Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read this discussion together with our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this Form 10-K.
Executive Overview
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 36 distinct markets across 14 states. As of December 31, 2025, our subsidiaries own or lease 69 affiliated hospitals, with more than 10,000 beds, and operate more than 1,000 sites of care, including physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers. We generate revenues by providing a broad range of general and specialized hospital healthcare services and outpatient services to patients in the communities in which we are located. 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.
Acquisition, Divestiture and Closure Activity
During the year ended December 31, 2025, we paid approximately $1 million to acquire the operating assets and related businesses of certain physician practices, clinics, ambulatory surgery centers and other ancillary businesses that operate within the communities served by our hospitals. The purchase price for these transactions was primarily allocated to property and equipment, intangible assets, working capital, noncontrolling interests and goodwill.
During 2025, we completed the divestiture of four hospitals and the sale of a majority interest in three hospitals. These hospitals represented annual net operating revenues in 2024 of approximately $792 million and we received total net proceeds of over $1.0 billion in connection with these dispositions. In addition, on December 1, 2025, we completed a transaction pursuant to which Laboratory Corporation of America Holdings acquired select assets and assumed certain leases of the ambulatory outreach business of the Company’s subsidiaries across 13 states, including certain patient service centers and in-office phlebotomy locations, for a total purchase price paid to us at the closing of approximately $194 million of cash, before transaction expenses.
During 2024, we completed the divestiture of two hospitals. These hospitals represented annual net operating revenues in 2023 of approximately $198 million and we received total net proceeds of approximately $174 million in connection with these dispositions. These total net proceeds do not include additional cash consideration which has been, and may continue to be, received in connection with the sale of Tennova Healthcare – Cleveland that was completed on August 1, 2024, beyond the approximately $160 million of cash received at closing. In this regard, during the three months ended December 31, 2025, we received additional cash consideration of approximately $91 million as a result of modifications to applicable supplemental reimbursement programs as more specifically provided in the asset purchase agreement underlying the transaction. Additional cash consideration may be received in one or more future periods, or a portion of the consideration previously received may be returned by us to the buyer, subject to periodic reconciliations as set forth in the asset purchase agreement underlying the transaction.
During 2023, we completed the divestiture of eight hospitals and the sale of a majority interest in one hospital. These hospitals represented annual net operating revenues in 2022 of approximately $594 million and we received total net proceeds of approximately $518 million in connection with these dispositions, inclusive of approximately $85 million received at a preliminary closing on December 30, 2022 in connection with the disposition of Greenbrier Valley Medical Center.
The following table provides a summary of hospitals that we divested (or, in the cases of Lutheran Rehabilitation Hospital, in which we sold a majority ownership interest, Merit Health Biloxi and Merit Health Madison, in which we divested our 50% ownership interest, and in the case of Cedar Park Regional Medical Center, in which we divested our 80% ownership interest) during the years ended December 31, 2025, 2024 and 2023:
Hospital
Buyer
City, State
Licensed
Beds
Effective Date
2025 Divestitures:
Merit Health Biloxi
Memorial Health System
Biloxi, MS
February 1, 2025
ShorePoint Health - Port Charlotte
AdventHealth
Port Charlotte, FL
March 1, 2025
ShorePoint Health - Punta Gorda
AdventHealth
Punta Gorda, FL
March 1, 2025
Lake Norman Regional Medical Center
Duke University Health System, Inc.
Mooresville, NC
April 1, 2025
Merit Health Madison
University of Mississippi Medical Center
Canton, MS
May 1, 2025
Cedar Park Regional Medical Center
Ascension Health
Cedar Park, TX
June 30, 2025
Northwest Health Physicians' Specialty Hospital
Washington Regional Medical Center
Fayetteville, AR
December 1, 2025
2024 Divestitures:
Tennova Healthcare - Cleveland
Hamilton Health Care Systems, Inc.
Cleveland, TN
August 1, 2024
Davis Regional Medical Center
Iredell Memorial Hospital
Statesville, NC
October 1, 2024
2023 Divestitures:
Greenbrier Valley Medical Center
Vandalia Health, Inc.
Ronceverte, WV
January 1, 2023
Plateau Medical Center
Vandalia Health, Inc.
Oak Hill, WV
April 1, 2023
Medical Center of South Arkansas
SARH Holdings, Inc.
El Dorado, AR
July 1, 2023
Lutheran Rehabilitation Hospital
Select Medical Corporation
Fort Wayne, IN
September 1, 2023
AllianceHealth Ponca City
Integris Health
Ponca City, OK
November 1, 2023
AllianceHealth Woodward
Integris Health
Woodward, OK
November 1, 2023
Bravera Health Brooksville
Tampa General Hospital
Brooksville, FL
December 1, 2023
Bravera Health Spring Hill
Tampa General Hospital
Spring Hill, FL
December 1, 2023
Bravera Health Seven Rivers
Tampa General Hospital
Crystal River, FL
December 1, 2023
In addition to hospitals divested in 2025, we completed the disposition of four hospitals subsequent to December 31, 2025, as follows:
On October 24, 2025, we entered into a definitive agreement to sell Regional Hospital of Scranton (186 licensed beds) and Moses Taylor Hospital (122 licensed beds) in Scranton, Pennsylvania, as well as Wilkes-Barre General Hospital (369 licensed beds) in Wilkes-Barre, Pennsylvania, and certain related businesses to affiliates of Tenor Health Foundation. These dispositions were completed on February 1, 2026. Consideration received for the sale of these hospitals included $33 million of cash received by us at closing (which amount is subject to post-closing adjustment) plus a $15 million promissory note from the buyer. Additional cash consideration may be received by us in one or more future periods contingent upon collections of certain patient accounts receivable during the 90-day period following the closing effective date.
On October 30, 2025, we entered into a definitive agreement to sell our 80% ownership interests in two joint ventures which respectively own and operate Tennova Healthcare - Clarksville (270 licensed beds) and certain ancillary businesses located in Clarksville, Tennessee, to subsidiaries of Vanderbilt University Medical Center, or VUMC. This disposition was completed effective February 1, 2026. We received proceeds from this sale of approximately $623 million of cash, after giving effect to estimated working capital and before certain transaction expenses (subject to a post-closing working capital adjustment). In addition, contemporaneous with the closing of the transaction, in connection with the balance of certain amounts due to the joint ventures from us and in accordance with the terms of the purchase agreement, we distributed approximately $23 million of cash to VUMC for their share of amounts owed to the joint ventures by us. Prior to this transaction, VUMC held a minority interest in the joint ventures, and purchased the remaining interests in the joint ventures through this transaction. For additional information about this transaction, see the Current Reports on Form 8-K filed by us with the SEC on October 30, 2025 and February 2, 2026.
In addition on January 20, 2026, we entered into a definitive agreement pursuant to which The Health Care Authority of the City of Huntsville (d/b/a Huntsville Hospital Health System) agreed to acquire substantially all of the assets, and assume certain liabilities, from us related to Crestwood Medical Center (180 licensed beds) in Huntsville, Alabama, and ancillary businesses for $450 million of cash, subject to adjustment for net working capital and any finance leases assumed. There can be no assurance that this transaction will be completed, or if this transaction is completed, the ultimate timing of the completion of this transaction. For additional information about this transaction, see the Current Report on Form 8-K filed by us with the SEC on January 20, 2026.
We may give consideration to divesting certain additional hospitals and non-hospital businesses. Generally, these hospitals and non-hospital businesses are not in one of our strategically beneficial service areas, are less complementary to our business strategy and/or have lower operating margins. In addition, we continue to receive interest from potential acquirers for certain of our hospitals and non-hospital businesses. As such, we may sell additional hospitals and/or non-hospital businesses if we consider any such disposition to be in our best interests. We expect proceeds from any such divestitures to be used for general corporate purposes (including potential debt repayments and/or debt repurchases) and capital expenditures.
