TENET HEALTHCARE CORP

TENET HEALTHCARE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

Description of Business and Basis of Presentation

Tenet Healthcare Corporation (together with our subsidiaries, referred to herein as “Tenet,” “we” or “us”) is a diversified healthcare services company headquartered in Dallas, Texas. Our expansive, nationwide care delivery network consists of our Hospital Operations and Services (“Hospital Operations”) and Ambulatory Care segments. As of September 30, 2026, our Hospital Operations segment was comprised of 51 acute care and specialty hospitals, a network of employed physicians and 135 outpatient facilities, including urgent care centers, imaging centers, off-campus hospital emergency departments and micro‑hospitals. Our Ambulatory Care segment is comprised of the operations of USPI Holding Company, Inc. (together with its subsidiaries, “USPI”), which held ownership interests in 535 ambulatory surgery centers and 25 surgical hospitals at September 30, 2026. USPI held noncontrolling interests in 147 of these facilities, which are recorded using the equity method of accounting. In addition, we operate a Global Business Center (“GBC”) in the Philippines.

Our Hospital Operations segment also provides revenue cycle management and value-based care services to hospitals and other healthcare facilities, health systems, physician practices, employers and other clients through Conifer Health Solutions, LLC (“Conifer”), which was a wholly owned subsidiary at September 30, 2026. We owned 76.2% of Conifer at December 31, 2025, and the remaining 23.8% was held by Catholic Health Initiatives (“CHI”), now known as CommonSpirit Health. Prior to January 2026, Conifer provided revenue cycle management services to certain CHI facilities under an amended and restated master services agreement (the “MSA Agreement”), which was scheduled to end on December 31, 2032. On January 27, 2026, we entered into certain agreements with CHI relating to Conifer (collectively, the “Omnibus Agreement”), pursuant to which the parties agreed to, among other things: (1) conclude the MSA Agreement by December 31, 2026; (2) CHI’s payment to us of an aggregate amount equal to $1.900 billion in annual installments over the next three years; provided that, of such amount, $540 million was satisfied on January 27, 2026 by offsetting the $540 million due to CHI from Conifer as described in the next clause; and (3) the reduction of our redeemable noncontrolling interest balance, and an increase in our additional paid-in capital balance associated with the redemption by Conifer of CHI’s minority equity interest in Conifer, in exchange for a payment by Conifer of $540 million, which redemption was effective January 1, 2026. Together, the MSA Agreement and the Omnibus Agreement are referred to herein as the “CHI Agreements”.

This quarterly report supplements our Annual Report on Form 10‑K for the year ended December 31, 2025 (“Annual Report”). As permitted by the Securities and Exchange Commission for interim reporting, we have omitted certain notes and disclosures that substantially duplicate those in our Annual Report. For further information, refer to the audited Consolidated Financial Statements and notes included in our Annual Report. Unless otherwise indicated, dollar amounts presented in our Condensed Consolidated Financial Statements and these accompanying notes are expressed in millions (except per‑share amounts), and all share amounts are expressed in thousands.

We adopted the Financial Accounting Standards Board’s Accounting Standards Update 2025‑10, “Government Grants” (“ASU 2025-10”), effective as of January 1, 2026, using the modified prospective approach. We elected to apply the cost accumulation approach for grants related to assets. Under this method, we will initially measure the subject asset on the basis of the cost incurred to acquire or construct the asset, less the monetary grant received or expected to be received, when the grant meets recognition criteria. The adoption of ASU 2025-10 did not result in a change in our method of accounting for grants related to income, and we will continue to reflect the earnings impact of these grants in other income in our condensed consolidated statements of operations. The adoption of this standard did not have a material impact on our financial statements.

