Community Health Systems, Inc. (NYSE: CYH) (the “Company”) today announced financial and operating results for the three and six months ended June 30, 2023.

The following highlights the financial and operating results for the three months ended June 30, 2023.

• Net operating revenues totaled $3.115 billion.
• Net loss attributable to Community Health Systems, Inc. stockholders was $(38) million, or $(0.29) per share (diluted), compared to $(326) million, or $(2.52) per share (diluted), for the same period in 2022. Excluding the adjusting items as presented in the table in footnote (e) on page 15, net loss attributable to Community Health Systems, Inc. stockholders was $(0.22) per share (diluted), compared to $(2.52) per share (diluted) for the same period in 2022.
• Adjusted EBITDA was $373 million.
• Net cash provided by operating activities was $86 million for the three months ended June 30, 2023, compared to $53 million for the same period in 2022.
• On a same-store basis, admissions increased 4.8 percent and adjusted admissions increased 4.9 percent, compared to the same period in 2022.

Commenting on the results, Tim L. Hingtgen, chief executive officer of Community Health Systems, Inc., said, "Our continued progress in the second quarter included sequential improvements in key operating metrics including patient volumes and net operating revenues, among others. During the quarter, we saw further recovery in the utilization of our healthcare services and we executed key growth and expense management initiatives that are producing strong results for our markets and the Company overall. Other strategic developments are expected to have a positive impact moving forward, including recent investments to modernize our business operations. We are in the process of redesigning numerous workflows that will further standardize and centralize key business functions across our organization, which we are referring to as Project Empower. As part of Project Empower, we are nearing the launch of a new Enterprise Resource Planning (ERP) platform which will enable us to leverage this new way of doing business as we streamline and enhance many business support services.”

Three Months Ended June 30, 2023

Net operating revenues for the three months ended June 30, 2023, totaled $3.115 billion, a 6.2 percent increase compared to $2.934 billion for the same period in 2022. On a same-store basis, net operating revenues increased 9.2 percent for the three months ended June 30, 2023, compared to the same period in 2022. Net operating revenues for the three months ended June 30, 2023, reflect a 0.9 percent increase in both admissions and adjusted admissions compared to the same period in 2022. On a same-store basis, admissions increased 4.8 percent and adjusted admissions increased 4.9 percent for the three months ended June 30, 2023, compared to the same period in 2022.

Net loss attributable to Community Health Systems, Inc. stockholders was $(38) million, or $(0.29) per share (diluted), for the three months ended June 30, 2023, compared to $(326) million, or $(2.52) per share (diluted), for the same period in 2022. Excluding the adjusting items as presented in the table in footnote (e) on page 15, net loss attributable to Community Health Systems, Inc. stockholders was $(0.22) per share (diluted) for the three months ended June 30, 2023, compared to $(2.52) per share (diluted) for the same period in 2022. During the three months ended June 30, 2023, pandemic relief funds did not materially impact net loss attributable to Community Health Systems, Inc. stockholders. During the three months ended June 30, 2022, pandemic relief funds had a positive impact on net loss attributable to Community Health Systems, Inc. stockholders (both on a consolidated and adjusted basis) of approximately $6 million, or $0.05 on a per share (diluted) basis.

Adjusted EBITDA for the three months ended June 30, 2023, was $373 million compared to $253 million for the same period in 2022. During the three months ended June 30, 2023, pandemic relief funds did not materially impact Adjusted EBITDA. During the three months ended June 30, 2022, pandemic relief funds had a positive impact on Adjusted EBITDA of approximately $8 million.

The decrease in net loss attributable to Community Health Systems, Inc. stockholders and increase in Adjusted EBITDA for the three months ended June 30, 2023, compared to the same period in 2022, is primarily due to higher inpatient and outpatient volumes, increased reimbursement rates, higher acuity, an increase in non-patient revenue, and lower costs for contract labor, partially offset by higher costs for professional liability insurance and increased rates for outsourced medical specialists.

