 179 
 
 $
 
 1 
 
 $
 
 ( 2 
 
 )
 
 $
 
 178 
 
 Gross
 
 Gross
 
 Estimated
 
 Amortized
 
 Unrealized
 
 Unrealized
 
 Fair
 
 Cost
 
 Gains
 
 Losses
 
 Values
 
 As of December 31, 2020:
 
 Government
 
 $
 
 48 
 
 $
 
 2 
 
 $
 
 —
 
 $
 
 50 
 
 Corporate
 
 38 
 
 2 
 
 —
 
 40 
 
 Mortgage and asset-backed securities
 
 19 
 
 1 
 
 —
 
 20 
 
 Total available-for-sale debt securities
 
 $
 
 105 
 
 $
 
 5 
 
 $
 
 —
 
 $
 
 110 
 
 As of December 31, 2021 and 2020, investments with aggregate estimated fair values of approximately $ 125 million ( 281 investments) and $ 7 million ( 11 investments), respectively, generated the gross unrealized losses disclosed in the above table. At each reporting date, the Company performs an evaluation of impaired securities to determine if the unrealized losses are other-than-temporary. This evaluation considers a number of factors including, but not limited to, the length of time and extent to which the fair value has been less than cost, and management’s ability and intent to hold the securities until fair value recovers. Based on the results of this evaluation, management concluded that as of December 31, 2021, there were no other-than-temporary losses related to available-for-sale debt securities. The recent declines in value of the securities and/or length of time they have been below cost, as well as the Company’s ability and intent to hold the securities for a reasonable period of time sufficient for a projected recovery of fair value, have caused management to conclude that the securities, that have generated gross unrealized losses, were not other-than-temporarily impaired. Management will continue to monitor and evaluate the recoverability of the Company’s available-for-sale debt securities.
 
 The contractual maturities of debt-based securities held by the Company as of December 31, 2021 and 2020, excluding mutual fund holdings, are set forth in the table below (in millions). Expected maturities will differ from contractual maturities because the issuers of the debt securities may have the right to prepay their obligations without prepayment penalties.

 December 31, 2021
 
 December 31, 2020
 
 Amortized
 
 Estimated
 
 Amortized
 
 Estimated
 
 Cost
 
 Fair Values
 
 Cost
 
 Fair Values
 
 Within 1 year
 
 $
 
 8 
 
 $
 
 8 
 
 $
 
 3 
 
 $
 
 3 
 
 After 1 year and through year 5
 
 61 
 
 61 
 
 26 
 
 27 
 
 After 5 years and through year 10
 
 49 
 
 49 
 
 30 
 
 32 
 
 After 10 years
 
 61 
 
 60 
 
 46 
 
 48 
 
 Gross realized gains and losses on sales of available-for-sale debt securities are summarized in the table below (in millions):

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Realized gains
 
 $
 
 1 
 
 $
 
 2 
 
 $
 
 —
 
 Realized losses
 
 ( 1 
 
 )
 
 ( 1 
 
 )
 
 —
 
 Other investment income, which includes interest and dividends, related to all investment securities were $ 5 million, $ 6 million and $ 7 million for the years ended December 31, 2021, 2020 and 2019, respectively. 
 
 112

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 Net gains and losses recognized during the years ended December 31, 2021, 2020 and 2019 for investments in equity securities, which are broken out between investments sold during the year and investments held at the end of the year, are summarized in the table below (in millions):

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Net gains and (losses), beginning of year
 
 $
 
 20 
 
 $
 
 9 
 
 $
 
 15 
 
 Less: Net gains and (losses) recognized during the year on equity securities sold during the year
 
 13 
 
 14 
 
 2 
 
 Unrealized gains and (losses) recognized during the year on equity securities held, end of year
 
 $
 
 7 
 
 $
 
 ( 5 
 
 )
 
 $
 
 13 
 
 9. LEASES

 The Company utilizes operating and finance leases for the use of certain hospitals, medical office buildings, and medical equipment. All lease agreements generally require the Company to pay maintenance, repairs, property taxes and insurance costs, which are variable amounts based on actual costs incurred during each applicable period. Such costs are not included in the determination of the ROU asset or lease liability. Variable lease cost also includes escalating rent payments that are not fixed at commencement but are based on an index that is determined in future periods over the lease term based on changes in the Consumer Price Index or other measures of cost inflation. Most leases include one or more options to renew the lease at the end of the initial term, with renewal terms that generally extend the lease at the then market rate of rental payment. Certain leases also include an option to buy the underlying asset at or a short time prior to the termination of the lease. All such options are at the Company’s discretion and are evaluated at the commencement of the lease, with only those that are reasonably certain of exercise included in determining the appropriate lease term.
 
 The components of lease cost and rent expense for the years ended December 31, 2021, 2020 and 2019 are as follows (in millions): 

 Year Ended December 31,
 
 Lease Cost
 
 2021
 
 2020
 
 2019
 
 Operating lease cost:
 
 Operating lease cost
 
 $
 
 196 
 
 $
 
 203 
 
 $
 
 194 
 
 Short-term rent expense
 
 92 
 
 104 
 
 114 
 
 Variable lease cost
 
 25 
 
 26 
 
 18 
 
 Sublease income
 
 ( 5 
 
 )
 
 ( 6 
 
 )
 
 ( 5 
 
 )
 
 Total operating lease cost
 
 $
 
 308 
 
 $
 
 327 
 
 $
 
 321 
 
 Finance lease cost:
 
 Amortization of ROU assets
 
 $
 
 9 
 
 $
 
 10 
 
 $
 
 12 
 
 Interest on finance lease liabilities
 
 9 
 
 8 
 
 7 
 
 Total finance lease cost
 
 $
 
 18 
 
 $
 
 18 
 
 $
 
 19 
 
 113

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 Supplemental balance sheet information related to leases was as follows (in millions):

