COMMUNITY HEALTH SYSTEMS INC

Previous wording

We are one of the nation’s largest healthcare companies. Our affiliates are leading providers of healthcare services, developing and operating healthcare delivery systems in 40 distinct markets across 15 states. As of March 31, 2024, our subsidiaries own or lease 71 affiliated hospitals, with approximately 12,000 beds, and operate more than 1,000 sites of care, including physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers. We generate revenues by providing a broad range of general and specialized hospital healthcare services and outpatient services to patients in the communities in which we are located. For the hospitals and other sites of care that we own and operate, we are paid for our services by governmental agencies, private insurers and directly by the patients we serve.

Current wording

We are one of the nation’s largest healthcare companies. Our affiliates are leading providers of healthcare services, developing and operating healthcare delivery systems in 40 distinct markets across 15 states. As of June 30, 2024, our subsidiaries own or lease 71 affiliated hospitals, with more than 11,000 beds, and operate more than 1,000 sites of care, including physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers. We generate revenues by providing a broad range of general and specialized hospital healthcare services and outpatient services to patients in the communities in which we are located. For the hospitals and other sites of care that we own and operate, we are paid for our services by governmental agencies, private insurers and directly by the patients we serve.

Previous wording

During the three months ended March 31, 2024, we paid approximately $1 million to acquire the operating assets and related businesses of certain physician practices and clinics that operate within the communities served by our hospitals. The purchase price for these transactions was primarily allocated to working capital and property and equipment.

Current wording

During the six months ended June 30, 2024, we paid approximately $1 million to acquire the operating assets and related businesses of certain physician practices and clinics that operate within the communities served by our hospitals. The purchase price for these transactions was primarily allocated to working capital and property and equipment.

Previous wording

There were no hospital divestitures completed during the three months ended March 31, 2024. The following table provides a summary of hospitals that we divested (or, in the case of Lutheran Rehabilitation Hospital, in which we sold a majority interest) during the year ended December 31, 2023:

Current wording

There were no hospital divestitures completed during the three and six months ended June 30, 2024. The following table provides a summary of hospitals that we divested (or, in the case of Lutheran Rehabilitation Hospital, in which we sold a majority interest) during the year ended December 31, 2023.

Previous wording

On February 28, 2023, we entered into a definitive agreement for the sale of substantially all of the assets of Lake Norman Regional Medical Center (123 licensed beds) in Mooresville, North Carolina, and Davis Regional Medical Center (144 licensed beds) in Statesville, North Carolina, to Novant Health, Inc., or Novant. For additional information regarding this potential disposition, see the Current Report on Form 8-K filed by us on February 28, 2023. On January 25, 2024, the Federal Trade Commission, or FTC, filed a complaint seeking to enjoin the consummation of the sale of these hospitals to Novant. For additional information regarding this litigation, see the Legal Proceedings section of Part I, Item 3 of the 2023 Form 10-K. Taking into account this FTC action, there can be no assurance that this transaction with Novant will be completed, or if this transaction is completed, the ultimate timing of the completion of this transaction.

Current wording

On February 28, 2023, we entered into a definitive agreement for the sale of substantially all of the assets of Lake Norman Regional Medical Center (123 licensed beds) in Mooresville, North Carolina, and Davis Regional Medical Center (144 licensed beds) in Statesville, North Carolina, to Novant Health, Inc., or Novant. Following judicial developments involving efforts of the Federal Trade Commission to prevent completion of this transaction, the aforementioned definitive agreement was terminated effective June 21, 2024. For additional information regarding termination of this definitive agreement, see the Current Report on Form 8-K filed by us on June 24, 2024.

Previous wording

On April 18, 2024, we entered into a definitive agreement for the sale of substantially all of the assets of Tennova Healthcare - Cleveland (351 licensed beds) in Cleveland, Tennessee, to affiliates of Hamilton Health Care System, Inc. and certain of its affiliates. For additional information regarding this potential disposition, see the Current Report on Form 8-K filed by us on April 18, 2024.

Current wording

On April 18, 2024, we entered into a definitive agreement for the sale of substantially all of the assets of Tennova Healthcare - Cleveland (351 licensed beds) in Cleveland, Tennessee, to Hamilton Health Care System, Inc. and certain of its affiliates. For additional information regarding this potential disposition, see the Current Report on Form 8-K filed by us on April 18, 2024.

Previous wording

There can be no assurance that these potential divestitures subject to definitive agreements will be completed, or if they are completed, the ultimate timing of the completion of the divestitures.

Current wording

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

Previous wording

Net operating revenues increased from $3.108 billion for the three months ended March 31, 2023 to $3.140 billion for the three months ended March 31, 2024. On a same-store basis, net operating revenues for the three months ended March 31, 2024 increased $170 million.