Although our Condensed Consolidated Financial Statements and these related notes are unaudited, we believe all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the amounts reported in our Condensed Consolidated Financial Statements and these accompanying notes. We regularly evaluate the accounting policies and estimates we use. In general, we base the estimates on historical experience and on assumptions that we believe to be reasonable given the particular circumstances in which we operate. Actual results may vary from those estimates. The financial and statistical information we report to other regulatory agencies may be prepared on a basis other than GAAP or using different assumptions or reporting periods and, therefore, may vary from the amounts presented herein. Although we make every effort to ensure that the information we report to those agencies is accurate, complete and consistent with applicable reporting guidelines, we cannot be responsible for the accuracy of the information they make available to the public.

Operating results for the three and nine-month periods ended September 30, 2026 are not necessarily indicative of the results that may be expected for the full year. Reasons for this include, but are not limited to: the impact of the demand for, and availability of, qualified medical personnel on compensation costs; overall revenue and cost trends, particularly the timing and magnitude of price changes; fluctuations in contractual allowances and cost report settlements and valuation allowances; managed care contract negotiations, settlements or terminations and payer consolidations; trends in patient accounts receivable collectability and associated implicit price concessions; the impact of cybersecurity incidents on our operations; fluctuations in interest rates; levels of malpractice insurance expense and settlement trends; impairment of long‑lived assets and goodwill; restructuring charges; losses, costs and insurance recoveries related to cybersecurity incidents, natural disasters and weather‑related occurrences; the potential emergence and effects of future pandemics, epidemics or outbreaks of infectious diseases on our operations, financial condition and liquidity; litigation and investigation costs; fluctuations in the costs associated with our defined contribution retirement plans; acquisitions and dispositions of facilities and other assets; gains (losses) on sales, consolidation and deconsolidation of facilities; income tax rates and deferred tax asset valuation allowance activity; changes in estimates of accruals for annual incentive compensation; the timing and amounts of stock-based compensation grants to employees and directors; gains (losses) from early extinguishment of debt; and changes in occupancy levels and patient volumes.

Our hospitals and outpatient facilities are subject to various factors that affect our service mix, revenue mix and patient volumes and, thereby, impact our net patient service revenues and results of operations. These factors include, among others: changes in federal and state statutes, regulations and executive orders that affect the healthcare industry directly or indirectly, particularly those impacting government healthcare funding; changes in general economic conditions, including inflation, shortages and outages, whether due to geopolitical conflicts, trade tensions, export control rules, tariffs or other factors; the number of uninsured and underinsured individuals in local communities treated at our facilities; cybersecurity incidents, including those targeting our vendors, and other unanticipated information technology disruptions or outages; disease hotspots and seasonal cycles of illness; weather‑related conditions and natural disasters; physician recruitment, satisfaction, retention and attrition; advances in technology and treatments that reduce length of stay or permit procedures to be performed in an outpatient rather than inpatient setting; local healthcare competitors; utilization pressure by managed care organizations, as well as managed care contract negotiations or terminations; performance data on quality measures and patient satisfaction, as well as pricing for services; any unfavorable publicity about us, or our joint venture partners, that impacts our relationships with physicians and patients; and changing consumer behavior, including with respect to the timing of elective procedures. These considerations apply to year‑to‑year comparisons as well.

Cash and Cash Equivalents

We treat highly liquid investments with original maturities of three months or less as cash equivalents. Cash and cash equivalents were $2.674 billion and $2.883 billion at September 30, 2026 and December 31, 2025, respectively. At September 30, 2026 and December 31, 2025, our book overdrafts were $165 million and $161 million, respectively, which were classified as accounts payable. Also at September 30, 2026 and December 31, 2025, $76 million and $108 million, respectively, of total cash and cash equivalents in the accompanying Condensed Consolidated Balance Sheets were intended for the operations of our insurance‑related subsidiaries.

At September 30, 2026 and December 31, 2025, we had $64 million and $111 million, respectively, of property and equipment purchases accrued for items received but not yet paid. Of these amounts, $56 million and $102 million, respectively, were included in accounts payable.

During the nine months ended September 30, 2026 and 2025, we recorded right‑of‑use assets related to non‑cancellable finance leases of $79 million and $45 million, respectively, and related to non‑cancellable operating leases of $293 million and $268 million, respectively.