 Balance Sheet Classification
 
 December 31,

 2021
 
 December 31,

 2020
 
 Operating Leases:
 
 Operating Lease ROU Assets
 
 Other assets, net
 
 $
 
 668 
 
 $
 
 642 
 
 Finance Leases:
 
 Finance Lease ROU Assets
 
 Property and equipment
 
 Land and improvements
 
 $
 
 8 
 
 $
 
 8 
 
 Buildings and improvements
 
 289 
 
 134 
 
 Equipment and fixtures
 
 17 
 
 8 
 
 Property and equipment
 
 314 
 
 150 
 
 Less accumulated depreciation and amortization
 
 ( 54 
 
 )
 
 ( 46 
 
 )
 
 Property and equipment, net
 
 $
 
 260 
 
 $
 
 104 
 
 Current finance lease liabilities
 
 Current maturities of long-term debt
 
 $
 
 8 
 
 $
 
 5 
 
 Long-term finance lease liabilities
 
 Long-term debt
 
 233 
 
 74 
 
 Supplemental cash flow information related to leases for the years ended December 31, 2021, 2020 and 2019 are as follows (in millions):
 
 Year Ended December 31,
 
 Cash flow information
 
 2021
 
 2020
 
 2019
 
 Cash paid for amounts included in the measurement of lease liabilities:
 
 Operating cash flows from operating leases (1)
 
 $
 
 197 
 
 $
 
 188 
 
 $
 
 167 
 
 Operating cash flows from finance leases
 
 9 
 
 8 
 
 7 
 
 Financing cash flows from finance leases
 
 4 
 
 7 
 
 9 
 
 ROU assets obtained in exchange for new finance lease liabilities
 
 166 
 
 22 
 
 2 
 
 ROU assets obtained in exchange for new operating lease liabilities
 
 143 
 
 150 
 
 122 
 
 Weighted-average remaining lease term:
 
 Operating leases
 
 6 years
 
 7 years
 
 6 years
 
 Finance leases
 
 30 years
 
 19 years
 
 20 years
 
 Weighted-average discount rate:
 
 Operating leases
 
 8.1 
 
 %
 
 9.0 
 
 %
 
 9.1 
 
 %
 
 Finance leases
 
 6.3 
 
 %
 
 8.4 
 
 %
 
 5.6 
 
 %
 
 (1) 
 
 Included in the change in other operating assets and liabilities in the consolidated statements of cash flows.
 
 114

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 Commitments relating to noncancellable operating and finance leases and financing obligations for each of the next five years and thereafter are as follows (in millions):

 Financing
 
 Year Ending December 31,
 
 Operating
 
 Finance
 
 Obligations
 
 2022
 
 $
 
 194 
 
 $
 
 21 
 
 $
 
 12 
 
 2023
 
 171 
 
 17 
 
 13 
 
 2024
 
 123 
 
 16 
 
 13 
 
 2025
 
 95 
 
 16 
 
 13 
 
 2026
 
 75 
 
 16 
 
 13 
 
 Thereafter
 
 236 
 
 525 
 
 89 
 
 Total minimum future payments
 
 894 
 
 611 
 
 153 
 
 Less: Imputed interest
 
 ( 212 
 
 )
 
 ( 370 
 
 )
 
 4 
 
 Total liabilities
 
 682 
 
 241 
 
 157 
 
 Less: Current portion
 
 ( 147 
 
 )
 
 ( 8 
 
 )
 
 ( 2 
 
 )
 
 Long-term liabilities
 
 $
 
 535 
 
 $
 
 233 
 
 $
 
 155 
 
 As of December 31, 2021, there were approximately $ 112 million of assets underlying approved but pending leases that have not yet commenced, primarily for leases of various real-estate and medical equipment.
 
 10. EMPLOYEE BENEFIT PLANS 

 The Company maintains various benefit plans, including defined contribution plans, defined benefit plans and deferred compensation plans, for which certain of the Company’s subsidiaries are the plan sponsors. The CHS/Community Health Systems, Inc. Retirement Savings Plan is a defined contribution plan which covers the majority of the Company’s employees. Employees at locations whose employment is covered by collective bargaining agreements are generally eligible to participate in the CHS/Community Health Systems, Inc. Standard 401(k) Plan. Total expense to the Company under the 401(k) plans was $ 65 million, $ 74 million and $ 85 million for the years ended December 31, 2021, 2020 and 2019, respectively, and is recorded in salaries and benefits expense on the consolidated statements of income (loss).

 The Company maintains unfunded deferred compensation plans that allow participants to defer receipt of a portion of their compensation. The liability for the deferred compensation plans was $ 175 million and $ 176 million as of December 31, 2021 and 2020, respectively, and is included in other long-term liabilities on the consolidated balance sheets. Assets designated to pay benefits under this plan are discussed below.

 The Company provides an unfunded Supplemental Executive Retirement Plan (“SERP”) for certain members of its executive management. The Company uses a December 31 measurement date for the benefit obligations and a January 1 measurement date for its net periodic costs for the SERP. Variances from actuarially assumed rates will result in increases or decreases in benefit obligations and net periodic cost in future periods. Benefits expense under the SERP was $ 11 million for the year ended December 31, 2021 and $ 7 million for both of the years ended December 31, 2020 and 2019. The accrued benefit liability for the SERP totaled $ 99 million and $ 89 million at December 31, 2021 and 2020, respectively, and is included in other long-term liabilities on the consolidated balance sheets. The weighted-average assumptions used in determining net periodic cost for the years ended December 31, 2021 and 2020 were discount rates of 2.7 % and 3.1 %, respectively, and an annual salary increase of 3.0 % for both years ended December 31, 2021 and 2020. 

 During 2021, certain members of executive management of the Company that were participants in the SERP retired and met the requirements for payout of their SERP retirement benefit. The SERP payout provisions require payment to the participant in an actuarially determined lump sum amount six months after the participant retires from the Company. There were no settlement losses during the years ended December 31, 2021, 2020 and 2019.