Current wording

Net operating revenues increased from $3.115 billion for the three months ended June 30, 2023 to $3.140 billion for the three months ended June 30, 2024. On a same-store basis, net operating revenues for the three months ended June 30, 2024 increased $141 million compared to the same period in 2023.

Previous wording

an after-tax benefit of $14 million for the gain related to the sale of a hospital and the impairment of long-lived assets that were idled, disposed of or held-for-sale, and

Current wording

an after-tax benefit of $3 million for the gain related to the sale of a hospital partially offset by impairment of long-lived assets that were idled, disposed of or held-for-sale, and

Previous wording

an after-tax charge of $1 million for restructuring charges related to the closure of businesses as well as service line closures and consolidations at certain hospitals.

Current wording

an after-tax charge of $7 million for restructuring charges related to the closure of businesses as well as service line closures and consolidations at certain hospitals.

Previous wording

Consolidated inpatient admissions for the three months ended March 31, 2024, decreased 2.3%, compared to the same period in 2023. Consolidated adjusted admissions for the three months ended March 31, 2024, decreased 4.0%, compared to the same period in 2023. Same-store inpatient admissions for the three months ended March 31, 2024, increased 3.8%, compared to the same period in 2023, and same-store adjusted admissions for the three months ended March 31, 2024, increased 1.9%, compared to the same period in 2023.

Current wording

Consolidated inpatient admissions for the three months ended June 30, 2024, decreased 2.8%, compared to the same period in 2023. Consolidated adjusted admissions for the three months ended June 30, 2024, decreased 2.4%, compared to the same period in 2023. Same-store inpatient admissions for the three months ended June 30, 2024, increased 3.0%, compared to the same period in 2023, and same-store adjusted admissions for the three months ended June 30, 2024, increased 3.2%, compared to the same period in 2023.

Previous wording

We had net loss of $6 million during the three months ended March 31, 2024, compared to a net loss of $20 million for the same period in 2023. Net loss for the three months ended March 31, 2024 included the following:

Current wording

We had net income of $20 million during the six months ended June 30, 2024, compared to a net loss of $(18) million for the same period in 2023. Net income for the six months ended June 30, 2024 included the following:

Previous wording

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

Current wording

an after-tax charge of $21 million resulting from impairment of long-lived assets that were idled, disposed of or held-for-sale.

Previous wording

Net loss for the three months ended March 31, 2023 included the following:

Current wording

Net loss for the six months ended June 30, 2023 included the following:

Previous wording

Self-pay revenues represented approximately 1.4% and 0.8% of net operating revenues for the three months ended March 31, 2024 and 2023, respectively. The amount of foregone revenue related to providing charity care services as a percentage of net operating revenues was approximately 10.1% and 10.5% for the three months ended March 31, 2024 and 2023, respectively. Direct and indirect costs incurred in providing charity care services as a percentage of net operating revenues was approximately 1.0% and 1.2% for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Self-pay revenues represented approximately 1.6% and 0.8% of net operating revenues for the three months ended June 30, 2024 and 2023, respectively, and 1.5% and 0.8% for the six months ended June 30, 2024 and 2023, respectively. The amount of foregone revenue related to providing charity care services as a percentage of net operating revenues was approximately 9.1% and 10.3% for the three months ended June 30, 2024 and 2023, respectively, and 9.6% and 10.4% for the six months ended June 30, 2024 and 2023, respectively. Direct and indirect costs incurred in providing charity care services as a percentage of net operating revenues was approximately 0.9% and 1.1% for the three months ended June 30, 2024 and 2023, respectively, and 0.9% and 1.2% for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

The healthcare industry is subject to changing political, regulatory, and economic influences that may affect our business. In recent years, the U.S. Congress and certain state legislatures have introduced and passed a large number of proposals and legislation affecting the healthcare system, including laws intended to impact access to health insurance and reduce healthcare costs and government spending. The most prominent of these efforts, the Affordable Care Act, affects how healthcare services are covered, delivered and reimbursed, and expanded health insurance coverage through a combination of public program expansion and private sector health insurance reforms. The Affordable Care Act has been, and continues to be, subject to legislative and regulatory changes and court challenges. To increase access to health insurance during the COVID-19 pandemic, the American Rescue Plan Act of 2021, or the ARPA, enhanced subsidies for individuals eligible to purchase coverage through Affordable Care Act marketplaces. Subsequent legislation extended these enhanced subsidies through 2025. In addition, COVID-related legislation enacted during the early stages of the pandemic required states to maintain continuous Medicaid enrollment, among other conditions, in order to receive a temporary increase in federal funds for Medicaid expenditures. The expiration of this “continuous coverage” requirement in April 2023 has resulted in significant Medicaid coverage disruptions and disenrollments. The Centers for Medicare & Medicaid Services, or CMS, has required certain states to pause disenrollments due to noncompliant renewal systems. These and other changes and initiatives may impact the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if obtained.