Overview of Operating Results
Net operating revenues decreased from approximately $12.6 billion for the year ended December 31, 2024 to approximately $12.5 billion for the year ended December 31, 2025. On a same-store basis, net operating revenues for the year ended December 31, 2025 increased $541 million, compared to the same period in 2024.
We had net income of $676 million during the year ended December 31, 2025, compared to net loss of $(362) million for the year ended December 31, 2024. Net income for the year ended December 31, 2025 included the following:
an after-tax benefit of $107 million for gain from early extinguishment of debt,
an after-tax charge of $7 million for expense related to costs associated with our multi-year initiative to modernize and consolidate technology platforms and associated processes, and
an after-tax benefit of $249 million resulting from a gain related to the divestiture of four hospitals and laboratory outreach business and additional cash consideration received from a prior year divestiture, partially offset by losses on the divestiture of our ownership interest in three separate hospitals and the impairment of certain long-lived assets that were idled or disposed as well as divestiture related costs.
In addition, net income during the year ended December 31, 2025, was positively impacted by an income tax benefit of approximately $163 million recognized during the three months ended September 30, 2025, resulting from a decrease in valuation allowances stemming from increased interest deductibility and increased bonus depreciation in connection with the federal budget legislation which was enacted on July 4, 2025.
Net loss for the year ended December 31, 2024 included the following:
an after-tax benefit of $27 million for gain from early extinguishment of debt,
an after-tax charge of $40 million for expense related to costs associated with our multi-year initiative to modernize and consolidate technology platforms and associated processes,
an after-tax charge of $250 million resulting from the impairment of long-lived assets that were idled, disposed or held-for-sale, a loss on the sale of one hospital and a gain on the sale of one hospital, and
an after-tax charge of $116 million for a change in estimate for professional liability claims accrual.
Consolidated inpatient admissions for the year ended December 31, 2025, decreased 5.4%, compared to the year ended December 31, 2024, and consolidated adjusted admissions for the year ended December 31, 2025, decreased 6.3%, compared to the year ended December 31, 2024. Same-store inpatient admissions for the year ended December 31, 2025, increased 1.5%, compared to the year ended December 31, 2024, and same-store adjusted admissions for the year ended December 31, 2025, increased 0.6%, compared to the year ended December 31, 2024.
Self-pay revenues represented approximately 0.8% and 1.3% of net operating revenues for the years ended December 31, 2025 and 2024, respectively. The amount of foregone revenue related to providing charity care services as a percentage of net operating revenues was approximately 12.0% and 9.5% for the years ended December 31, 2025 and 2024, respectively. Direct and indirect costs incurred in providing charity care services as a percentage of net operating revenues was approximately 1.2% and 0.9% for the years ended December 31, 2025 and 2024, respectively.
Overview of Legislative and Other Governmental Developments
The healthcare industry is subject to changing political, regulatory, economic and other influences that may affect our business and is heavily regulated. Federal agencies oversee, regulate and otherwise affect many aspects of our business, including through Medicare and Medicaid policies, policies affecting the size of the uninsured population and enforcement and interpretation of fraud and abuse laws. The outcome of the 2024 federal elections, including Republican control of both the executive and legislative branches, has increased regulatory uncertainty and the likelihood of ongoing significant policy changes. President Trump has issued several executive orders that impact or may impact the healthcare industry, including orders focused on price transparency and tariffs, and an executive order established a presidential advisory commission tasked with restructuring government agencies and reducing government expenditures, although this commission was disbanded in mid-2025. Other actions by the presidential administration have resulted in holds on or cancellations of congressionally authorized spending as well as interruptions in the distribution of government funds. In addition, the presidential administration has significant influence on healthcare policy changes through government agency regulation. In March 2025, HHS announced a significant agency that will reduce the HHS workforce and consolidate divisions of the agency. HHS also announced a change in its policy on public participation in rulemaking that may affect the ability of industry participants to receive advance notice of and offer feedback on some policy changes. Regulatory uncertainty has also increased as a result of recent decisions issued by the U.S. Supreme Court that affect review of federal agency actions, including
Loper Bright Enterprises v. Raimondo . These U.S. Supreme Court decisions increase judicial scrutiny of agency authority, shift greater responsibility for statutory interpretation to courts and expand the timeline in which a plaintiff can sue regulators. These decisions may increase legal challenges to healthcare regulations and agency guidance and decisions and result in inconsistent judicial interpretations and delays in and other impacts to agency rulemaking and legislative processes. Moreover, evolving interpretations or enforcement of applicable laws and regulations could require us to make changes in our facilities or operations or require us to incur other costs to comply. For example, in May 2025, CMS rescinded EMTALA guidance issued to hospitals by the prior presidential administration regarding the preemption of state laws restricting abortion. Hospitals may face conflicting interpretations as to the requirements imposed by EMTALA in relation to state laws that address access to abortion or other reproductive health services.
In the last two decades, 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 increase access to health insurance and reduce healthcare costs and government spending and increase or, more recently, decrease access to health insurance. For example, the Affordable Care Act expanded health insurance coverage through a combination of public program expansion and private sector health insurance reforms, but changes in the law’s implementation, subsequent legislation and regulations, state initiatives and other factors have affected or may affect the number of individuals that elect or are able to obtain public or private health insurance and the scope of such coverage, if obtained. COVID-19 relief legislation, as modified by subsequent legislation, temporarily enhanced subsidies available for individuals to purchase coverage through Affordable Care Act marketplaces through 2025, but these enhanced subsidies expired at the end of 2025. Their expiration may significantly increase the number of people who are uninsured. Further, CMS issued a final rule in June 2025 that standardizes and shortens the open enrollment period for individual market coverage, both on and off the Affordable Care Act marketplaces, and requires stricter income-verification measures, among other changes. This rule is currently the subject of legal . Moreover, the 2025 Reconciliation Law includes healthcare policy changes that are expected to decrease access to health insurance. Among other provisions, the 2025 Reconciliation Law makes changes to Affordable Care Act marketplace insurance, including effectively ending automatic renewals of coverage by requiring pre-enrollment verification of eligibility and restricting subsidized marketplace coverage and Medicare and Medicaid eligibility based on immigration status. Other legislative and executive branch initiatives related to health insurance could also result in increased prices for consumers purchasing health insurance coverage or may permit the sale of insurance plans that do not current Affordable Care Act consumer protections. Any of these developments could increase rates of and individuals and insurance markets.
Of critical importance to us is the potential impact of any changes specific to the Medicaid program, including changes resulting from legislative and administrative actions at the federal and state levels. Federal actions may impact funding for, or the structure of, the Medicaid program and may shape provider reimbursement rates, eligibility and coverage policies and other aspects of the state Medicaid programs in a manner that could materially and adversely affect us. For example, the 2025 Reconciliation Law includes policy changes that are expected to result in Medicaid spending reductions and changes in administration of state Medicaid programs. The law limits eligibility for Medicaid, including by imposing work or community engagement requirements for adults in Medicaid expansion states, and limits some Medicaid financing mechanisms, including through restrictions intended to reduce the federal matching funds received by state Medicaid programs. Reductions in federal matching funds and increased state obligations and administrative burden could have significant effects, such as resulting in state limitations on eligibility or coverage or changes to Medicaid expansion programs, particularly if states are unable to offset reductions. The effects of the 2025 Reconciliation Law could be particularly significant in states that expanded Medicaid under the Affordable Care Act, especially if a significant number of individuals formerly covered under Medicaid expansion Medicaid eligibility but do not obtain other health insurance coverage. Of the 14 states in which we operated hospitals as of December 31, 2025, eight states have taken action to expand their Medicaid programs. The other six states in which we operated hospitals as of December 31, 2025 have opted out of Medicaid expansion, including Florida, Alabama, Tennessee, Mississippi and Texas, in which states we operated a significant number of hospitals as of December 31, 2025. Although we are to fully assess the magnitude of the future impact of the 2025 Reconciliation Law, we expect the law to impact our revenue and financial results as well as increase the amount of our self-pay patients, including as a result of this legislation’s on Medicaid eligibility and reductions in federal Medicaid funding as noted above.