 The Company had assets of $ 248 million as of December 31, 2021, in a non-qualified plan trust generally designated to pay benefits of the deferred compensation plans and the SERP, consisting of equity securities of $ 81 million as of December 31, 2021, and company-owned life insurance contracts of $ 167 million as of December 31, 2021. The Company had assets of $ 243 million as of December 31, 2020, in a non-qualified plan trust generally designated to pay benefits of the deferred compensation plans and the SERP, consisting of equity securities of $ 95 million as of December 31, 2020, and company-owned life insurance contracts of $ 148 million as of December 31, 2020 . 
 
 115

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 The Company maintains the CHS/Community Health Systems, Inc. Retirement Income Plan (“Pension Plan”), which is a defined benefit, non-contributory pension plan that covers certain employees at three of its formerly owned hospitals. The Pension Plan provides benefits to covered individuals satisfying certain age and service requirements. Employer contributions to the Pension Plan are in accordance with the minimum funding requirements of the Employee Retirement Income Security Act of 1974, as amended. The Company does not expect to make contributions to the Pension Plan in 2022. 

 In September 2021, the lifetime obligation of the Pension Plan with respect to certain participants was transferred to a third-party insurer via an irrevocable annuity contract. The third-party insurer began paying benefits to the participants as of November 1, 2021. This action resulted in a partial plan settlement and recognition of a less than $ 1 million settlement charge during the year ended December 31, 2021. 

 The Company uses a December 31 measurement date for the benefit obligations and a January 1 measurement date for its net periodic costs for the Pension Plan. Variances from actuarially assumed rates will result in increases or decreases in benefit obligations, net periodic cost and funding requirements in future periods. Benefits expense under the Pension Plan was less than $1 million during the year ended December 31, 2021, inclusive of the aforementioned partial plan settlement, and less than $ 1 million for each of the years ended December 31, 2020 and 2019. The accrued benefit liability for the Pension Plan totaled less than $ 1 million and $ 5 million at December 31, 2021 and 2020, respectively, and is included in other long-term liabilities on the consolidated balance sheets. The weighted-average assumptions used for determining the net periodic cost for the years ended December 31, 2021 and 2020 were discount rates of 2.5 % and 3.2 %, respectively, and the expected long-term rates of return on assets of 5.5 % and 6.0 %, respectively.
 
 11. STOCKHOLDERS’ DEFICIT 

 Authorized capital shares of the Company include 400,000,000 shares of capital stock consisting of 300,000,000 shares of common stock and 100,000,000 shares of preferred stock. Each of the aforementioned classes of capital stock has a par value of $ 0.01 per share. Shares of preferred stock, none of which were outstanding as of December 31, 2021, may be issued in one or more series having such rights, preferences and other provisions as determined by the Board of Directors without approval by the holders of common stock.

 The Company is a holding company which operates through its subsidiaries. The Company’s ABL Facility and the indentures governing each series of the Company’s outstanding notes contain various covenants under which the assets of the subsidiaries of the Company are subject to certain restrictions relating to, among other matters, dividends and distributions, as referenced in the paragraph below. 

 The ABL Facility and the indentures governing each series of the Company’s outstanding notes restrict the Company’s subsidiaries from, among other matters, paying dividends and making distributions to the Company, which thereby limits the Company’s ability to pay dividends and/or repurchase stock. As of December 31, 2021, under the most restrictive test in these agreements (and subject to certain exceptions), the Company has approximately $ 300 million of capacity to pay permitted dividends and/or repurchase shares of stock or make other restricted payments. 
 
 The following schedule discloses the effects of changes in the Company’s ownership interest in its less-than-wholly-owned subsidiaries on Community Health Systems, Inc. stockholders’ deficit (in millions):

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Net income (loss) attributable to Community Health Systems,
 
 Inc. stockholders
 
 $
 
 230 
 
 $
 
 511 
 
 $
 
 ( 675 
 
 )
 
 Transfers to the noncontrolling interests:
 
 Net increase in Community Health
 
 Systems, Inc. paid-in-capital for
 
 purchase of subsidiary partnership interests
 
 17 
 
 3 
 
 3 
 
 Net transfers to the noncontrolling interests
 
 17 
 
 3 
 
 3 
 
 Change to Community Health Systems, Inc.
 
 stockholders’ deficit from net income (loss) attributable to
 
 Community Health Systems, Inc. stockholders
 
 and transfers to noncontrolling interests
 
 $
 
 247 
 
 $
 
 514 
 
 $
 
 ( 672 
 
 )
 
 116

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 12. EARNINGS PER SHARE
 
 The following table sets forth the components of the denominator for the computation of basic and diluted earnings per share for net income (loss) attributable to Community Health Systems, Inc. stockholders:

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Weighted-average number of shares outstanding — basic
 
 126,754,852 
 
 115,491,022 
 
 113,739,046 
 
 Effect of dilutive securities:
 
 Restricted stock awards
 
 2,803,938 
 
 905,903 
 
 —
 
 Employee stock options
 
 726,130 
 
 122,785 
 
 —
 
 Other equity-based awards
 
 312,490 
 
 24,851 
 
 —
 
 Weighted-average number of shares outstanding — diluted
 
 130,597,410 
 
 116,544,561 
 
 113,739,046 
 
 The Company generated a loss attributable to Community Health Systems, Inc. stockholders for the year ended December 31, 2019, so the effect of dilutive securities is not considered because their effect would be antidilutive. If the Company had generated income during the year ended December 31, 2019, the effect of restricted stock awards, employee stock options, and other equity-based awards on the diluted shares calculation would have been an increase in shares of 133,866 . 