Goodwill

The following table presents information on changes in the carrying amount of goodwill for each of our segments:

Other Intangible Assets

The following table presents information regarding the other intangible assets included in the accompanying Condensed Consolidated Balance Sheets:

The table below presents our estimated future amortization of intangible assets with finite useful lives at September 30, 2026:

We recognized amortization expense of $107 million and $122 million in the accompanying Condensed Consolidated Statements of Operations during the nine months ended September 30, 2026 and 2025, respectively.

Other Current Assets

The principal components of other current assets in the accompanying Condensed Consolidated Balance Sheets are presented below:

Under the terms of the Omnibus Agreement, in January 2026, CHI executed and delivered a $1.360 billion non‑interest‑bearing promissory note to us (the “CHI Note Receivable”). The CHI Note Receivable requires three annual payments of approximately $453 million, with the first two payments due in January 2027 and January 2028 and the final payment, together with any unpaid principal, due in January 2029. Of the CHI Note Receivable’s carrying amount, which is recorded at present value, $434 million was included in other current assets and $828 million was included in investments and other assets in the accompanying Condensed Consolidated Balance Sheet at September 30, 2026.

Investments in Unconsolidated Affiliates

As of September 30, 2026, we controlled 413 of the facilities in our Ambulatory Care segment and, therefore, consolidated their results. We account for many of the facilities in which our Ambulatory Care segment holds ownership interests (147 of 560 at September 30, 2026), as well as additional companies in which our Hospital Operations segment holds ownership interests, under the equity method as investments in unconsolidated affiliates and report only our share of net income as equity in earnings of unconsolidated affiliates in our condensed consolidated statements of operations. Summarized financial information for equity method investees is presented in the following table. For investments acquired during the reported periods, amounts in the table include 100% of the investee’s results beginning on the date of our acquisition of the investment.

NOTE 2. ACCOUNTS RECEIVABLE AND CONTRACT BALANCES

Accounts Receivable

The principal components of accounts receivable are presented in the table below:

Contract Balances

The following table presents the opening and closing balances of our Hospital Operations segment’s contract assets and liabilities:

The changes in our contract assets and liabilities from December 31, 2025 to September 30, 2026 were primarily attributable to the terms of the Omnibus Agreement, the effects of which are further discussed in Note 9. During the nine months ended September 30, 2026 and 2025, we recognized revenue totaling $75 million and $60 million, respectively, from our revenue cycle management services that was included in the opening current deferred revenue liability. This revenue consists primarily of prepayments for those contract clients who were billed in advance, changes in estimates related to metric‑based services and up‑front integration services that are recognized over the service period.

Uninsured and Charity Care Patient Costs

The following table presents our estimated costs (based on selected operating expenses, which include salaries, wages and benefits, supplies and other operating expenses) of caring for our uninsured and charity patients:

NOTE 3. DISPOSITION OF ASSETS AND LIABILITIES

At both September 30, 2026 and December 31, 2025, our assets classified as held for sale consisted of a building we own in West Palm Beach, Florida. The carrying amount of the building was $62 million at September 30, 2026 and December 31, 2025.

NOTE 4. IMPAIRMENT AND RESTRUCTURING CHARGES, AND ACQUISITION‑RELATED COSTS

During the nine months ended September 30, 2026, we recorded impairment and restructuring charges and acquisition‑related costs of $92 million, consisting of $54 million of restructuring charges, $25 million of impairment charges and $13 million of acquisition‑related transaction costs. Restructuring charges during this period included $31 million of employee severance costs, $9 million related to the transition of various administrative functions to our GBC, $6 million of contract and lease termination fees, and $8 million of other restructuring costs. Impairment charges recognized during the nine months ended September 30, 2026 primarily related to the write-down of long-lived and other assets associated with Ambulatory Care segment facilities closed during the period.