Six Months Ended June 30, 2023

Net operating revenues for the six months ended June 30, 2023, totaled $6.223 billion, a 3.0 percent increase compared to $6.044 billion for the same period in 2022. On a same-store basis, net operating revenues increased 5.3 percent for the six months ended June 30, 2023, compared to the same period in 2022. Net operating revenues for the six months ended June 30, 2023, reflect a 1.0 percent increase in admissions and a 3.4 percent increase in adjusted admissions, compared to the same period in 2022. On a same-store basis, admissions increased 4.8 percent and adjusted admissions increased 7.2 percent for the six months ended June 30, 2023, compared to the same period in 2022.

Net loss attributable to Community Health Systems, Inc. stockholders was $(89) million, or $(0.68) per share (diluted), for the six months ended June 30, 2023, compared to $(327) million, or $(2.54) per share (diluted), for the same period in 2022. Excluding the adjusting items as presented in the table in footnote (e) on page 15, net loss attributable to Community Health Systems, Inc. stockholders was $(0.65) per share (diluted) for the six months ended June 30, 2023, compared to $(2.40) per share (diluted) for the same period in 2022. During the six months ended June 30, 2023, pandemic relief funds did not materially impact net loss attributable to Community Health Systems, Inc. stockholders. During the six months ended June 30, 2022, pandemic relief funds had a positive impact on net loss attributable to Community Health Systems, Inc. stockholders (both on a consolidated and adjusted basis) of approximately $41 million, or $0.32 on a per share (diluted) basis.

Adjusted EBITDA for the six months ended June 30, 2023, was $707 million compared to $662 million for the same period in 2022. During the six months ended June 30, 2023, pandemic relief funds did not materially impact Adjusted EBITDA. During the six months ended June 30, 2022, pandemic relief funds had a positive impact on Adjusted EBITDA of approximately $55 million.

The decrease in net loss attributable to Community Health Systems, Inc. stockholders and increase in Adjusted EBITDA for the six months ended June 30, 2023, compared to the same period in 2022, is primarily due to stronger inpatient and outpatient volumes, increased reimbursement rates, higher acuity, an increase in non-patient revenue, and reduced expense for contract labor, partially offset by unfavorable changes in payor mix, a reduction in pandemic relief funds recognized, increased salaries and benefits expense, higher costs for professional liability insurance, and increased rates for outsourced medical specialists.

Other

During 2023, through the date of this press release, the Company has completed the divestiture of three hospitals. On January 1, 2023, the Company completed the divestiture of one hospital (in respect of which the Company received proceeds at a preliminary closing on December 31, 2022). On April 1, 2023, the Company completed the divestiture of one hospital (in respect of which the Company received proceeds at a preliminary closing on March 31, 2023). On July 1, 2023, the Company completed the divestiture of one hospital (in respect of which the Company received proceeds at a preliminary closing on June 30, 2023). Financial and statistical data for 2023 and 2022 presented in this press release includes the operating results of divested or closed businesses for the periods prior to the consummation of the respective divestiture or closure. Same-store operating results and statistical information include operating results of businesses operated in the comparable current year and prior year periods and exclude businesses divested or closed in 2022 and the six months ended June 30, 2023.

Information About Non-GAAP Financial Measures

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

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

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

The Company’s annual earnings guidance for 2023, as provided in our press release issued on February 15, 2023, is reaffirmed. The 2023 guidance is based on the Company’s historical operating performance, current trends and other assumptions the Company believes are reasonable. Assumptions underlying the annual earnings guidance provided on February 15, 2023 are unchanged.

About Community Health Systems, Inc.

Community Health Systems, Inc. is one of the nation’s largest healthcare companies. The Company’s affiliates are leading providers of healthcare services, developing and operating healthcare delivery systems in 43 distinct markets across 15 states. As of August 2, 2023, the Company’s subsidiaries own or lease 77 affiliated hospitals with approximately 13,000 beds and operate more than 1,000 sites of care, including physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers.