 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Dilutive securities outstanding not included in the computation of earnings

 per share because their effect is antidilutive:
 
 Employee stock options and restricted stock awards
 
 774,981 
 
 2,821,511 
 
 3,508,968 
 
 13. EQUITY INVESTMENTS 

 On July 30, 2021 , the Company sold its unconsolidated minority equity interests in Macon Healthcare, LLC, a joint venture with certain subsidiaries of HCA representing two hospitals in Macon, Georgia, in which the Company held a 38 % interest. The Company received $ 110 million in cash in connection with the sale of its equity interests and, as a result, recognized a pre-tax gain of approximately $ 39 million on the sale of equity interests in Macon Healthcare, LLC during the year ended December 31, 2021.

 On December 31, 2016 , the Company sold 80 % of its ownership interest in the legal entity that owned and operated its home care agency business. As part of the divestiture of its controlling interest in the home care agency business, the Company recorded an equity method investment representing its remaining 20 % ownership. Since December 31, 2016 and primarily in conjunction with the divestiture of hospitals, the Company has divested of its remaining 20% ownership in certain home care agency businesses . 

 In March 2005, the Company began purchasing items, primarily medical supplies, medical equipment and pharmaceuticals, under an agreement with HealthTrust Purchasing Group, L.P. (“HealthTrust”), a group purchasing organization in which the Company is a noncontrolling partner. As of December 31, 2021, the Company had a 17.5 % ownership interest in HealthTrust.

 The Company’s investment in all of its unconsolidated affiliates was $ 129 million and $ 190 million at December 31, 2021 and 2020, respectively, and is included in other assets, net in the accompanying consolidated balance sheets. Included in the Company’s results of operations is the Company’s equity in pre-tax earnings from its investments in unconsolidated affiliates, which was $ 22 million, $ 10 million and $ 15 million for the years ended December 31, 2021, 2020 and 2019, respectively.
 
 117

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 14. COMPREHENSIVE LOSS
 
 The following tables present information about items reclassified out of accumulated other comprehensive loss (“AOCL”) by component for the years ended December 31, 2021 and 2020 (in millions, net of tax): 

 Change in
 
 Fair Value of
 
 Change in
 
 Available-for-Sale
 
 Unrecognized
 
 Debt
 
 Pension Cost
 
 Securities (1)
 
 Components
 
 AOCL (1)
 
 Balance as of December 31, 2020
 
 $
 
 2 
 
 $
 
 ( 15 
 
 )
 
 $
 
 ( 13 
 
 )
 
 Other comprehensive (loss)
 
 income before reclassifications
 
 ( 1 
 
 )
 
 1 
 
 —
 
 Amounts reclassified from
 
 AOCL
 
 ( 4 
 
 )
 
 2 
 
 ( 2 
 
 )
 
 Net current-period other
 
 comprehensive (loss) income
 
 ( 5 
 
 )
 
 3 
 
 ( 2 
 
 )
 
 Balance as of December 31, 2021
 
 $
 
 ( 2 
 
 )
 
 $
 
 ( 12 
 
 )
 
 $
 
 ( 14 
 
 )
 
 __________________________

 (1) Totals may not add due to rounding.

 Change in
 
 Fair Value of
 
 Change in
 
 Change in Fair
 
 Available-for-Sale
 
 Unrecognized
 
 Value of Interest
 
 Debt
 
 Pension Cost
 
 Rate Swaps (1)
 
 Securities (1)
 
 Components
 
 AOCL
 
 Balance as of December 31, 2019
 
 $
 
 2 
 
 $
 
 ( 3 
 
 )
 
 $
 
 ( 8 
 
 )
 
 $
 
 ( 9 
 
 )
 
 Other comprehensive (loss)
 
 income before reclassifications
 
 ( 1 
 
 )
 
 6 
 
 ( 1 
 
 )
 
 4 
 
 Amounts reclassified from
 
 AOCL
 
 —
 
 2 
 
 ( 6 
 
 )
 
 ( 8 
 
 )
 
 Net current-period other
 
 comprehensive (loss) income
 
 ( 1 
 
 )
 
 4 
 
 ( 7 
 
 )
 
 ( 4 
 
 )
 
 Balance as of December 31, 2020
 
 $
 
 —
 
 $
 
 2 
 
 $
 
 ( 15 
 
 )
 
 $
 
 ( 13 
 
 )
 
 __________________________

 (1) Totals may not add due to rounding.
 
 The following tables present a subtotal for each significant reclassification to net income (loss) out of AOCL and the line item affected in the accompanying consolidated statements of income (loss) for the years ended December 31, 2021 and 2020 (in millions):

 Amount reclassified
 
 from AOCL
 
 Affected line item in the
 
 Year Ended
 
 statement where net
 
 Details about AOCL components
 
 December 31, 2021
 
 (loss) income is presented
 
 Amortization of defined benefit pension items
 
 Prior service costs
 
 $
 
 ( 2 
 
 )
 
 Salaries and benefits
 
 ( 2 
 
 )
 
 Total before tax
 
 —
 
 Tax benefit
 
 $
 
 ( 2 
 
 )
 
 Net of tax
 
 118

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 Amount reclassified
 
 from AOCL
 
 Affected line item in the
 
 Year Ended
 
 statement where net
 
 Details about AOCL components
 
 December 31, 2020
 
 income (loss) is presented
 
 Amortization of defined benefit pension items
 
 Prior service costs
 
 $
 
 ( 1 
 
 )
 
 Salaries and benefits
 
 Settlement losses recognized
 
 ( 3 
 
 )
 
 Salaries and benefits
 
 ( 4 
 
 )
 
 Total before tax
 
 10 
 
 Tax benefit
 
 $
 
 6 
 
 Net of tax
 
 15. COMMITMENTS AND CONTINGENCIES

 Construction and Other Capital Commitments. Pursuant to a hospital purchase agreement from the Company’s March 1, 2016 acquisition of Northwest Health – Starke, formerly known as Starke Hospital, the Company is committed to build a replacement facility in Knox, Indiana. Under the terms of such agreement, the construction of the replacement facility for Northwest Health - Starke is required to be completed within five years of the date the Company entered into a new lease with Starke County, Indiana, the hospital lessor, or in the event the Company does not enter into a new lease with Starke County, or is required to be completed by September 30, 2026 . The Company has not entered into a new lease with the lessor for Northwest Health - Starke and currently anticipate completing construction of the Northwest Health - Starke replacement facility in 2026. Construction costs for the Northwest Health - Starke replacement facility are currently estimated to be approximately $ 15 million. 