Future Medicaid reform proposals may result in further reductions to Medicaid expenditures and involve additional administrative changes. For example, some members of Congress and the presidential administration have raised, and Congress may in the future adopt, other proposals intended to reduce Medicaid expenditures such as restructuring the Medicaid program to give states a “block grant” or fixed amount of overall funding for their respective Medicaid programs or to impose spending caps such as per Medicaid beneficiary limits on federal contributions. Any future changes that reduce federal funding for Medicaid expansion populations could trigger laws in some states that would end those states’ Medicaid expansion or require other changes to the program. In addition to changes related to federal funding, CMS administrators may make changes to Medicaid payment models and may impose new restrictions or grant states additional flexibilities in the administration of Medicaid programs.
The federal deficit and other federal and state budgetary pressures have affected government healthcare program expenditures, and we anticipate these effects will continue. For example, the 2025 Reconciliation Law is expected to decrease federal healthcare spending, particularly with respect to Medicaid, and is generally expected to have significant impact on state budgets, which may result in state-level changes such as reductions to the scope of covered services or tax increases. It is possible that future legislation will impose or otherwise result in additional spending reductions.
The 2025 Reconciliation Law authorized the Rural Health Transformation, or RHT, Program, which is intended to strengthen and modernize healthcare in rural communities. Through the RHT Program, $50 billion in federal grants will be distributed over five years, with $10 billion available in each of federal fiscal years 2026 through 2030, which may partially offset Medicaid spending reductions expected as a result of the 2025 Reconciliation Law as described herein, although the magnitude of such grants will be far less than the anticipated Medicaid spending reductions. In December 2025, CMS announced that all 50 states will receive awards under the RHT Program. Providers may be granted subcontracts or subawards and providers could receive payments for healthcare items and services, subject to funding policies and limitations. All funds must be spent before October 1, 2032.
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 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 reduced payment rates for non-drug services under the outpatient PPS for calendar year 2023, and lump sum payments were distributed to affected 340B providers as the remedy for calendar years 2018 through 2022. This reduction to payment rates adversely affected our results for the nine months ended September 30, 2025. 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 until the past invalidated payments are offset. This 0.5% reduction began in calendar year 2026 and was expected to continue for approximately 16 years, but CMS has indicated that it may accelerate this timeline by implementing a larger reduction beginning in calendar year 2027. We anticipate that the reduction to the outpatient PPS conversion factor will impact our results.
Sources of Revenue
The following table presents the approximate percentages of net operating revenues by payor source for the periods indicated. The data for the periods presented are not strictly comparable due to the effect that businesses acquired, sold, closed or opened during each of the respective periods, as applicable, have had on these statistics.
Year Ended December 31,
Medicare
Medicare Managed Care
Medicaid
Managed Care and other third-party payors
Self-pay
Total
As shown above, we receive a substantial portion of our revenues from the Medicare, Medicare Managed Care and Medicaid programs. Included in Managed Care and other third-party payors is net operating revenues from insurance companies with which we have insurance provider contracts, insurance companies for which we do not have insurance provider contracts, workers’ compensation carriers and non-patient service revenue, such as gain (loss) on investments, rental income and cafeteria sales. We generally expect the portion of revenues received from the Medicare and Medicare Managed Care programs to increase over the long-term due to the general aging of the population and other factors. The general trend toward increased enrollment in Medicare Managed Care and Medicaid managed care programs, which has slowed or reversed in some cases in recent years, may adversely affect our net operating revenues. We may also be impacted by regulatory requirements imposed on insurers, such as minimum medical-loss ratios and specific benefit requirements. Furthermore, in the normal course of business, managed care programs, insurance companies and employers actively negotiate the amounts paid to hospitals. Our relationships with payors may be impacted by policy developments such as price initiatives and out-of-network billing restrictions, including those in the No Surprises Act. There can be no assurance that we will retain our existing reimbursement arrangements or that third-party payors will not attempt to further reduce the rates they pay for our services. The revenues we receive and our relationships with payors are also expected to be impacted by the 2025 Reconciliation Law, which includes healthcare policy changes that are expected to decrease access to health insurance and result in significant cuts to federal healthcare spending.
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 years ended December 31, 2025, 2024 and 2023.
The payment rates under the Medicare program for hospital inpatient and outpatient acute care services are based on prospective payment systems, which depend upon a patient’s diagnosis or the clinical complexity of services provided to a patient, among other factors. These rates are indexed for inflation annually, although increases have historically been less than actual inflation. In its final rule establishing payment rates for federal fiscal year 2026 (which began October 1, 2025) for hospital inpatient acute care services reimbursed under the prospective system, CMS increased payment rates by approximately 2.6%. This increase reflects a market basket increase of 3.3%, reduced by a 0.7 percentage point productivity adjustment. Hospitals that do not submit required patient quality data are subject to payment reductions. We are complying with this data submission requirement. Payments may also be affected by various other adjustments, including those that depend on patient-specific or hospital specific factors. For example, the “two midnight rule” establishes admission and medical review criteria for inpatient services limiting when services to Medicare beneficiaries are payable as inpatient hospital services. Reductions in the rate of increase or overall reductions in Medicare reimbursement may cause a decline in the growth of our net operating revenues.
Payment rates under the Medicaid program vary by state. In addition to the base payment rates for specific claims for services rendered to Medicaid enrollees, several states utilize supplemental reimbursement programs to make separate payments that are not specifically tied to an individual’s care, some of which offset a portion of the cost of providing care to Medicaid and indigent patients. These programs are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. In addition, as noted above, the 2025 Reconciliation Law includes several changes to Medicaid financing mechanisms, including limitations on provider taxes and SDP arrangements. It is difficult to predict the ultimate impact of the legislation on these supplemental programs or whether or on what terms CMS will extend the supplemental programs in the states in which we operate. Under these supplemental programs, we recognize revenue and related expenses in the period in which amounts are estimable and payment is reasonably assured. Reimbursement under these programs is reflected in net operating revenues and included as Medicaid revenue in the table above, and fees, taxes or other program related costs are reflected in other operating expenses.
Results of Operations
Our hospitals and other sites of care offer a broad variety of inpatient and outpatient medical and surgical services. These include general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic services, psychiatric and rehabilitation services. Utilization of services and our results of operations are dependent on a multitude of factors including seasonal fluctuations in demand. Historically, the strongest demand for hospital services generally occurs during the winter months, and the weakest demand generally occurs during the summer months.
The following tables summarize, for the periods indicated, selected operating data.
Year Ended December 31,
Operating results, as a percentage of net operating revenues:
Net operating revenues
Operating expenses (a)
Depreciation and amortization
Impairment and gain (loss) on sale of businesses, net
Income from operations
Interest expense, net
Gain from early extinguishment of debt
Equity in earnings of unconsolidated affiliates
Income (loss) before income taxes
Provision for income taxes
Net income (loss)
Less: Net income attributable to noncontrolling interests
Net income (loss) attributable to Community Health Systems,
Inc. stockholders
Year Ended December 31,
Percentage (decrease) increase from prior year:
Net operating revenues
Admissions (b)
Adjusted admissions (c)
Average length of stay (d)
Net income (loss) attributable to Community Health Systems,
Inc. stockholders
Same-store percentage increase from prior year (e):
Net operating revenues
Admissions (b)
Adjusted admissions (c)
Operating expenses include salaries and benefits, supplies, other operating expenses, and lease cost and rent.