Current wording

The healthcare industry is subject to changing political, regulatory, and economic influences that may affect our business. In recent years, the U.S. Congress and certain state legislatures have introduced and passed a large number of proposals and legislation affecting the healthcare system, including laws intended to impact access to health insurance and reduce healthcare costs and government spending. The most prominent of these efforts, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively, the Affordable Care Act, affects how healthcare services are covered, delivered and reimbursed, and expanded health insurance coverage through a combination of public program expansion and private sector health insurance reforms. The Affordable Care Act has been, and continues to be, subject to legislative and regulatory changes and court challenges. To increase access to health insurance during the COVID-19 pandemic, the American Rescue Plan Act of 2021, or the ARPA, enhanced subsidies for individuals eligible to purchase coverage through Affordable Care Act marketplaces. Subsequent legislation extended these enhanced subsidies through 2025. In addition, COVID-related legislation enacted during the early stages of the pandemic required states to maintain continuous Medicaid enrollment, among other conditions, in order to receive a temporary increase in federal funds for Medicaid expenditures. The expiration of this “continuous coverage” requirement in April 2023 has resulted in significant Medicaid coverage disruptions and disenrollments. Although it was originally anticipated that states would complete unwinding-related Medicaid renewals by June 2024, the Centers for Medicare & Medicaid Services, or CMS, required certain states to pause procedural disenrollments due to noncompliant renewal systems, and CMS has approved state implementation of other flexibilities and mitigation strategies that extended timelines for completion. These and other changes and initiatives may impact the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if obtained.

Previous wording

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

Current wording

We did not receive or recognize any significant level of payments or benefits under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, or other COVID-19 related stimulus and relief legislation, during the six months ended June 30, 2024, and do not expect to receive or recognize any significant level of payments or benefits under the CARES Act and other existing legislation related to COVID-19 in future periods.

Previous wording

Reimbursement by government programs may be affected by broad shifts in payment policy. For example, recent changes related to the 340B Drug Pricing Program have implications for all hospitals reimbursed under the outpatient prospective payment system, or PPS, including those, like ours, that do not participate in the program. In 2018, CMS implemented a payment policy that reduced Medicare payments for 340B hospitals for most drugs obtained at 340B-discounted rates and that resulted in increased payments for non-340B hospitals. In June 2022, the U.S. Supreme Court, in American Hospital Association v. Becerra, invalidated past payment cuts for hospitals participating in the 340B Drug Pricing Program. In light of the U.S. Supreme Court decision and to achieve budget neutrality, CMS implemented a reduction of approximately 3.1% to payment rates for non-drug services under the outpatient PPS for calendar year 2023. In addition, HHS directed that $9 billion be paid to affected 340B providers in one-time lump sum payments as the remedy for calendar years 2018 through 2022. Moreover, in order to comply with budget neutrality requirements, HHS finalized a corresponding offset in future non-drug item and service payments for all outpatient PPS providers (except new providers) that will reduce the outpatient PPS conversion factor by 0.5% annually. This adjustment will start in calendar year 2026 and continue for approximately 16 years. This reduction to payment rates adversely affected our results for the three months ended March 31, 2024, and the reduction to the outpatient PPS conversion factor as noted above is anticipated to adversely impact our future results.

Current wording

Reimbursement by government programs may be affected by broad shifts in payment policy. For example, recent changes related to the 340B Drug Pricing Program have implications for all hospitals reimbursed under the outpatient prospective payment system, or PPS, including those, like ours, that do not participate in the program. In 2018, CMS implemented a payment policy that reduced Medicare payments for 340B hospitals for most drugs obtained at 340B-discounted rates and that resulted in increased payments for non-340B hospitals. In June 2022, the U.S. Supreme Court, in American Hospital Association v. Becerra, invalidated past payment cuts for hospitals participating in the 340B Drug Pricing Program. In light of the U.S. Supreme Court decision and to achieve budget neutrality, CMS implemented a reduction of approximately 3.1% to payment rates for non-drug services under the outpatient PPS for calendar year 2023. In addition, HHS directed that $9 billion be paid to affected 340B providers in one-time lump sum payments as the remedy for calendar years 2018 through 2022. Moreover, in order to comply with budget neutrality requirements, HHS finalized a corresponding offset in future non-drug item and service payments for all outpatient PPS providers (except new providers) that will reduce the outpatient PPS conversion factor by 0.5% annually. This adjustment will start in calendar year 2026 and continue for approximately 16 years. This reduction to payment rates adversely affected our results for the six months ended June 30, 2024, and the reduction to the outpatient PPS conversion factor as noted above is anticipated to adversely impact our future results.