During the nine months ended September 30, 2025, we recorded impairment and restructuring charges and acquisition‑related costs of $66 million, consisting of $33 million of restructuring charges, $20 million of acquisition‑related transaction costs and impairment charges totaling $13 million. Restructuring charges during this period included $12 million of contract and lease termination fees, $10 million related to the transition of various administrative functions to our GBC, $5 million of employee severance costs, and $6 million of other restructuring costs.

NOTE 5. LONG-TERM DEBT

The table below presents our long‑term debt included in the accompanying Condensed Consolidated Balance Sheets:

At September 30, 2026, we had senior unsecured notes and senior secured first lien notes with aggregate principal amounts outstanding of $12.662 billion. These notes have fixed interest rates ranging from 4.250% to 6.875% and require semi‑annual interest payments in arrears. Payment of the principal and any accrued but unpaid interest is due upon the maturity date of the respective notes, which dates are staggered from June 2028 through September 2034.

In September 2026, we issued $2.000 billion in aggregate principal amount of 6.250% senior unsecured notes, which are due in September 2034 (the “2034 Senior Notes”). We will pay interest on the 2034 Senior Notes semi-annually in arrears on March 15 and September 15 of each year, commencing on March 15, 2027. We used the net issuance proceeds, together with cash on hand, to finance the redemption of all $1.500 billion in aggregate principal amount of our 5.125% senior secured first lien notes due November 2027 and the redemption of $500 million of the then outstanding $1.750 billion aggregate principal amount of our 6.125% senior unsecured notes due October 2028.

We have a senior secured revolving credit facility (the “Credit Agreement”) that provides for revolving loans in an aggregate principal amount of up to $1.900 billion with a $200 million subfacility for standby letters of credit. Our borrowing availability, which is calculated by reference to a borrowing base that is determined by specified percentages of eligible accounts receivable, eligible inventory and Medicaid supplemental payments, was $1.900 billion at September 30, 2026. On that date, we hadno cash borrowings and less than $1 million of standby letters of credit outstanding under the Credit Agreement.

In addition, we have a letter of credit facility (as amended to date, the “LC Facility”) that provides for the issuance, from time to time, of standby and documentary letters of credit in an aggregate principal amount of up to $200 million. At September 30, 2026, we had $105 million of standby letters of credit outstanding under the LC Facility.

NOTE 6. GUARANTEES

At September 30, 2026, the maximum potential amount of future payments under our revenue guarantees to certain physicians who agree to relocate and revenue collection guarantees to hospital‑based physician groups providing certain services at our hospitals was $328 million. We had a total liability of $290 million recorded for these guarantees included in other current liabilities in the accompanying Condensed Consolidated Balance Sheet at September 30, 2026.

We have also issued guarantees of the indebtedness and other obligations of our investees to third parties, the maximum potential amount of future payments under which was approximately $83 million at September 30, 2026.

NOTE 7. EMPLOYEE BENEFIT PLANS

The accompanying Condensed Consolidated Statements of Operations for the nine months ended September 30, 2026 and 2025 include $104 million and $79 million, respectively, of pre-tax compensation costs related to our stock‑based compensation arrangements.

Stock Options

As of September 30, 2026, there were 114,924 stock options outstanding under our stock-based compensation plans, which had a weighted average exercise price per share of $24.72. During the nine months ended September 30, 2026 and 2025,29,757 and 22,616 stock options, respectively, were exercised with an aggregate intrinsic value of $7 million and $4 million, respectively. Other than these exercises, there was no activity related to our stock options during either of the nine-month periods ended September 30, 2026 or 2025. All outstanding options were vested and exercisable at September 30, 2026, and the options collectively had an aggregate intrinsic value of $27 million.

Restricted Stock Units

The following table presents information about our restricted stock unit (“RSU”) activity during the nine months ended September 30, 2026:

During the nine months ended September 30, 2026, we granted 124,019 RSUs that vest over periods ranging fromone tothree years. In addition, we granted 129,096 performance-based RSUs, the vesting of which is contingent on our achievement of specified performance goals for the years 2026 to 2028. Provided the goals are achieved, the performance‑based RSUs that could vest will range from 0% to 250% of the 129,096 units granted, depending on our level of achievement with respect to the performance goals. During the same period, we issued an additional 350,583 RSUs that vested immediately as a result of our level of achievement with respect to previously awarded performance-based RSUs.