Admissions represents the number of patients admitted for inpatient treatment.
Adjusted admissions is a general measure of combined inpatient and outpatient volume. We computed adjusted admissions by multiplying admissions by gross patient revenues and then dividing that number by gross inpatient revenues.
Average length of stay represents the average number of days inpatients stay in our hospitals.
Excludes information for businesses sold or closed during each of the respective periods, as applicable.
Items (b) – (e) are metrics used to manage our performance. These metrics provide useful insight to investors about the volume and acuity of services we provide, which aid in evaluating our financial results.
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Net operating revenues decreased by 1.2% to approximately $12.5 billion for the year ended December 31, 2025, from approximately $12.6 billion for the year ended December 31, 2024. Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased $541 million, or 4.6%, during the year ended December 31, 2025, compared to the same period in 2024. On a period-over-period basis, the increase in same-store net operating revenues was primarily attributable to increased reimbursement rates, higher supplemental reimbursement program revenue and favorable changes in payor mix, partially offset by lower acuity. Non-same-store net operating revenues decreased $690 million during the year ended December 31, 2025, compared to the same period in 2024, with the decrease attributable primarily to the divestiture of hospitals during 2025 and 2024, partially offset by an increase in non-patient revenue resulting primarily from the receipt of $28 million during the three months ended September 30, 2025 for the settlement of a legal matter. On a consolidated basis, inpatient admissions decreased by 5.4% and adjusted admissions decreased by 6.3% during the year ended December 31, 2025, compared to the same period in 2024. On a same-store
basis, net operating revenues per adjusted admission increased 4.0%, while inpatient admissions increased by 1.5% and adjusted admissions increased by 0.6% for the year ended December 31, 2025, compared to the same period in 2024.
Operating expenses, as a percentage of net operating revenues, decreased from 95.7% during the year ended December 31, 2024 to 88.1% during the year ended December 31, 2025. Operating expenses, excluding depreciation and amortization and impairment and (gain) loss on sale of businesses, as a percentage of net operating revenues, decreased from 89.5% for the year ended December 31, 2024 to 88.0% for the year ended December 31, 2025. Salaries and benefits increased as a percentage of net operating revenues from 42.9% for the year ended December 31, 2024 to 43.3% for the year ended December 31, 2025, primarily due to an increased hiring commensurate with lower utilization of contract labor. Supplies, as a percentage of net operating revenues, decreased from 15.4% for the year ended December 31, 2024 to 14.9% for the year ended December 31, 2025, primarily due to changes in the mix of services and the benefit of cost savings initiatives. Other operating expenses, as a percentage of net operating revenues, decreased from 28.8% for the year ended December 31, 2024 to 27.6% for the year ended December 31, 2025, primarily due to a change in estimate for the professional liability claims accrual recorded in 2024 partially offset by higher medical specialist fees and increased supplemental reimbursement program expense. Lease cost and rent, as a percentage of net operating revenues, decreased from 2.4% for the year ended December 31, 2024 to 2.2% for the year ended December 31, 2025.
Depreciation and amortization, as a percentage of net operating revenues, decreased to 3.4% for the year ended December 31, 2025 from 3.8% for the year ended December 31, 2024 primarily due to a reduction in the amortization of capitalized internal-use software and the impact of hospital divestitures in 2025 and 2024.
Impairment and (gain) loss on sale of businesses, net was a net gain of $406 million for the year ended December 31, 2025, compared to expense of $301 million for the same period in 2024. The gain in 2025 and expense in 2024 related primarily to divestiture activity during each respective period as discussed more specifically under “Acquisition, Divestiture and Closure Activity” herein.
Interest expense, net, increased by $10 million to $870 million for the year ended December 31, 2025 compared to $860 million for the same period in 2024. This was primarily due to our refinancing activity during 2025 and 2024.
Gain from early extinguishment of debt of $97 million was recognized during the year ended December 31, 2025, compared to $25 million in the same period in 2024, as a result of the refinancing and extinguishment of certain of our outstanding notes as discussed further in “Liquidity and Capital Resources.”
Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, remained consistent at 0.1% for the years ended December 31, 2025 and 2024.
The net results of the above-mentioned changes resulted in income (loss) before income taxes changing by $1.0 billion to an income of $724 million for the year ended December 31, 2025 from a loss of $(283) million for the same period in 2024.
Our provision for income taxes for the years ended December 31, 2025 and 2024 was $48 million and $79 million, respectively, and the effective tax rates were 6.6% and (27.9)% for the years ended December 31, 2025 and 2024, respectively. The change in the provision for income taxes for the year ended December 31, 2025, compared to the same period in 2024, was primarily due to higher pre-tax income in 2025 compared to 2024 and a decrease in valuation allowances stemming from increased interest deductibility and increased bonus depreciation as a result of the 2025 Reconciliation Law which resulted in an income tax benefit of approximately $163 million recognized by us during the year ended December 31, 2025.
Net income (loss), as a percentage of net operating revenues, was income of 5.4% for the year ended December 31, 2025, compared to loss of (2.9)% for the same period in 2024.
Net income attributable to noncontrolling interests, as a percentage of net operating revenues, was 1.3% for the year ended December 31, 2025, compared to 1.2% for the same period in 2024.
Net income (loss) attributable to Community Health Systems, Inc. was income of $509 million for the year ended December 31, 2025, compared to a loss of $(516) million for the same period in 2024.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Net operating revenues increased by 1.2% to approximately $12.6 billion for the year ended December 31, 2024, from approximately $12.5 billion for the year ended December 31, 2023. Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased $653 million, or 5.5%, during the year ended December 31, 2024, compared to the same period in 2023. On a period-over-period basis, the increase in same-store net operating revenues was primarily attributable to higher inpatient and outpatient volumes, increased reimbursement rates, favorable changes in payor mix and higher revenues from
supplemental reimbursement programs, partially offset by lower acuity and increased patient claim denials. Non-same-store net operating revenues decreased $509 million during the year ended December 31, 2024, compared to the same period in 2023, with the decrease attributable primarily to the divestiture of hospitals during 2024 and 2023. On a consolidated basis, inpatient admissions decreased by 3.2% and adjusted admissions decreased by 3.4% during the year ended December 31, 2024, compared to the same period in 2023. On a same-store basis, net operating revenues per adjusted admission increased 2.8%, while inpatient admissions increased by 3.2% and adjusted admissions increased by 2.7% for the year ended December 31, 2024, compared to the same period in 2023.
Operating expenses, as a percentage of net operating revenues, increased from 92.3% during the year ended December 31, 2023 to 95.7% during the year ended December 31, 2024. Operating expenses, excluding depreciation and amortization and impairment and (gain) loss on sale of businesses, as a percentage of net operating revenues, increased from 89.0% for the year ended December 31, 2023 to 89.5% for the year ended December 31, 2024. Salaries and benefits decreased as a percentage of net operating revenues from 43.4% for the year ended December 31, 2023 to 42.9% for the year ended December 31, 2024, primarily due to an increase in net operating revenues, partially offset by increased hiring commensurate with lower utilization of contract labor. Supplies, as a percentage of net operating revenues, decreased from 16.0% for the year ended December 31, 2023 to 15.4% for the year ended December 31, 2024, primarily due to changes in the mix of services, the benefit of cost savings initiatives and an increase in net operating revenues. Other operating expenses, as a percentage of net operating revenues, increased from 27.0% for the year ended December 31, 2023 to 28.8% for the year ended December 31, 2024, primarily due to a change in estimate for the professional liability claims accrual, increased expense for supplemental reimbursement programs and outsourced medical specialists, partially offset by decreased costs for contract labor and an increase in net operating revenues. Lease cost and rent, as a percentage of net operating revenues, decreased from 2.6% for the year ended December 31, 2023 to 2.4% for the year ended December 31, 2024.