Previous wording

Net operating revenues include amounts estimated by management to be reimbursable by Medicare and Medicaid under prospective payment systems and provisions of cost-based reimbursement and other payment methods. In addition, we are reimbursed by non-governmental payors using a variety of payment methodologies. Amounts we receive for the treatment of patients covered by Medicare, Medicaid and non-governmental payors are generally less than our standard billing rates. We account for the differences between the estimated program reimbursement rates and our standard billing rates as contractual allowance adjustments, which we deduct from gross revenues to arrive at net operating revenues. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the periods that such adjustments become known. Contractual allowance adjustments related to final settlements and previous program reimbursement estimates impacted net operating revenues by an insignificant amount in each of the three-month periods ended March 31, 2024 and 2023.

Current wording

Net operating revenues include amounts estimated by management to be reimbursable by Medicare and Medicaid under prospective payment systems and provisions of cost-based reimbursement and other payment methods. In addition, we are reimbursed by non-governmental payors using a variety of payment methodologies. Amounts we receive for the treatment of patients covered by Medicare, Medicaid and non-governmental payors are generally less than our standard billing rates. We account for the differences between the estimated program reimbursement rates and our standard billing rates as contractual allowance adjustments, which we deduct from gross revenues to arrive at net operating revenues. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the periods that such adjustments become known. Contractual allowance adjustments related to final settlements and previous program reimbursement estimates impacted net operating revenues by an insignificant amount in each of the three- and six-month periods ended June 30, 2024 and 2023.

Previous wording

Net operating revenues increased to $3.140 billion for the three months ended March 31, 2024, compared to $3.108 billion for the same period in 2023. Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased $170 million, or 5.7%, during the three months ended March 31, 2024, compared to the same period in 2023. On a period-over-period basis, the increase in net operating revenues was primarily attributable to increased reimbursement rates and higher revenues from supplemental reimbursement programs. Non-same-store net operating revenues decreased $138 million during the three months ended March 31, 2024, compared to the same period in 2023, with the decrease primarily attributable to the divestiture of hospitals in 2023. On a consolidated basis, inpatient admissions decreased by 2.3% and adjusted admissions decreased by 4.0% during the three months ended March 31, 2024, compared to the same period in 2023. On a same-store basis, net operating revenues per adjusted admission increased 3.7%, while inpatient admissions increased by 3.8% and adjusted admissions increased by 1.9% for the three months ended March 31, 2024, compared to the same period in 2023.

Current wording

Net operating revenues increased to $3.140 billion for the three months ended June 30, 2024, compared to $3.115 billion for the same period in 2023. Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased $141 million, or 4.7%, during the three months ended June 30, 2024, compared to the same period in 2023. On a period-over-period basis, the increase in same-store net operating revenues was primarily attributable to higher inpatient and outpatient volumes, increased reimbursement rates and higher revenues from supplemental reimbursement programs. Non-same-store net operating revenues decreased $116 million during the three months ended June 30, 2024, compared to the same period in 2023, due to the divestiture of hospitals in 2023. On a consolidated basis, inpatient admissions decreased by 2.8% and adjusted admissions decreased by 2.4% during the three months ended June 30, 2024, compared to the same period in 2023. On a same-store basis, net operating revenues per adjusted admission increased 1.4%, while inpatient admissions increased by 3.0% and adjusted admissions increased by 3.2% for the three months ended June 30, 2024, compared to the same period in 2023.

Previous wording

Operating costs and expenses, as a percentage of net operating revenues, decreased from 93.2% during the three months ended March 31, 2023 to 92.6% during the three months ended March 31, 2024. Operating costs and expenses, excluding depreciation and amortization and impairment and (gain) loss on sale of businesses, as a percentage of net operating revenues, decreased from 89.7% for the three months ended March 31, 2023 to 88.4% for the three months ended March 31, 2024. Salaries and benefits, as a percentage of net operating revenues, decreased from 43.9% for the three months ended March 31, 2023 to 43.5% for the three months ended March 31, 2024, primarily due to an increase in net operating revenues. Supplies, as a percentage of net operating revenues, decreased from 16.3% for the three months ended March 31, 2023 to 15.5% for the three months ended March 31, 2024, primarily due to changes in the mix of surgical services and cost savings initiatives. Other operating expenses, as a percentage of net operating revenues, remained consistent at 26.9% for both of the three-month periods ended March 31, 2024 and 2023, primarily due to increased expense for supplemental reimbursement programs, offset by decreased costs for contract labor and an increase in net operating revenues. Lease cost and rent, as a percentage of net operating revenues, decreased from 2.6% for the three months ended March 31, 2023 to 2.5% for the three months ended March 31, 2024.