During the nine months ended September 30, 2025, we granted 317,154 RSUs that vest over periods ranging fromone tofour years. In addition, we granted 279,769 performance-based RSUs, the vesting of which is contingent on our achievement of specified performance goals for the years 2025 to 2028. Provided the goals are achieved, the performance‑based RSUs that could vest will range from 0% to 250% of the 279,769 units granted, depending on our level of achievement with respect to the performance goals. During the same period, we issued an additional 255,386 RSUs that vested immediately as a result of our level of achievement with respect to previously awarded performance-based RSUs.

The fair value of an RSU is based on our share price on the grant date. The fair value of an RSU with a market‑based condition is estimated through the use of a Monte Carlo simulation. Significant inputs used in our valuation of these RSUs included the following:

NOTE 8. EQUITY

The following tables present the changes in consolidated equity (dollars in millions, share amounts in thousands):

Nonredeemable Noncontrolling Interests

The table below presents our nonredeemable noncontrolling interests balances by segment:

The table below presents our net income available to nonredeemable noncontrolling interests by segment:

Share Repurchase Program Activity

In July 2024, our board of directors authorized the repurchase of up to $1.500 billion of our common stock through a share repurchase program that has no expiration date. In July 2025, the board authorized a $1.500 billion increase to the program, and, in June 2026, the board authorized an additional $2.000 billion for share repurchases under the program. The share repurchase program does not obligate us to acquire any particular amount of common stock, and it may be suspended for periods or discontinued at any time. Share repurchases may be made in open‑market or privately negotiated transactions, at management’s discretion subject to market conditions and other factors, in a manner consistent with applicable securities laws and regulations.

The table below presents repurchase activity under our share repurchase program:

NOTE 9. NET OPERATING REVENUES

The table below presents our sources of net operating revenues:

During the three months ended September 30, 2026, we assessed the periods over which we expect to satisfy the performance obligations under the CHI Agreements based on our current transition progress. We will substantially complete the transition of revenue cycle management services by October 30, 2026 rather than December 31, 2026, as we originally expected. As a result, in the three months ended September 30, 2026, we recognized cumulative catch-up adjustments that increased revenue from contract termination by $233 million and other revenues, included in net operating revenues, by $97 million. See Note 1 for additional information regarding the CHI Agreements.

The table below presents the composition of net operating revenues for our Ambulatory Care segment:

Performance Obligations

The following table presents revenue from revenue cycle management services that is expected to be recognized in the future related to performance obligations that are unsatisfied, or partially unsatisfied, at the end of the reporting period:

The amounts in the table primarily consist of revenue cycle management fixed fees, which are typically recognized ratably as the performance obligation is satisfied. The estimated revenue does not include volume‑ or contingency‑based contracts, variable‑based escalators, performance incentives, penalties or other variable consideration that is considered constrained. The majority of the fixed-fee revenue for the three months ending December 31, 2026 in the table above relates to the CHI Agreements, as further discussed in Note 1.

NOTE 10. INSURANCE

Property Insurance

We have property, business interruption and related insurance coverage to mitigate the financial impact of catastrophic events or perils that is subject to deductible provisions based on the terms of the policies. These policies are issued on an occurrence basis. For the policy period of June 1, 2026 through April 30, 2027, we have coverage totaling $850 million per occurrence, after deductibles and exclusions, with annual aggregate sub‑limits of $100 million for floods, $400 million for earthquakes and a per‑occurrence sub‑limit of $300 million per named windstorm with no annual aggregate. With respect to fires and other perils, excluding floods, earthquakes and named windstorms, the total $850 million limit of coverage per occurrence applies. Deductibles are 5% of insured values for earthquakes in California and named windstorms, and 2% of insured values for earthquakes in the New Madrid fault zone, each with a maximum deductible per claim of $25 million. All other covered losses are subject to a minimum deductible of $5 million per occurrence.