Depreciation and amortization, as a percentage of net operating revenues, decreased to 3.8% for the year ended December 31, 2024 from 4.0% for the year ended December 31, 2023 primarily due to an increase in net operating revenues and a reduction in the amortization of capitalized internal-use software.
Impairment and (gain) loss on sale of businesses, net was expense of $301 million for the year ended December 31, 2024, compared to income of $87 million for the same period in 2023. The expense in 2024 and the gain in 2023 related primarily to divestiture activity during each respective period as discussed more specifically under “Acquisition, Divestiture and Closure Activity” herein.
Interest expense, net, increased by $30 million to $860 million for the year ended December 31, 2024 compared to $830 million for the same period in 2023. This was primarily due to our refinancing activity during 2024 and 2023.
Gain from early extinguishment of debt of $25 million was recognized during the year ended December 31, 2024, compared to $72 million in the same period in 2023, as a result of our refinancing activity during 2024 and 2023.
Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, remained consistent at 0.1% for the years ended December 31, 2024 and 2023.
The net results of the above-mentioned changes resulted in (loss) income before income taxes changing by $490 million to a loss of $(283) million for the year ended December 31, 2024 from income of $207 million for the same period in 2023.
Our provision for income taxes for the years ended December 31, 2024 and 2023 was $79 million and $191 million, respectively, and the effective tax rates were (27.9)% and 92.3% for the years ended December 31, 2024 and 2023, respectively. The decrease in the provision for income taxes for the year ended December 31, 2024, compared to the same period in 2023, was primarily due to a decrease in non-deductible goodwill related to divested hospitals and a decrease in income before income taxes in 2024 compared to 2023. The difference in our effective tax rate for the year ended December 31, 2024, compared to the same period in 2023, was due to the aforementioned decrease in the provision for income taxes and the decrease in (loss) income before taxes.
Net (loss) income, as a percentage of net operating revenues, was (2.9)% for the year ended December 31, 2024, compared to 0.1% for the same period in 2023.
Net income attributable to noncontrolling interests, as a percentage of net operating revenues, was 1.2% for both of the years ended December 31, 2024 and 2023.
Net loss attributable to Community Health Systems, Inc. was $(516) million for the year ended December 31, 2024, compared to $(133) million for the same period in 2023.
Liquidity and Capital Resources
2025 Compared to 2024
Net cash provided by operating activities was approximately $543 million for the year ended December 31, 2025, compared to $480 million for the year ended December 31, 2024. The increase in cash provided by operating activities is primarily due to lower professional liability claim payments and increased non-patient revenues, partially offset by increased cash paid for interest and taxes. Total cash paid for interest increased to approximately $804 million for the year ended December 31, 2025, from approximately $741 million for the year ended December 31, 2024. Cash paid for income taxes, net of refunds received, resulted in a net payment of $249 million and $171 million during the years ended December 31, 2025 and 2024, respectively. During the years ended December 31, 2025 and 2024, approximately $169 million and $17 million, respectively, of cash paid for income taxes related to the gains on hospitals divested during the periods.
Our net cash provided by investing activities was approximately $847 million for the year ended December 31, 2025, compared to cash used in investing activities of approximately $275 million for the year ended December 31, 2024, a change of approximately $1.122 billion. The change during the year ended December 31, 2025, compared to the prior year, was impacted by an increase of $1.080 billion in cash proceeds from dispositions of hospitals and other ancillary operations, partially offset by a decrease of $15 million in cash from the net impact of the purchases and sales of available-for-sale debt and equity securities.
Our net cash used in financing activities was $1.167 billion for the year ended December 31, 2025, compared to $206 million for the year ended December 31, 2024, an increase of $961 million. This was primarily due to the net impact of our debt borrowings and repayments during the year ended December 31, 2025, compared to the same period in 2024.
2024 Compared to 2023
Net cash provided by operating activities was approximately $480 million for the year ended December 31, 2024, compared to $210 million for the year ended December 31, 2023. 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. Total cash paid for interest decreased to approximately $741 million for the year ended December 31, 2024, from approximately $801 million for the year ended December 31, 2023. Cash paid for income taxes, net of refunds received, resulted in a net payment of $171 million and $91 million during the years ended December 31, 2024 and 2023, respectively. During the years ended December 31, 2024 and 2023, approximately $17 million and $47 million, respectively, of cash paid for income taxes related to the gains on hospitals divested during the periods.
Our net cash used in investing activities was approximately $275 million for the year ended December 31, 2024, compared to approximately $26 million for the year ended December 31, 2023, an increase of approximately $249 million. The increase in net cash used in investing activities during the year ended December 31, 2024, compared to the prior year, was impacted by a decrease of $258 million in cash proceeds from dispositions of hospitals and other ancillary operations and a decrease of $96 million in cash from the net impact of the purchases and sales of available-for-sale debt and equity securities, partially offset by a decrease of $107 million in cash used for the purchase of property and equipment.
Our net cash used in financing activities was $206 million for the year ended December 31, 2024, compared to $264 million for the year ended December 31, 2023, a decrease of $58 million. This was primarily due to the net impact of our debt borrowings and repayments during the year ended December 31, 2024, compared to the same period in 2023.
Liquidity
Net working capital was approximately $1.0 billion and $956 million at December 31, 2025 and December 31, 2024, respectively. Net working capital increased by approximately $70 million between December 31, 2024 and December 31, 2025. The increase is primarily due to increases in cash and other current assets and decreases in accounts payable, accrued liabilities for employee compensation and other during the year ended December 31, 2025, partially offset by decreases in patient accounts receivable, prepaid expenses and prepaid income taxes.
In addition to cash flows from operations, available sources of capital include amounts available under the asset-based loan (ABL) credit agreement, or the ABL Credit Agreement, as amended and restated on June 5, 2024, and anticipated access to public and private debt markets as well as proceeds from the disposition of hospitals or other investments such as our minority equity interests in various businesses, as applicable.
Pursuant to the ABL Credit Agreement, the lenders have extended to CHS/Community Health Systems, Inc., or CHS, a revolving asset-based loan facility. The maximum aggregate amount under the ABL Facility is $1.0 billion, subject to borrowing base capacity. At December 31, 2025, we had no outstanding borrowings and approximately $786 million of additional borrowing capacity (after
taking into consideration $34 million of outstanding letters of credit) under the ABL Facility. Letters of credit were reduced during the year ended December 31, 2025 by $32 million, primarily due to a reduction in collateral for an insurance-related bond. Principal amounts outstanding under the ABL Facility, if any, will be due and payable in full on June 5, 2029.
2025 Financing Activity
On May 9, 2025, CHS completed the offering of $700 million aggregate principal amount of 10.750% Senior Secured Notes due June 15, 2033, or the 10¾% Senior Secured Notes due 2033, to a multi-asset investment manager through a privately negotiated agreement. The 10¾% Senior Secured Notes due 2033 bear interest at a rate of 10.750% per year payable semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2025. Proceeds from issuance of the 10¾% Senior Secured Notes due 2033, together with cash on hand, were used to redeem all of our outstanding 8% Senior Secured Notes due 2027 and to pay related fees and expenses.