Current wording

Operating costs and expenses, as a percentage of net operating revenues, increased from 92.1% during the three months ended June 30, 2023 to 92.4% during the three months ended June 30, 2024. Operating costs and expenses, excluding depreciation and amortization and impairment and (gain) loss on sale of businesses, as a percentage of net operating revenues, decreased from 88.5% for the three months ended June 30, 2023 to 88.1% for the three months ended June 30, 2024. Salaries and benefits, as a percentage of net operating revenues, decreased from 42.9% for the three months ended June 30, 2023 to 42.3% for the three months ended June 30, 2024, primarily due to an increase in net operating revenues. Supplies, as a percentage of net operating revenues, decreased from 16.2% for the three months ended June 30, 2023 to 15.4% for the three months ended June 30, 2024, primarily due to changes in the mix of services, the benefit of cost savings initiatives and an increase in net operating revenues. Other operating expenses, as a percentage of net operating revenues, increased from 26.8% for the three months ended June 30, 2023 to 28.1% for the three months ended June 30, 2024, primarily due to increased expense for supplemental reimbursement programs and outsourced medical specialists, partially offset by decreased costs for contract labor and an increase in net operating revenues. Lease cost and rent, as a percentage of net operating revenues, decreased from 2.6% for the three months ended June 30, 2023 to 2.3% for the three months ended June 30, 2024.

Previous wording

Interest expense, net, increased by $4 million to $211 million for the three months ended March 31, 2024, compared to $207 million for the same period in 2023 due primarily to financing activities in 2023.

Current wording

Interest expense, net, increased by $9 million to $216 million for the three months ended June 30, 2024, compared to $207 million for the same period in 2023 due primarily to financing activities in 2023.

Previous wording

The net results of the above-mentioned changes resulted in income before income taxes increasing $16 million to $22 million for the three months ended March 31, 2024 from $6 million for the same period in 2023.

Current wording

The net results of the above-mentioned changes resulted in income before income taxes increasing $10 million to $50 million for the three months ended June 30, 2024 from $40 million for the same period in 2023.

Previous wording

Our provision for income taxes for the three months ended March 31, 2024 and 2023 was $28 million and $26 million, respectively, and the effective tax rates were 127.3% and 433.3% for the three months ended March 31, 2024 and 2023, respectively. The increase in the provision for income taxes and the difference in our effective tax rate for the three months ended March 31, 2024, compared to the same period in 2023 was due to an increase in income before income taxes for the three months ended March 31, 2024 compared to the same period in 2023.

Current wording

Our provision for income taxes for the three months ended June 30, 2024 and 2023 was $24 million and $38 million, respectively, and the effective tax rates were 48.0% and 95.0% for the three months ended June 30, 2024 and 2023, respectively. The decrease in the provision for income taxes and the difference in our effective tax rate for the three months ended June 30, 2024, compared to the same period in 2023 was due to a decrease in nondeductible goodwill for the three months ended June 30, 2024 compared to the same period in 2023.

Previous wording

Net income attributable to noncontrolling interests as a percentage of net operating revenues was 1.1% for the three months ended March 31, 2024, compared to 1.0% for the same period in 2023.

Current wording

Net income attributable to noncontrolling interests as a percentage of net operating revenues was 1.2% for the three months ended June 30, 2024, compared to 1.3% for the same period in 2023.

Previous wording

Net loss attributable to Community Health Systems, Inc. stockholders was $(41) million for the three months ended March 31, 2024, compared to $(51) million for the same period in 2023.

Current wording

Net loss attributable to Community Health Systems, Inc. stockholders was $(13) million for the three months ended June 30, 2024, compared to $(38) million for the same period in 2023.

Previous wording

Depreciation and amortization, as a percentage of net operating revenues, decreased to 3.7% for the three months ended March 31, 2024 from 4.2% for the same period in 2023, primarily due to an increase in net operating revenues and a reduction in the amortization of capitalized internal-use software.

Current wording

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

Previous wording

Impairment and (gain) loss on sale of businesses, net was expense of $17 million for the three months ended March 31, 2024, compared to a gain of $22 million for the same period in 2023. The expense recognized during the three months ended March 31, 2024 was recorded to reduce the carrying value of several assets that were idled, disposed of or held-for-sale. The gain recognized during the three months ended March 31, 2023 related primarily to divestiture activity during the respective period as discussed more specifically under “Acquisition, Divestiture and Closure Activity” herein.