 Physician Recruiting Commitments. As part of its physician recruitment strategy, the Company provides income guarantee agreements to certain physicians who agree to relocate to its communities and commit to remain in practice there. Under such agreements, the Company is required to make payments to the physicians in excess of the amounts they earned in their practice up to the amount of the income guarantee. These income guarantee periods are typically for 12 months. Such payments are recoverable by the Company from physicians who do not fulfill their commitment period, which is typically three years , to the respective community. At December 31, 2021, the maximum potential amount of future payments under these guarantees in excess of the liability recorded is $ 10 million. 

 Professional Liability Claims. As part of the Company’s business of providing healthcare services, it is subject to legal actions alleging liability on its part. The Company accrues for losses resulting from such liability claims, as well as loss adjustment expenses that are out-of-pocket and directly related to such liability claims. These direct out-of-pocket expenses include fees of outside counsel and experts. The Company does not accrue for costs that are part of corporate overhead, such as the costs of in-house legal and risk management departments. The losses resulting from professional liability claims primarily consist of estimates for known claims, as well as estimates for incurred but not reported claims. The estimates are based on specific claim facts, historical claim reporting and payment patterns, the nature and level of hospital operations and actuarially determined projections. The actuarially determined projections are based on the Company’s actual claim data, including historic reporting and payment patterns which have been gathered over an approximate 20 -year period. As discussed below, since the Company purchases excess insurance on a claims-made basis that transfers risk to third-party insurers, the liability it accrues does include an amount for the losses covered by its excess insurance. The Company also records a receivable for the expected reimbursement of losses covered by excess insurance. Since the Company believes that the amount and timing of its future claims payments are reliably determinable, it discounts the amount accrued for losses resulting from professional liability claims using the risk-free interest rate corresponding to the timing of expected payments. 

 The net present value of the projected payments was discounted using a weighted-average risk-free rate of 1.8 % in both 2021 and 2020 and 2.6 % in 2019. This liability is adjusted for new claims information in the period such information becomes known. The Company’s estimated liability for professional and general liability claims was $ 533 million and $ 602 million as of December 31, 2021 and 2020, respectively. The estimated undiscounted claims liability was $ 564 million and $ 629 million as of December 31, 2021 and 2020, respectively. The current portion of the liability for professional and general liability claims was $ 162 million and $ 177 million as of December 31, 2021 and 2020, respectively, and is included in other accrued liabilities in the accompanying consolidated balance sheets, with the long-term portion recorded in other long-term liabilities. Professional malpractice expense includes the losses resulting from professional liability claims and loss adjustment expense, as well as excess insurance premiums, and is presented within other operating expenses in the accompanying consolidated statements of income (loss).
 
 119

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 The Company’s processes for obtaining and analyzing claims and incident data are standardized across all of its businesses and have been consistent for many years. The Company monitors the outcomes of the medical care services that it provides and for each reported claim, the Company obtains various information concerning the facts and circumstances related to that claim. In addition, the Company routinely monitors current key statistics and volume indicators in its assessment of utilizing historical trends. The average lag period between claim occurrence and payment of a final settlement is between three and four years , although the facts and circumstances of individual claims could result in the timing of such payments being different from this average. Since claims are paid promptly after settlement with the claimant is reached, settled claims represent less than 1.0 % of the total liability at the end of any period.

 For purposes of estimating its individual claim accruals, the Company utilizes specific claim information, including the nature of the claim, the expected claim amount, the year in which the claim occurred and the laws of the jurisdiction in which the claim occurred. Once the case accruals for known claims are determined, information is stratified by loss layers and retentions, accident years, reported years and geography. Several actuarial methods are used against this data to produce estimates of ultimate paid losses and reserves for incurred but not reported claims. Each of these methods uses company-specific historical claims data and other information. This company-specific data includes information regarding the Company’s business, including historical paid losses and loss adjustment expenses, historical and current case loss reserves, actual and projected hospital statistical data, a variety of hospital census information, employed physician information, professional liability retentions for each policy year, geographic information and other data. 

 Based on these analyses the Company determines its estimate of the professional liability claims. The determination of management’s estimate, including the preparation of the reserve analysis that supports such estimate, involves subjective judgment of management. Changes in reserve data or the trends and factors that influence reserve data may signal fundamental shifts in the Company’s future claim development patterns or may simply reflect single-period anomalies. Even if a change reflects a fundamental shift, the full extent of the change may not become evident until years later. Moreover, since the Company’s methods and models use different types of data and the Company selects its liability from the results of all of these methods, it typically cannot quantify the precise impact of such factors on its estimates of the liability. Due to the Company’s standardized and consistent processes for handling claims and the long history and depth of company-specific data, the Company’s methodologies have produced reliably determinable estimates of ultimate paid losses. Management considers any changes in the amount and pattern of its historical paid losses up through the most recent reporting period to identify any fundamental shifts or trends in claim development experience in determining the estimate of professional liability claims. However, due to the subjective nature of this estimate and the impact that previously unforeseen shifts in actual claim experience can have, future estimates of professional liability could be adversely impacted when actual paid losses develop unexpectedly based on assumptions and settlement events that were not previously known or anticipated.