In addition, approximately $584 million principal amount of the 6⅞% Senior Unsecured Notes due 2028 were redeemed in May 2025 via a tender offer using cash on-hand of approximately $438 million. Upon completion of the tender offer, approximately $42 million principal amount of the 6⅞% Senior Unsecured Notes due 2028 remained outstanding.
For additional information regarding the sale of the 10¾% Senior Secured Notes due 2033, the redemption of the 8% Senior Secured Notes due 2027, and the tender offer, see the Current Reports on Form 8-K filed by the Company with the SEC on April 23, 2025, May 7, 2025, and May 9, 2025.
On August 12, 2025, CHS completed an offering of $1.790 billion principal amount of 9.750% Senior Secured Notes due 2034, or the 9¾% Senior Secured Notes due 2034. The proceeds from the issuance of the 9¾% Senior Secured Notes due 2034 were used to redeem $1.743 billion principal amount of our 5.625% Senior Secured Notes due 2027, or approximately 99% of the total outstanding principal amount, that were validly tendered and accepted for purchase pursuant to a tender offer that launched on July 28, 2025, and was completed on August 25, 2025, and to pay related fees and expenses. Upon completion of the tender offer, approximately $14 million principal amount of the 5.625% Senior Secured Notes due 2027 remained outstanding. The 9¾% Senior Secured Notes due 2034 bear interest at a rate of 9.750% per year payable semi-annually in arrears on March 15 and September 15 of each year, commencing on March 15, 2026. The 9¾% Senior Secured Notes due 2034 are unconditionally guaranteed on a senior-priority secured basis by us and each of the current and future domestic subsidiaries that provide guarantees under the ABL Facility.
For additional information regarding the sale of the 9¾% Senior Secured Notes due 2034, the redemption of the 5.625% Senior Secured Notes due 2027, and the tender offer, see the Current Reports on Form 8-K filed by us with the SEC on July 29, 2025 and August 12, 2025.
During the three months ended December 31, 2025, the Company exercised a special call provision to redeem 10% or approximately $223 million in principal amount of our 10.875% Senior Secured Notes due 2032 at a redemption price of 103% of the principal amount, plus accrued and unpaid interest. In addition, on February 2, 2026, the Company exercised the same special call provision to redeem an additional 10% or approximately $223 million in principal amount of the 10.875% Senior Secured Notes due 2032, at a redemption price of 103% of the principal amount, plus accrued and unpaid interest. Moreover, during the three months ended December 31, 2025, we redeemed all $14 million in outstanding principal amount of the remaining 5.625% Senior Secured Notes due 2027.
During the year ended December 31, 2025, a pre-tax gain from early extinguishment of debt of approximately $97 million was recognized associated with these 2025 financing activities discussed above.
2024 Financing Activity
On June 5, 2024, CHS completed the offering of an additional $1.225 billion aggregate principal amount of its outstanding 10.875% Senior Secured Notes due 2032, or the Tack-On Notes, at an issue price of 102.000%, plus accrued and unpaid interest from December 22, 2023 to the closing date (which equaled approximately $60 million). The Tack-On Notes are part of the same series as, and rank equally with, the 10⅞% Senior Secured Notes due 2032 issued in December 2023. Proceeds from the offering of the Tack-On Notes, together with cash on hand, were used to redeem all of the remaining $1.116 billion of outstanding 8.000% Senior Secured Notes due 2026, to fund senior note repurchases in the amount of approximately $98 million resulting in the extinguishment of $130 million principal amount of the 6⅞% Senior Notes due 2028, pay related fees and expenses and for general corporate purposes.
On June 5, 2024, the ABL Credit Agreement, as noted above, was amended and restated to, among other things, extend the maturity to June 5, 2029.
During the year ended December 31, 2024, the Company extinguished approximately $143 million principal value of the 5⅝% Senior Secured Notes due 2027 through open market repurchases utilizing cash on hand. An immaterial pre-tax and after-tax loss from early extinguishment resulted from these repurchases.
Additional Liquidity Information
For information regarding our amended and restated asset-based loan (ABL) credit agreement and our other outstanding indebtedness, see Note 6 - Long Term Debt of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K. Our ability to meet the restricted covenants and financial ratios and tests in the ABL Facility and the indentures governing our outstanding notes can be affected by events beyond our control, and we cannot assure you that we will meet those tests. A breach of any of these covenants could result in a default under the ABL Facility and/or the indentures that govern our outstanding notes. Upon the occurrence of an event of default under the ABL Facility or indentures that govern our outstanding notes, all amounts outstanding under the ABL Facility and the indentures that govern our outstanding notes may become immediately due and payable and all commitments under the ABL Facility to extend further credit may be terminated.
As of December 31, 2025, approximately $16 million of our outstanding debt of approximately $10.4 billion is due within the next 12 months and all of our outstanding debt has a fixed rate of interest. Our debt as a percentage of total capitalization was 113% at December 31, 2025, compared to 117% at December 31, 2024.
Net proceeds from divestitures, if any, are expected to be used for general corporate purposes (including potential debt repayments and/or debt repurchases) and capital expenditures.
We believe that our current levels of cash, internally generated cash flows and current levels of availability for additional borrowing under the ABL Facility, our anticipated continued access to the capital markets, and the use of proceeds from any potential future dispositions as noted above, will be sufficient to finance acquisitions, capital expenditures, working capital requirements, and any debt repurchases or other debt repayments we may elect to make or be required to make through the next 12 months and the foreseeable future thereafter. However, ongoing negative economic conditions (including in relation to inflationary pressures, elevated interest rate levels and impacts from the imposition of, or changes in, tariffs) have resulted in, and may continue to result in, significant disruptions of financial and capital markets, which could reduce our ability to access capital and negatively affect our liquidity in the future.
As noted above, during the years ended December 31, 2025 and 2024, we extinguished a portion of certain series of our outstanding notes through open market repurchases, privately negotiated transactions, tender offers, and redemptions. We may elect from time to time to continue to purchase our outstanding debt through open market purchases, privately negotiated transactions, tender offers, redemptions or otherwise. Any such debt repurchases will depend upon prevailing market conditions, our liquidity requirements, contractual restrictions, applicable securities laws requirements, and other factors.
Capital Resources
Material cash requirements from known contractual and other obligations primarily consist of purchase obligations, long-term debt and related interest payments, operating leases, finance leasing and financing obligations, and capital expenditures related to routine capital, information systems infrastructure and applications, replacement or de novo construction projects and bed expansion projects, certain commitments and other investments. Refer to Notes 6, 9 and 16 of the Notes to Consolidated Financial Statements for amounts outstanding at December 31, 2025 related to long-term debt, and related interest payments, operating leases, finance leasing and financing obligations, and certain commitments.
Purchase obligations include supplies and third-party services purchased in the normal course of business. Open purchase orders total $109 million at December 31, 2025 and substantially all such amounts are due in the next 12 months. Other investments include, among other things, purchases of investments in unconsolidated affiliates which are expected to be incurred within the next 24 months.
Cash expenditures for purchases of facilities and other related businesses were approximately $1 million in 2025, $25 million in 2024 and $38 million in 2023, which were primarily related to expenditures for physician practices, clinics and other ancillary businesses.
Capital expenditures relate primarily to expansion and renovation of existing facilities, construction of additional access points such as freestanding 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 for the year ended December 31, 2025 totaled $335 million compared to $360 million in 2024 and $467 million in 2023.
Pursuant to a hospital purchase agreement from our March 1, 2016 acquisition of Northwest Health - Starke, formerly known as Starke Hospital, we committed to make an investment of up to $15 million toward the construction of a replacement facility in Starke County, Indiana. Construction is required to be completed by the earlier of (i) five years after we enter into a new lease (or amendment to the existing lease) with Starke County, Indiana, or (ii) September 30, 2026. We have not entered into a new lease (or amendment to the existing lease) with Starke County, Indiana.