Current wording

Impairment and (gain) loss on sale of businesses, net was an expense of $27 million for the six months ended June 30, 2024, compared to a gain of $35 million for the same period in 2023. The expense recognized during the six months ended June 30, 2024 was primarily to reduce the carrying value of several assets that were idled, disposed of or held-for-sale. The gain recognized during the six months ended June 30, 2023 related primarily to divestiture activity during the respective period as discussed more specifically under “Acquisition, Divestiture and Closure Activity” herein.

Previous wording

Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, remained consistent at (0.1)% for both of the three-month periods ended March 31, 2024 and 2023.

Current wording

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

Previous wording

Net cash provided by operating activities increased $91 million, from approximately $5 million for the three months ended March 31, 2023, to approximately $96 million for the three months ended March 31, 2024. The increase in cash provided by operating activities is primarily due to increased collections of patient accounts receivable and decreases in payments for professional liability claims and interest. Cash paid for interest was $149 million during the three months ended March 31, 2024, compared to $197 million for the same period in 2023. Cash paid for income taxes, net of refunds received, resulted in a net payment of less than $1 million during both of the three-month periods ended March 31, 2024 and 2023.

Current wording

Net cash provided by operating activities increased $106 million, from approximately $91 million for the six months ended June 30, 2023, to approximately $197 million for the six months ended June 30, 2024. The increase in cash provided by operating activities is primarily due to increased collections of patient accounts receivable and lower cash paid for interest, partially offset by increased income tax payments. Cash paid for interest was $360 million during the six months ended June 30, 2024, compared to $385 million for the same period in 2023. Cash paid for income taxes, net of refunds received, resulted in a net payment of $84 million and $37 million during the six months ended June 30, 2024 and 2023.

Previous wording

Net cash used in investing activities was approximately $99 million for the three months ended March 31, 2024, compared to approximately $19 million for the same period in 2023. Net cash used in investing activities during the three months ended March 31, 2024 was impacted by a decrease of $92 million in cash proceeds from dispositions of hospitals and other ancillary operations and a decrease of $27 million in cash from the net impact of the purchases and sales of available-for-sale debt and equity securities, offset by a decrease of $29 million in cash used for the purchase of property and equipment.

Current wording

Net cash used in investing activities was approximately $207 million for the six months ended June 30, 2024, compared to approximately $105 million for the same period in 2023. Net cash used in investing activities during the six months ended June 30, 2024 was impacted by a decrease of $111 million in cash proceeds from dispositions of hospitals and other ancillary operations and a decrease of $29 million in cash from the net impact of the purchases and sales of available-for-sale debt and equity securities, offset by a decrease of $46 million in cash used for the purchase of property and equipment.

Previous wording

Our net cash provided by financing activities was approximately $13 million for the three months ended March 31, 2024, compared to approximately $40 million for the same period in 2023, a change of $27 million. This was primarily due to the net impact of our debt borrowings and repayments during the three months ended March 31, 2024, compared to the same period in 2023.

Current wording

Our net cash provided by financing activities was approximately $11 million for the six months ended June 30, 2024, compared to approximately $14 million for the same period in 2023, a change of $3 million. This was primarily due to the net impact of our debt borrowings and repayments during the six months ended June 30, 2024, compared to the same period in 2023.

Previous wording

Net working capital was approximately $1.0 billion at March 31, 2024 and $1.1 billion at December 31, 2023. Net working capital decreased by approximately $27 million between December 31, 2023 and March 31, 2024. The decrease is primarily due to decreases in patient accounts receivable and prepaid income taxes and increases in current maturities of long-term debt, accounts payable and accrued interest during the three months ended March 31, 2024, partially offset by increases in cash and other current assets and decreases in current operating lease liabilities, accrued liabilities for employee compensation and other current liabilities.

Current wording

Net working capital was approximately $1.0 billion at June 30, 2024 and $1.1 billion at December 31, 2023. Net working capital decreased by approximately $39 million between December 31, 2023 and June 30, 2024. The decrease is primarily due to decreases in patient accounts receivable and prepaid expenses and taxes and increases in current maturities of long-term debt, accrued interest and other current liabilities during the six months ended June 30, 2024, partially offset by increases in supplies, prepaid income taxes and other current assets and decreases in accounts payable, current operating lease liabilities and accrued liabilities for employee compensation.