 During the year ended December 31, 2020, the Company incurred expenses in the amount of approximately $ 50 million related to the settlement of a professional liability claim for which the Company’s third-party insurers’ obligation to provide coverage to the Company in connection with the underlying loss was being litigated. In the ordinary course of business, the Company’s expense with respect to professional liability claims, which is actuarially determined, is limited to amounts not covered by third-party insurance policies, which typically provide coverage for professional liability claims. The subject of the litigation for the recovery of the full amount of the $ 50 million settlement was whether the claim was covered under the subject policies. This litigation was settled during the three months ended December 31, 2021, and in connection with this settlement, approximately $ 22 million was recovered from various third-party insurers related to their obligation to provide coverage for the professional liability claim. Aside from this matter, there were no significant changes in the Company’s estimate of the reserve for professional liability claims during the years ended December 31, 2021 and 2020.

 The Company is primarily self-insured for professional liability claims; however, the Company obtains excess insurance that transfers the risk of loss to a third-party insurer for claims in excess of the Company’s self-insured retentions. The Company’s excess insurance is underwritten on a claims-made basis. For claims reported prior to June 1, 2002, substantially all of the Company’s professional and general liability risks were subject to a less than $ 1 million per occurrence self-insured retention and for claims reported from June 1, 2002 through June 1, 2003, these self-insured retentions were $ 2 million per occurrence. Substantially all claims reported after June 1, 2003 and before June 1, 2005 are self-insured up to $ 4 million per claim. Substantially all claims reported on or after June 1, 2005 and before June 1, 2014 are self-insured up to $ 5 million per claim. Substantially all claims reported on or after June 1, 2014 and before June 1, 2018 are self-insured up to $ 10 million per claim. Substantially all claims reported on or after June 1, 2018 are self-insured up to $ 15 million per claim. Management, on occasion, has selectively increased the insured risk at certain hospitals based upon insurance pricing and other factors and may continue that practice in the future. 
 
 Excess insurance for all hospitals has been purchased through commercial insurance companies and generally covers the Company for liabilities in excess of the self-insured retentions. The excess coverage consists of multiple layers of insurance, the sum of which 
 
 120

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 totals up to $ 95 million per occurrence and in the aggregate for claims reported on or after June 1, 2003, up to $ 145 million per occurrence and in the aggregate for claims reported on or after January 1, 2008, up to $ 195 million per occurrence and in the aggregate for claims reported on or after June 1, 2010, and up to at least $ 215 million per occurrence and in the aggregate for claims reported on or after June 1, 2015. In addition, for integrated occurrence malpractice claims, there is an additional $ 50 million of excess coverage for claims reported on or after June 1, 2014 and an additional $ 75 million of excess coverage for claims reported on or after June 1, 2015 through June 1, 2020 . The $ 75 million in integrated occurrence coverage will also apply to claims reporte d between June 1, 2020 and June 1, 2022 for events that occurred prior to June 1, 2020 but which were not previously known or reported . For certain policy years prior to June 1, 2014, if the first aggregate layer of excess coverage becomes fully utilized, then the self-insured retention will increase to $ 10 million per claim for any subsequent claims in that policy year until the Company’s total aggregate coverage is met. Beginning June 1, 2018, this drop-down provision in the excess policies attaches over the $ 15 million per claim self-insured retention. 

 Effective June 1, 2014, the hospitals acquired from HMA were insured on a claims-made basis as described above and through commercial insurance companies as described above for substantially all claims reported on or after June 1, 2014 except for physician-related claims with an occurrence date prior to June 1, 2014. Prior to June 1, 2014, the former HMA hospitals obtained insurance coverage through a wholly-owned captive insurance subsidiary and a risk retention group subsidiary which are domiciled in the Cayman Islands and South Carolina, respectively. Those insurance subsidiaries, which are collectively referred to as the “Insurance Subsidiaries,” provided (i) claims-made coverage to all of the former HMA hospitals and (ii) occurrence-basis coverage to most of the physicians employed by the former HMA hospitals. The employed physicians not covered by the Insurance Subsidiaries generally maintained claims-made policies with unrelated third party insurance companies. To mitigate the exposure of the program covering the former HMA hospitals and other healthcare facilities, the Insurance Subsidiaries bought claims-made reinsurance policies from unrelated third parties for claims above self-retention levels of $ 10 million or $ 15 million per claim, depending on the policy year.
 
 Legal Matters. The Company is a party to various legal, regulatory and governmental proceedings incidental to its business. Based on current knowledge, management does not believe that loss contingencies arising from pending legal, regulatory and governmental matters, including the matters described herein, will have a material adverse effect on the consolidated financial position or liquidity of the Company. However, in light of the inherent uncertainties involved in pending legal, regulatory and governmental matters, some of which are beyond the Company’s control, and the very large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to the Company’s results of operations or cash flows for any particular reporting period. 

 With respect to all legal, regulatory and governmental proceedings, the Company considers the likelihood of a negative outcome. If the Company determines the likelihood of a negative outcome with respect to any such matter is probable and the amount of the loss can be reasonably estimated, the Company records an accrual for the estimated loss for the expected outcome of the matter. If the likelihood of a negative outcome with respect to material matters is reasonably possible and the Company is able to determine an estimate of the possible loss or a range of loss, whether in excess of a related accrued liability or where there is no accrued liability, the Company discloses the estimate of the possible loss or range of loss. However, the Company is unable to estimate a possible loss or range of loss in some instances based on the significant uncertainties involved in, and/or the preliminary nature of, certain legal, regulatory and governmental matters. 
 
 In connection with the spin-off of Quorum Health Corporation (“QHC”), the Company agreed to indemnify QHC for certain liabilities relating to outcomes or events occurring prior to April 29, 2016, the closing date of the spin-off, including (i) certain claims and proceedings that were known to be outstanding at or prior to the consummation of the spin-off and involved multiple facilities and (ii) certain claims, proceedings and investigations by governmental authorities or private plaintiffs related to activities occurring at or related to QHC’s healthcare facilities prior to the closing date of the spin-off, but only to the extent, in the case of clause (ii), that such claims are covered by insurance policies maintained by the Company, including professional liability and employer practices. Notwithstanding the foregoing, the Company is not required to indemnify QHC in respect of any claims or proceedings arising out of or related to the business operations of Quorum Health Resources, LLC at any time or QHC’s compliance with the corporate integrity agreement. Subsequent to the spin-off of QHC, the Office of the Inspector General provided the Company with written assurance that it would look solely at QHC for compliance for its facilities under the Company’s corporate integrity agreement; however, the Office of the Inspector General declined to enter into a separate corporate integrity agreement with QHC. 