For the policy period of April 1, 2025 through May 31, 2026, our coverage totaled $850 million per occurrence, after deductibles and exclusions, with annual aggregate sub‑limits of $100 million for floods, $200 million for earthquakes in California, $200 million for all other earthquakes and a per‑occurrence sub‑limit of $200 million per named windstorm with no annual aggregate. With respect to fires and other perils, excluding floods, earthquakes and named windstorms, the total $850 million limit of coverage per occurrence applied. Deductibles were 5% of insured values for earthquakes in California and named windstorms, and 2% of insured values for earthquakes in the New Madrid fault zone, each with a maximum deductible per claim of $25 million. All other covered losses were subject to a minimum deductible of $5 million per occurrence.

Professional and General Liability Reserves

We are self‑insured for the majority of our professional and general liability claims, and we purchase insurance from third parties to cover catastrophic claims. At September 30, 2026 and December 31, 2025, the aggregate current and long‑term professional and general liability reserves in the accompanying Condensed Consolidated Balance Sheets were $1.296 billion and $1.227 billion, respectively. These accruals include the reserves recorded by our captive insurance subsidiaries and our self‑insured retention reserves recorded based on modeled estimates for the portion of our professional and general liability risks, including incurred but not reported claims, for which we do not have insurance coverage. Malpractice expense of $296 million and $243 million was included in other operating expenses, net, in the accompanying Condensed Consolidated Statements of Operations for the nine months ended September 30, 2026 and 2025, respectively.

NOTE 11. CLAIMS AND LAWSUITS

We operate in a highly regulated and litigious industry. We and our subsidiaries are subject to investigations by various government agencies, and we have been and expect to continue to be party to class action lawsuits, employment‑related claims, private litigation and other legal actions in the ordinary course of business. We record accruals for estimated losses relating to claims and lawsuits when available information indicates that a loss is probable and we can reasonably estimate the amount of the loss or a range of loss. These determinations are updated at least quarterly and are adjusted to reflect the effects of negotiations, settlements, rulings, advice of legal counsel and technical experts, and other information and events pertaining to a particular matter; however, our assessments are subject to significant uncertainty regarding numerous factors that could affect the ultimate loss levels. If a loss on a material matter is reasonably possible and estimable, we disclose an estimate of the loss or a range of loss.

We cannot predict the outcome of current or future legal actions against us or the effect that judgments or settlements in such matters may have on us; however, we believe that the ultimate resolution of our existing ordinary‑course claims and lawsuits will not have a material effect on our overall business or financial condition. Given the inherent uncertainties associated with material legal matters, an adverse outcome in one or more of these matters could be material to our results of operations or cash flows for a particular reporting period.

The following table presents reconciliations of the beginning and ending liability balances in connection with legal settlements and related costs:

NOTE 12. REDEEMABLE NONCONTROLLING INTERESTS IN EQUITY OF CONSOLIDATED SUBSIDIARIES

The following table presents the changes in redeemable noncontrolling interests in equity of consolidated subsidiaries:

As previously discussed, we redeemed CHI’s minority equity interest in Conifer effective January 1, 2026. This redemption resulted in an $846 million decrease in our redeemable noncontrolling interests balance and a $306 million increase in our additional paid-in capital balance in the nine months ended September 30, 2026. See Note 1 for additional information regarding this transaction.

The following tables present the composition by segment of our redeemable noncontrolling interests balances, as well as our net income available to redeemable noncontrolling interests:

NOTE 13. INCOME TAXES

A reconciliation between the amount of reported income tax expense and the amount computed by multiplying income before income taxes by the statutory federal tax rate is presented below:

Our provision for income taxes during interim reporting periods is calculated by applying an estimate of the annual effective tax rate to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. In calculating “ordinary” income, non‑taxable income available to noncontrolling interests was deducted from pre-tax income.