Previous wording

Pursuant to the ABL Credit Agreement, the lenders have extended to CHS/Community Health Systems, Inc., or CHS, a revolving asset-based loan facility, or ABL Facility. The maximum aggregate amount under the ABL Facility is $1.0 billion, subject to borrowing base capacity. At March 31, 2024, we had outstanding borrowings of $302 million and approximately $618 million of additional borrowing capacity (after taking into consideration $67 million of outstanding letters of credit) under the ABL Facility. The issued letters of credit were primarily in support of potential insurance-related claims and certain bonds. Letters of credit were reduced during the three months ended March 31, 2024 by $14 million, primarily in relation to a professional liability claim that was settled and funded during the three months ended March 31, 2024. Principal amounts outstanding under the ABL Facility, if any, will be due and payable in full on November 22, 2026.

Current wording

Pursuant to the ABL Credit Agreement, the lenders have extended to CHS/Community Health Systems, Inc., or CHS, a revolving asset-based loan facility, or ABL Facility. The maximum aggregate amount under the ABL Facility is $1.0 billion, subject to borrowing base capacity. At June 30, 2024, we had outstanding borrowings of $273 million and approximately $599 million of additional borrowing capacity (after taking into consideration $67 million of outstanding letters of credit) under the ABL Facility. The issued letters of credit were primarily in support of potential insurance-related claims and certain bonds. Letters of credit were reduced during the six months ended June 30, 2024 by $14 million, primarily in relation to a professional liability claim that was settled and funded during the six months ended June 30, 2024. Principal amounts outstanding under the ABL Facility, if any, will be due and payable in full on June 5, 2029.

Previous wording

As of March 31, 2024, approximately $34 million of our outstanding debt of approximately $11.6 billion is due within the next 12 months.

Current wording

As of June 30, 2024, approximately $27 million of our outstanding debt of approximately $11.5 billion is due within the next 12 months.

Previous wording

Cash expenditures for purchases of facilities and other related businesses were approximately $1 million for the three months ended March 31, 2024, compared to $8 million for the same period in 2023. Our expenditures for the three months ended March 31, 2024 and 2023 were primarily related to physician practices and clinics.

Current wording

Cash expenditures for purchases of facilities and other related businesses were approximately $1 million for the six months ended June 30, 2024, compared to $15 million for the same period in 2023. Our expenditures for the six months ended June 30, 2024 and 2023 were primarily related to physician practices and clinics.

Previous wording

Capital expenditures relate primarily to expansion and renovation of existing facilities, construction of additional access points such as free-standing emergency departments and ambulatory surgery centers, investments in higher acuity service lines and information technology infrastructure, as well as routine expenditures for equipment, minor renovations and other upgrades. Capital expenditures totaled $93 million and $122 million for the three months ended March 31, 2024 and 2023, respectively. We expect total capital expenditures of approximately $350 million to $400 million in 2024.

Current wording

Capital expenditures relate primarily to expansion and renovation of existing facilities, construction of additional access points such as free-standing emergency departments and ambulatory surgery centers, investments in higher acuity service lines and information technology infrastructure, as well as routine expenditures for equipment, minor renovations and other upgrades. Capital expenditures totaled $181 million and $227 million for the six months ended June 30, 2024 and 2023, respectively. We expect total capital expenditures of approximately $350 million to $400 million in 2024.

Previous wording

Pursuant to a hospital purchase agreement from our March 1, 2016 acquisition of Northwest Health - Starke, formerly known as Starke Hospital, we committed to spend up to $15 million toward the construction of a replacement facility in Knox, Indiana. Construction is required to be completed within five years of the date we enter into a new lease with Starke County, Indiana, the hospital lessor, or in the event we do not enter into a new lease with Starke County, construction shall be completed by September 30, 2026. We have not entered into a new lease with the lessor for Northwest Health - Starke.

Current wording

Pursuant to a hospital purchase agreement from our March 1, 2016 acquisition of Northwest Health - Starke, formerly known as Starke Hospital, we committed to spend up to $15 million toward the construction of a replacement facility in Knox, Indiana. Construction is required to be completed within five years of the date we enter into a new lease with Starke County, Indiana, the hospital lessor, or in the event we do not enter into a new lease with Starke County, construction is to be completed by September 30, 2026. We have not entered into a new lease with the lessor for Northwest Health - Starke.