 Summary of Recorded Amounts 
 
 The table below presents a reconciliation of the beginning and ending liability balances (in millions) during the years ended December 31, 2021 and 2020, with respect to the Company’s determination of the contingencies of the Company in respect of which 
 
 121

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 an accrual has been recorded. The l iability as of December 31, 2021 is comprised of individually insignificant amounts for various matters. 

 Probable
 
 Contingencies
 
 Balance as of December 31, 2019
 
 $
 
 68 
 
 Expense
 
 14 
 
 Reserve for insured claim
 
 11 
 
 Cash payments
 
 ( 82 
 
 )
 
 Balance as of December 31, 2020
 
 11 
 
 Expense
 
 11 
 
 Reserve for insured claim
 
 ( 1 
 
 )
 
 Cash payments
 
 ( 1 
 
 )
 
 Balance as of December 31, 2021
 
 $
 
 20 
 
 In accordance with applicable accounting guidance, the Company establishes a liability for litigation, regulatory and governmental matters for which, based on information currently available, the Company believes that a negative outcome is known or is probable and the amount of the loss is reasonably estimable. For all such matters (whether or not discussed in this contingencies footnote), such amounts have been recorded in other accrued liabilities on the consolidated balance sheets and are included in the table above. Due to the uncertainties and difficulty in predicting the ultimate resolution of these contingencies, the actual amount could differ from the estimated amount reflected as a liability on the consolidated balance sheets.

 In the aggregate, attorneys’ fees and other costs incurred but not included in the table above related to probable contingencies totaled less than $ 1 million, $ 3 million and $ 21 million during the years ended December 31, 2021, 2020 and 2019, respectively, and are included in other operating expenses in the accompanying consolidated statements of income (loss).
 
 16. SUBSEQUENT EVENTS 

 The Company has evaluated all material events occurring subsequent to the balance sheet date for events requiring disclosure or recognition in the consolidated financial statements. On February 4, 2022 , CHS completed a private offering of $ 1.535 billion aggregate principal amount of 5¼% Senior Secured Notes due May 15, 2030 (the “5¼% Senior Secured Notes due 2030”). The proceeds of the offering were used to redeem the 6⅝% Senior Secured Notes due 2025 on February 4, 2022, and to pay related fees and expenses. The 5¼% Senior Secured Notes due 2030 bear interest at a rate of 5.250 % per year payable semi-annually in arrears on May 15 and November 15, commencing on November 15, 2022. The 5¼% Senior Secured Notes due 2030 are unconditionally guaranteed on a senior-priority secured basis by each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS. 

 The 5¼% Senior Secured Notes due 2030 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 5¼% Senior Secured Notes due 2030. 

 CHS is entitled, at its option, to redeem all or a portion of the 5¼% Senior Secured Notes due 2030 at any time prior to May 15, 2025, upon not less than 10 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 5¼% Senior Secured Notes due 2030 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 5¼% Senior Secured Notes due 2030. 

 CHS may redeem up to 40 % of the aggregate principal amount of the 5¼ % Senior Secured Notes due 2030 at any time prior to May 15, 2025 using the net proceeds from certain equity offerings at a redemption price of 105.250 % of the principal amount of the 5¼% Senior Secured Notes due 2030 redeemed, plus accrued and unpaid interest, if any. In addition, any time prior to May 15, 2025, but not more than once during each twelve-month period , CHS may redeem up to 10 % of the original aggregate principal amount of the 5¼% Senior Secured Notes due 2030 at a redemption price equal to 103 % of the principal amount of the 5¼% Senior Secured Notes due 2030 to be redeemed, plus accrued and unpaid interest, if any .

 At any time and from time to time on or after May 15, 2025 , CHS may redeem the 5¼ % Senior Secured Notes due 2030 in whole or in part, upon not less than 10 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal 
 
 122

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 amount set forth below plus accrued and unpaid interest, if any, on the 5¼% Senior Secured Notes due 2030 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the twelv e-month period beginning on May 15 of the years indicated below : 
 
 Period
 
 Redemption Price
 
 May 15, 2025 to May 14, 2026
 
 102.625 
 
 %
 
 May 15, 2026 to May 14, 2027
 
 101.313 
 
 %
 
 May 15, 2027 to May 14, 2030
 
 100.000 
 
 %
 
 17. CONDENSED FINANCIAL INFORMATION OF PARENT
 
 Parent Company Only
 
 Condensed Balance Sheets
 
 (In millions)
 
 December 31,
 
 2021
 
 2020
 
 ASSETS
 
 Prepaid income taxes
 
 $
 
 94 
 
 $
 
 50 
 
 Total current assets
 
 94 
 
 50 
 
 Deferred income taxes
 
 53 
 
 59 
 
 Other assets, net
 
 —
 
 ( 3 
 
 )
 
 Total assets
 
 $
 
 147 
 
 $
 
 106 
 
 LIABILITIES AND STOCKHOLDERS' DEFICIT
 
 Intercompany payable
 
 $
 
 1,326 
 
 $
 
 1,701 
 
 Deferred income taxes
 
 192 
 
 29 
 
 Other long-term liabilities
 
 1 
 
 1 
 
 Total liabilities
 
 1,519 
 
 1,731 
 
 Community Health Systems, Inc. stockholders’ deficit:
 
 Preferred stock
 
 — 
 
 — 
 
 Common stock
 
 1 
 
 1 
 
 Additional paid-in capital
 
 2,118 
 
 2,094 
 
 Accumulated other comprehensive loss
 
 ( 14 
 
 )
 
 ( 13 
 
 )
 
 Accumulated deficit
 
 ( 3,477 
 
 )
 
 ( 3,707 
 
 )
 
 Total Community Health Systems, Inc. stockholders’ deficit
 
 ( 1,372 
 
 )
 
 ( 1,625 
 
 )
 
 Total liabilities and stockholders' deficit
 
 $
 
 147 
 
 $
 
 106 
 
 See note to condensed financial statements of Parent.
 