Income tax expense in the nine months ended September 30, 2026 included $7 million attributable to an increase in our estimated liabilities for uncertain tax positions, net of related deferred tax effects. The total amount of unrecognized tax benefits as of September 30, 2026 was $77 million, all of which, if recognized, would affect our effective tax rate and income tax expense.

Our practice is to recognize interest and penalties related to income tax matters in income tax expense in our condensed consolidated statements of operations. Total accrued interest and penalties on unrecognized tax benefits at September 30, 2026 were $16 million.

NOTE 14. EARNINGS PER COMMON SHARE

The following table reconciles the numerators and denominators of our basic and diluted earnings per common share calculations. Net income available to our common shareholders is expressed in millions and weighted average shares are expressed in thousands.

Dilutive instruments during the three and nine months ended September 30, 2026 and 2025 included stock options, RSUs, convertible long‑term incentive awards and deferred compensation units.

NOTE 15. FAIR VALUE MEASUREMENTS

We employ a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Our valuation techniques and inputs used to measure fair value and the definition of the three levels (Level 1, Level 2 and Level 3) of the fair value hierarchy are disclosed in Note 21 to our Annual Report.

The following table presents information about assets measured at fair value on a non-recurring basis and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair values at December 31, 2025. There were no significant non-recurring fair value measurements at September 30, 2026.

Financial Instruments

The fair value of our long‑term debt (except for any borrowings under the Credit Agreement) is based on quoted market prices (Level 1). The inputs used to establish the fair value of borrowings outstanding under the Credit Agreement are considered to be Level 2 inputs. At September 30, 2026 and December 31, 2025, the estimated fair value of our long‑term debt was approximately 97.3% and 100.9%, respectively, of the carrying value of the debt. The inputs used to estimate the fair value of the CHI Note Receivable are considered to be Level 3 inputs. At September 30, 2026, the estimated fair value of the CHI Note Receivable was approximately 100.0% of its carrying value.

NOTE 16. ACQUISITIONS

During the nine months ended September 30, 2026, we used $201 million of cash for acquisition-related activity, of which $198 million related to acquisitions and consolidations completed during that period and $3 million related to measurement‑period adjustments for acquisitions completed during 2025. During the nine months ended September 30, 2025, we used $266 million of cash for acquisition‑related activity, of which $257 million related to acquisitions and consolidations completed during that period and $9 million related to measurement‑period adjustments for acquisitions completed during 2024.

We are required to allocate the purchase prices of acquired businesses to assets acquired or liabilities assumed and, if applicable, noncontrolling interests based on their fair values. The excess of the purchase prices allocated over those fair values is recorded as goodwill. The purchase price allocations for certain acquisitions completed in 2026 and 2025 are preliminary. We are in the process of assessing working capital balances and lease and other agreements assumed, as well as obtaining and evaluating valuations of the acquired property and equipment, management contracts and other intangible assets, and noncontrolling interests. Therefore, those purchase price allocations, including goodwill, recorded in the accompanying Condensed Consolidated Financial Statements are subject to adjustment once the assessments and valuation work are completed and evaluated. Such adjustments will be recorded as soon as practical and within the measurement period as defined by the accounting literature. During the nine months ended September 30, 2026, we adjusted the preliminary purchase price allocations of certain Ambulatory Care segment acquisitions completed in 2025 based on the results of completed valuations and post‑closing working capital adjustments. These adjustments resulted in an increase of $5 million in goodwill recognized.

The table below presents the preliminary or final purchase price allocations for acquisitions made during the nine months ended September 30, 2026 and 2025:

The goodwill generated from our 2026 acquisitions, the majority of which we believe will not be deductible for income tax purposes, can be attributed to the benefits that we expect to realize from operating efficiencies and growth strategies. Goodwill recognized related to our acquisition activity during the nine months ended September 30, 2026 was primarily attributable to our Ambulatory Care segment.

NOTE 17. SEGMENT INFORMATION

The following tables present amounts for each of our reportable segments and the reconciling items necessary to agree to amounts reported in the accompanying Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations, as applicable.