In addition to the commitment to spend up to $15 million toward the construction of a replacement facility in Knox, Indiana, other off-balance sheet arrangements consist of letters of credit issued on the ABL Facility, primarily in support of potential insurance-related claims and specified outstanding bonds of approximately $34 million as well as approximately $5 million representing the maximum potential amount of future payments under physician recruiting guarantee commitments in excess of the liability recorded at December 31, 2025.
We expect total capital expenditures of approximately $350 million to $400 million in 2026.
Reimbursement, Legislative and Regulatory Changes
Ongoing presidential actions, legislative and regulatory efforts and judicial interpretations could reduce or otherwise adversely affect the amount of payments we receive from Medicare and Medicaid and other payors, including through lapses in appropriations and holds on or cancellations of congressionally authorized spending. As noted above, the 2025 Reconciliation Law includes healthcare policy changes that are expected to decrease access to health insurance and result in significant cuts to federal healthcare spending. There is uncertainty regarding the implementation and ultimate impact of the law, but it may adversely affect our revenues. In addition, within the statutory framework of the Medicare and Medicaid programs, there are substantial areas subject to administrative rulings, interpretations and discretion that may affect payments made under those programs. It is unclear how the restructuring efforts within HHS or broader governmental deregulatory initiatives will impact administration of or payment under the Medicare and Medicaid programs. Legal challenges to healthcare regulations and agency guidance, including those related to Medicare and Medicaid payment policies, may also adversely affect payments, and we expect legal challenges to increase as a result of recent U.S. Supreme Court decisions as noted above. The increased potential for legal may result in in and other impacts to the agency rulemaking process. Further, the federal and state governments may reduce the funds available under the Medicare and Medicaid programs, require repayment of previously received funds or require more utilization and quality reviews of hospital facilities. Additionally, there may be a continued rise in managed care programs and further of the financing and delivery of healthcare in the United States. Any of these events could impact our future financial results. We
cannot estimate the impact of Medicare and Medicaid reimbursement changes that have been enacted or otherwise determined or that are currently or may in the future be under consideration. Moreover, we cannot predict whether additional reimbursement reductions, including as a result of the factors described above, will be made or whether any such changes or other restructuring of the financing and delivery of healthcare would have a material adverse effect on our business, financial conditions, results of operations, cash flow, capital resources and liquidity.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions.
Critical accounting policies are defined as those policies that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant. We believe that our critical accounting policies are limited to those described below. The following information should be read in conjunction with our significant accounting policies included in Note 1 - Basis of Presentation and Significant Accounting Policies of the Notes to the Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K.
Revenue Recognition
Net operating revenues include amounts estimated by management to be reimbursable by Medicare and Medicaid under prospective payment systems and provisions of cost-reimbursement and other payment methods. In addition, we are reimbursed by non-governmental payors using a variety of payment methodologies. Amounts we receive for treatment of patients covered by these programs are generally less than our standard billing rates. Explicit price concessions are recorded for contractual allowances that are calculated and recorded through a combination of internally- and externally-developed data collection and analysis tools to automate the monthly estimation of required contractual allowances. Within these automated systems, payors’ historical paid claims data and contracted amounts are utilized to calculate the contractual allowances. This data is updated on a monthly basis. All hospital contractual allowance calculations are subjected to monthly review by management to ensure reasonableness and accuracy. We account for the differences between the estimated program reimbursement rates and the standard billing rates as contractual allowance adjustments, which is one component of the deductions from gross revenues to arrive at net operating revenues. The process of estimating contractual allowances requires us to estimate the amount expected to be received based on payor contract provisions. The key assumption in this process is the estimated contractual reimbursement percentage, which is based on payor classification, historical paid claims data and, when applicable, application of the expected managed care plan reimbursement based on contract terms.
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 December 31, 2025 from our estimated reimbursement percentage, net income for the year ended December 31, 2025 would have changed by approximately $97 million, and net patient accounts receivable at December 31, 2025 would have changed by $126 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 each of the years ended December 31, 2025, 2024 and 2023.
Patient Accounts Receivable
Substantially all of our accounts receivable are related to providing healthcare services to patients at our hospitals and affiliated businesses. Collection of these patient accounts receivable is our primary source of cash and is critical to our operating performance. Our primary collection risks relate to uninsured patients and outstanding patient balances for which the primary insurance payor has paid some but not all of the outstanding balance, with the remaining outstanding balance (generally deductibles and co-payments) owed by the patient. For all procedures scheduled in advance, our policy is to verify insurance coverage prior to the date of the procedure. Insurance coverage is not verified in advance of procedures for walk-in and emergency room patients.
We estimate any adjustments to the transaction price for implicit price concessions by reserving a percentage of all self-pay patient accounts receivable without regard to aging category, based on collection history, adjusted for expected recoveries and any anticipated changes in trends. Our ability to estimate the transaction price and any implicit price concessions is not impacted by not utilizing an aging of our net patient accounts receivable as we believe that substantially all of the risk exists at the point in time such accounts are
identified as self-pay. The percentage used to reserve for all self-pay accounts is based on our collection history. We believe that we collect substantially all of our third-party insured receivables, which include receivables from governmental agencies.
Patient accounts receivable can be impacted by the effectiveness of our collection efforts and, as described in our significant accounting policies included in Note 1 - Basis of Presentation and Significant Accounting Policies of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K, numerous factors may affect the net realizable value of patient accounts receivable. If the actual collection percentage differed by 1% at December 31, 2025 from our estimated collection percentage as a result of a change in expected recoveries, net income for the year ended December 31, 2025 would have changed by $35 million, and net patient accounts receivable at December 31, 2025 would have changed by $45 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.
Our policy is to write-off gross patient accounts receivable if the balance is under $10 or when such amounts are placed with outside collection agencies. We believe this policy accurately reflects our ongoing collection efforts and is consistent with industry practices. We had approximately $1.4 billion and $1.6 billion at December 31, 2025 and 2024, respectively, being pursued by various outside collection agencies. We expect to collect less than 4%, net of estimated collection fees, of the amounts being pursued by outside collection agencies. As these amounts have been written-off, they are not included in our patient accounts receivable. Collections on amounts previously written-off are recognized as a recovery of net operating revenues when received. However, we take into consideration estimated collections of these future amounts written-off in determining the implicit price concessions used to measure the transaction price for the applicable portfolio of patient accounts receivable.
All of the following information is derived from our hospitals, excluding clinics, unless otherwise noted.
Patient accounts receivable from our hospitals represent approximately 98% of our total consolidated patient accounts receivable.
Days revenue outstanding, adjusted for the impact of receivables for state Medicaid supplemental payment programs and divested facilities, was 54 days and 55 days at December 31, 2025 and 2024, respectively.