 123

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 Parent Company Only
 
 Condensed Statements of Income (Loss)
 
 (In millions)
 
 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Net operating revenues
 
 $
 
 —
 
 $
 
 —
 
 $
 
 —
 
 Operating costs and expenses:
 
 Salaries and benefits
 
 —
 
 —
 
 —
 
 Supplies
 
 —
 
 —
 
 —
 
 Other operating expenses
 
 —
 
 —
 
 —
 
 Government and other legal settlements and related costs
 
 —
 
 —
 
 —
 
 Electronic health records incentive reimbursement
 
 —
 
 —
 
 —
 
 Lease cost and rent
 
 —
 
 —
 
 —
 
 Pandemic relief funds
 
 —
 
 —
 
 —
 
 Depreciation and amortization
 
 —
 
 —
 
 —
 
 Impairment and (gain) loss on sale of businesses, net
 
 —
 
 —
 
 —
 
 Total operating costs and expenses
 
 —
 
 —
 
 —
 
 Income from operations
 
 —
 
 —
 
 —
 
 Interest expense, net
 
 —
 
 —
 
 —
 
 Loss (gain) from early extinguishment of debt
 
 —
 
 —
 
 —
 
 Equity in earnings of unconsolidated affiliates
 
 ( 230 
 
 )
 
 ( 511 
 
 )
 
 675 
 
 Income (loss) before income taxes
 
 230 
 
 511 
 
 ( 675 
 
 )
 
 (Benefit from) provision for income taxes
 
 —
 
 —
 
 —
 
 Net income (loss)
 
 230 
 
 511 
 
 ( 675 
 
 )
 
 Less: Net income attributable to noncontrolling interests
 
 —
 
 —
 
 —
 
 Net income (loss) attributable to Community Health Systems, Inc. stockholders
 
 $
 
 230 
 
 $
 
 511 
 
 $
 
 ( 675 
 
 )
 
 See note to condensed financial statements of Parent.
 
 124

 COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 Parent Company Only
 
 Condensed Statements of Comprehensive Income (Loss)
 
 (In millions)
 
 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 (In millions)
 
 Net income (loss)
 
 $
 
 230 
 
 $
 
 511 
 
 $
 
 ( 675 
 
 )
 
 Equity in other comprehensive (loss) income of affiliates,

 net of income taxes:
 
 Net change in fair value of interest rate swaps, net of tax
 
 —
 
 ( 1 
 
 )
 
 ( 3 
 
 )
 
 Net change in fair value of available-for-sale debt securities, net of tax
 
 ( 5 
 
 )
 
 4 
 
 4 
 
 Amortization and recognition of unrecognized pension cost

 components, net of tax
 
 3 
 
 ( 7 
 
 )
 
 —
 
 Other comprehensive (loss) income
 
 ( 2 
 
 )
 
 ( 4 
 
 )
 
 1 
 
 Comprehensive income (loss)
 
 228 
 
 507 
 
 ( 674 
 
 )
 
 Less: Comprehensive income attributable to noncontrolling interests
 
 —
 
 —
 
 —
 
 Comprehensive income (loss) attributable to Community Health Systems,

 Inc. stockholders
 
 $
 
 228 
 
 $
 
 507 
 
 $
 
 ( 674 
 
 )
 
 See note to condensed financial statements of Parent.
 
 Parent Company Only
 
 Condensed Statements of Cash Flows
 
 (In millions)
 
 Year Ended December 31,
 
 2021
 
 2020
 
 2019
 
 Cash flows from operating activities:
 
 Net cash used in operating activities
 
 $
 
 ( 11 
 
 )
 
 $
 
 ( 12 
 
 )
 
 $
 
 ( 4 
 
 )
 
 Cash flows from investing activities:
 
 Net cash provided by (used in) investing activities
 
 —
 
 —
 
 —
 
 Cash flows from financing activities:
 
 Repurchase of restricted stock shares for payroll tax withholding

 requirements
 
 ( 5 
 
 )
 
 ( 1 
 
 )
 
 ( 1 
 
 )
 
 Changes in intercompany balances with affiliates, net
 
 16 
 
 13 
 
 5 
 
 Net cash provided by financing activities
 
 11 
 
 12 
 
 4 
 
 Net change in cash and cash equivalents
 
 —
 
 —
 
 —
 
 Cash and cash equivalents at beginning of period
 
 —
 
 —
 
 —
 
 Cash and cash equivalents at end of period
 
 $
 
 —
 
 $
 
 —
 
 $
 
 —
 
 See note to condensed financial statements of Parent.
 
 1. 
 
 Basis of Presentation 
 
 The Parent is a holding company and operates no business in its own name; all of the Company’s business operations are conducted through subsidiaries of the Parent. The Company’s outstanding indebtedness restricts the ability of subsidiaries to dividend or otherwise provide funds to the Parent. Accordingly, these financial statements have been presented on a “parent-only” basis. Under parent-only presentation, the Parent’s investments in its consolidated subsidiaries are presented under the equity method of accounting. These parent-only financial statements should be read in conjunction with consolidated financial statements of Community Health Systems, Inc. 
 
 125

 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 None.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
COMMUNITY HEALTH SYSTEMS INC 10-K

Item 8. Financial Statements and Supplementary Data