Previous wording

Ongoing legislative and regulatory efforts, and judicial interpretations, could reduce or otherwise adversely affect the payments we receive from Medicare and Medicaid and other payors. Within the statutory framework of the Medicare and Medicaid programs, there are substantial areas subject to administrative rulings, interpretations and discretion, and which are at times subject to court challenges, which may further affect payments made under those programs. Further, the federal and state governments might, in the future, reduce the funds available under those programs, require repayment of previously received funds or require more stringent utilization and quality reviews of hospital facilities. Additionally, there may be a continued rise in managed care programs and further restructuring of the financing and delivery of healthcare in the United States. These events could cause our future financial results to be adversely impacted. We cannot estimate the impact of Medicare and Medicaid reimbursement changes that have been enacted or otherwise determined or that are currently or may in the future be under consideration. We cannot predict whether additional reimbursement reductions will be made or whether any such changes or other restructuring of the financing and delivery of healthcare would have a material adverse effect on our business, financial conditions, results of operations, cash flow, capital resources and liquidity.

Current wording

Ongoing legislative and regulatory efforts, and judicial interpretations, could reduce or otherwise adversely affect the payments we receive from Medicare and Medicaid and other payors. Within the statutory framework of the Medicare and Medicaid programs, there are substantial areas subject to administrative rulings, interpretations and discretion, and which are at times subject to court challenges, which may further affect payments made under those programs. We expect legal challenges to healthcare regulations and agency guidance, including those related to Medicare and Medicaid payment policies, to increase as a result of recent U.S. Supreme Court decisions as noted above. The increased potential for legal challenges may result in delays in and other impacts to the agency rulemaking process. Further, the federal and state governments might, in the future, reduce the funds available under the Medicare and Medicaid programs, require repayment of previously received funds or require more stringent utilization and quality reviews of hospital facilities. Additionally, there may be a continued rise in managed care programs and further restructuring of the financing and delivery of healthcare in the United States. These events could cause our future financial results to be adversely impacted. We cannot estimate the impact of Medicare and Medicaid reimbursement changes that have been enacted or otherwise determined or that are currently or may in the future be under consideration. We cannot predict whether additional reimbursement reductions will be made or whether any such changes or other restructuring of the financing and delivery of healthcare would have a material adverse effect on our business, financial conditions, results of operations, cash flow, capital resources and liquidity.

Previous wording

Due to the complexities involved in these estimates, actual payments we receive could be different from the amounts we estimate and record. If the actual contractual reimbursement percentage under government programs and managed care contracts differed by 1% at March 31, 2024 from our estimated reimbursement percentage, net loss for the three months ended March 31, 2024 would have changed by approximately $102 million, and net accounts receivable at March 31, 2024 would have changed by $131 million. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the periods that such adjustments become known. Contractual allowance adjustments related to final settlements and previous program reimbursement estimates impacted net operating revenues by an insignificant amount for both of the three-month periods ended March 31, 2024 and 2023.

Current wording

Due to the complexities involved in these estimates, actual payments we receive could be different from the amounts we estimate and record. If the actual contractual reimbursement percentage under government programs and managed care contracts differed by 1% at June 30, 2024 from our estimated reimbursement percentage, net income for the six months ended June 30, 2024 would have changed by approximately $99 million, and net accounts receivable at June 30, 2024 would have changed by $127 million. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the periods that such adjustments become known. Contractual allowance adjustments related to final settlements and previous program reimbursement estimates impacted net operating revenues by an insignificant amount for the three- and six-month periods ended June 30, 2024 and 2023.

Previous wording

Patient accounts receivable can be impacted by the effectiveness of our collection efforts and, as described in our significant accounting policies included in Note 1 of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Form 10-Q, numerous factors may affect the net realizable value of accounts receivable. If the actual collection percentage differed by 1% at March 31, 2024 from our estimated collection percentage as a result of a change in expected recoveries, net loss for the three months ended March 31, 2024 would have changed by $37 million, and net accounts receivable at March 31, 2024 would have changed by $48 million. We also continually review our overall reserve adequacy by monitoring historical cash collections as a percentage of trailing net operating revenues, as well as by analyzing current period net operating revenues and admissions by payor classification, days revenue outstanding, the composition of self-pay receivables between pure self-pay patients and the patient responsibility portion of third-party insured receivables and the impact of recent acquisitions and dispositions.

Current wording

Patient accounts receivable can be impacted by the effectiveness of our collection efforts and, as described in our significant accounting policies included in Note 1 of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Form 10-Q, numerous factors may affect the net realizable value of accounts receivable. If the actual collection percentage differed by 1% at June 30, 2024 from our estimated collection percentage as a result of a change in expected recoveries, net income for the six months ended June 30, 2024 would have changed by $37 million, and net accounts receivable at June 30, 2024 would have changed by $48 million. We also continually review our overall reserve adequacy by monitoring historical cash collections as a percentage of trailing net operating revenues, as well as by analyzing current period net operating revenues and admissions by payor classification, days revenue outstanding, the composition of self-pay receivables between pure self-pay patients and the patient responsibility portion of third-party insured receivables and the impact of recent acquisitions and dispositions.