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

Community Health Systems, Inc. will hold a conference call on Thursday, August 3, 2023, at 10:00 a.m. Central, 11:00 a.m. Eastern, to review financial and operating results for the second quarter ended June 30, 2023. Investors will have the opportunity to listen to a live internet broadcast of the conference call by clicking on the Investor Relations link of the Company’s website at www.chs.net. For those who cannot listen to the live broadcast, a replay will be available shortly after the call and will continue to be available for approximately 30 days. Copies of this press release and conference call slide show, as well as the Company’s Current Report on Form 8-K (including this press release), will be available on the Company’s website at www.chs.net.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties. All statements in this press release other than statements of historical fact, including statements regarding projections, expected operating results, and other events that depend upon or refer to future events or conditions or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “thinks,” and similar expressions, are forward-looking statements. Although the Company believes that these forward-looking statements are based on reasonable assumptions, these assumptions are inherently subject to significant economic and competitive uncertainties and contingencies, which are difficult or impossible to predict accurately and may be beyond the control of the Company. Accordingly, the Company cannot give any assurance that its expectations will in fact occur and cautions that actual results may differ materially from those in the forward-looking statements. A number of factors could affect the future results of the Company or the healthcare industry generally and could cause the Company’s expected results to differ materially from those expressed in this press release.

These factors include, among other things:

• general economic and business conditions, both nationally and in the regions in which we operate, including the current negative macroeconomic conditions, ongoing inflationary pressures that have significantly increased and may continue to significantly increase our expenses, the current high interest rate environment, ongoing challenging labor market conditions and labor shortages, including the current and/or potential future adverse impact of such economic conditions and other factors on our net operating revenues (including our service mix, revenue mix, payor mix and/or patient volumes) and our ability to collect outstanding receivables, as well as the potential impact on us of financial and capital market instability and/or disruptions to the banking system due to bank failures and other factors, including any potential impact on our ability to access and or obtain the return of cash and cash equivalents, and/or our ability to access credit, liquidity and capital market sources on acceptable terms or at all;

• the impact of current or future federal and state health reform initiatives, including the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”), and the potential for changes to the Affordable Care Act, its implementation or its interpretation (including through executive orders and court challenges);

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

• the future and long-term viability of health insurance exchanges and potential changes to the beneficiary enrollment process;

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

• demographic changes;

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

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

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

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

• any security breaches, cyber-attacks, loss of data, other cybersecurity threats or incidents, and any actual or perceived failures to comply with legal requirements governing the privacy and security of health information or other regulated, sensitive or confidential information, or legal requirements regarding data privacy or data protection, and the impact of the security breach announced by us on February 13, 2023, including legal, reputational, and financial risks associated with this security breach, existing and/or any future litigation associated with this security breach, any potential regulatory inquiries to which we may become subject in connection with this security breach, and the extent of remediation and other additional costs that may be incurred by us in connection with this security breach;

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

• changes in inpatient or outpatient Medicare and Medicaid payment levels and methodologies;

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

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

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

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

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

• any failure to obtain medical supplies or pharmaceuticals at favorable prices;

• liabilities and other claims asserted against us, including self-insured professional liability claims;

• competition;

• trends toward treatment of patients in less acute or specialty healthcare settings, including ambulatory surgery centers or specialty hospitals or via telehealth;

• changes in medical or other technology;

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

• changes in U.S. GAAP;

• the availability and terms of capital to fund any additional acquisitions or replacement facilities or other capital expenditures;

• our ability to successfully make acquisitions or complete divestitures, our ability to complete any such acquisitions or divestitures on desired terms or at all, the timing of the completion of any such acquisitions or divestitures, and our ability to realize the intended benefits from any such acquisitions or divestitures;

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

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

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

• our ability to obtain adequate levels of insurance, including cyber, general liability, professional liability, and directors and officers liability insurance;

• timeliness of reimbursement payments received under government programs;

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

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

• challenging economic conditions in non-urban communities in which we operate;

• the concentration of our revenue in a small number of states;

• our ability to realize anticipated cost savings and other benefits from our current strategic and operational cost savings initiatives;

• any changes in or interpretations of income tax laws and regulations; and

• the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on February 17, 2023 and other filings filed with the SEC.

The consolidated operating results for the three and six months ended June 30, 2023, are not necessarily indicative of the results that may be experienced for any future periods. The Company cautions that the reaffirmation of our guidance for calendar year 2023 (which guidance was originally included in our February 15, 2023 press release) as set forth herein is based on currently available information. The Company undertakes no obligation to revise or update any forward-looking statements (including such guidance), or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

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