Total gross patient accounts receivable (prior to allowance for contractual adjustments and implicit price concessions) was approximately $16.9 billion and $17.3 billion as of December 31, 2025 and 2024, respectively. The approximate percentage of total gross patient accounts receivable (prior to allowance for contractual adjustments and implicit price concessions) summarized by payor and aging categories is as follows:
At December 31, 2025:
% of Gross Receivables
Payor
0 - 90 Days
90 - 180 Days
180 - 365 Days
Over 365 Days
Medicare
Medicare Managed Care
Medicaid
Managed Care and other third-party payors
Self-Pay
At December 31, 2024:
% of Gross Receivables
Payor
0 - 90 Days
90 - 180 Days
180 - 365 Days
Over 365 Days
Medicare
Medicare Managed Care
Medicaid
Managed Care and other third-party payors
Self-Pay
The approximate percentage of total gross patient accounts receivable (prior to allowances for contractual adjustments and implicit price concessions) summarized by payor type is as follows:
December 31,
Insured receivables
Self-pay receivables
Total
The combined total at our hospitals and clinics for the estimated implicit price concessions for self-pay patient accounts receivable and allowances for other self-pay discounts and contractuals, as a percentage of gross self-pay receivables, was approximately 90% at both December 31, 2025 and 2024. If the receivables that have been written-off, but where collections are still being pursued by outside collection agencies, were included in both the allowances and gross self-pay receivables specified above, the percentage of combined allowances to total self-pay receivables would have been 93% at both December 31, 2025 and 2024.
Goodwill
At December 31, 2025, we had approximately $3.3 billion of goodwill recorded, all of which resides at our hospital operations reporting unit. Goodwill represents the excess of the fair value of the consideration conveyed in an acquisition over the fair value of net assets acquired. Goodwill is evaluated for impairment annually and when an event occurs or circumstances change that, more likely than not, reduce the fair value of the reporting unit below its carrying value. We performed our last annual goodwill impairment evaluation during the fourth quarter of 2025 using the October 31, 2025 measurement date, which indicated no impairment.
The determination of fair value in our goodwill impairment analysis is based on an estimate of fair value for the hospital operations reporting unit utilizing known and estimated inputs at the evaluation date. Some of those inputs include, but are not limited to, the most recent price of our common stock and fair value of our long-term debt, our recent financial results, estimates of future revenue and expense growth, estimated market multiples, expected capital expenditures, income tax rates, costs of invested capital and a discount rate.
Future estimates of fair value could be adversely affected if the actual outcome of one or more of the assumptions described above changes materially in the future, including as a result of any decline in or increased volatility of our stock price and the fair value of our long-term debt, lower than expected hospital volumes and/or net operating revenues, higher market interest rates, increased operating costs or other adverse impacts on our financial results. Such changes impacting the calculation of our fair value could result in a material impairment charge in the future.
Professional Liability Claims
As part of our business of providing healthcare services, we are subject to legal actions alleging liability on our part. We accrue for losses resulting from such liability claims, as well as loss adjustment expenses that are out-of-pocket and directly related to such liability claims. These direct out-of-pocket expenses include fees of outside counsel and experts. We do not accrue for costs that are part of our corporate overhead, such as the costs of our in-house legal and risk management departments. The losses resulting from professional liability claims primarily consist of estimates for known claims, as well as estimates for incurred but not reported claims. The estimates are based on specific claim facts, our historical claim reporting and payment patterns, the nature and level of our hospital operations, and actuarially determined projections. The actuarially determined projections are based on our actual claim data, including historic reporting and payment patterns. As discussed below, since we purchase excess insurance on a -made basis that transfers risk to third-party insurers, the estimated liability for professional and general liability does include an amount for the covered by our excess insurance. We also record a receivable for the expected reimbursement of covered by our excess insurance. Since we believe that the amount and timing of our future payments are reliably determinable, we discount the amount we accrue for resulting from professional liability .
The net present value of the projected payments was discounted using weighted-average risk free rates of 3.5% in 2025 and 3.7% in both 2024 and 2023. This liability is adjusted for new claims information in the period such information becomes known to us. Professional liability expense includes the losses resulting from professional liability claims and loss adjustment expense, as well as excess insurance premiums, and is presented within other operating expenses or, for increased losses specifically attributable to certain divestitures, within impairment and (gain) loss on sales of businesses, net in the accompanying consolidated statements of income (loss).
Our processes for obtaining and analyzing claims and incident data are standardized across all of our businesses and have been consistent for many years. We monitor the outcomes of the medical care services that we provide and for each reported claim, we obtain various information concerning the facts and circumstances related to that claim. In addition, we routinely monitor current key statistics and volume indicators in our assessment of utilizing historical trends. The average lag period between claim occurrence and payment of a final settlement is between three and four years, although the facts and circumstances of individual claims could result in
the timing of such payments being different from this average. Since claims are paid promptly after settlement with the claimant is reached, settled claims represent approximately 4% or less of the total liability at the end of any period.
For purposes of estimating our individual claim accruals, we utilize specific claim information, including the nature of the claim, the expected claim amount, the year in which the claim occurred and the laws of the jurisdiction in which the claim occurred. Once the case accruals for known claims are determined, information is stratified by loss layers and retentions, accident years, reported years and geography. Several actuarial methods are used to produce estimates of ultimate paid losses and reserves for incurred but not reported claims. Each of these methods uses our company-specific historical claims data and other information. Company-specific data includes information regarding our business, including historical paid losses and loss adjustment expenses, historical and current case loss reserves, actual and projected hospital statistical data, a variety of hospital census information, employed physician information, professional liability retentions for each policy year, geographic information and other data. Significant assumptions are made on the basis of the aforementioned information in estimating reserves for incurred but not reported . A 1% change in assumptions for either or frequency as of December 31, 2025 would have increased or decreased the reserve by approximately $5 million to $10 million.
Based on these analyses, we periodically review and determine our estimate of the professional liability claims. The determination of management’s estimate, including the preparation of the reserve analysis that supports such estimate, involves subjective judgment of management. Changes in reserve data or the trends and factors that influence reserve data may signal fundamental shifts in our future claim development patterns or may simply reflect single-period anomalies. Even if a change reflects a fundamental shift, the full extent of the change may not become evident until years later. Moreover, since our methods and models use different types of data and we select our liability from the results of all of these methods, we typically cannot quantify the precise impact of such factors on our estimates of the liability. Due to our standardized and consistent processes for handling claims and the long history and depth of our company-specific data, our methodologies have historically produced reliably determinable estimates of ultimate paid losses. Management considers any changes in the amount and pattern of its historical paid losses up through the most recent reporting period to identify any fundamental shifts or trends in claim development experience in determining the estimate of professional liability claims. However, due to the subjective nature of this estimate and the impact that previously shifts in actual claim experience can have, future estimates of professional liability could be impacted when actual paid develop based on assumptions and settlement events that were not previously known or anticipated.
Year Ended December 31,
Accrual for professional liability claims, beginning of year
Liability for insured claims (1)
Expense related to:
Current accident year
Prior accident years
Expense from discounting
Total incurred loss and loss expense (2)
Paid claims and expenses related to:
Current accident year
Prior accident years
Total paid claims and expenses
Accrual for professional liability claims, end of year
The liability for insured claims is recorded in the consolidated balance sheets with a corresponding insurance recovery receivable.
Total expense, including premiums for insured coverage, was $295 million in 2025, $372 million in 2024 and $208 million in 2023.
In the ordinary course of business, our expense with respect to professional liability claims, which is actuarially determined, is limited to amounts not covered by third-party insurance policies, which typically provide coverage for professional liability claims. During the year ended December 31, 2023, we experienced an increase in the amounts paid or expected to be paid to settle outstanding professional liability claims, compared to the same period in the prior year and to previous actuarially determined estimates due to adverse claim developments. During the years ended December 31, 2024, in connection with our periodic review of the professional liability claims accrual, we, with input from our third-party actuary, considered recent increases in the amounts paid to resolve outstanding professional liability claims arising in prior periods as well as recent increases in individual claim accruals for unresolved prior period claims. The emergence in the period of adverse developments, including from social inflationary pressures, impacted the actuarially determined estimate for the resolution of professional liability and resulted in an upward revision to the professional liability accrual estimate in the amount of $149 million during the year ended December 31, 2024, the majority of which
increase in estimate related to divested locations. There were no other significant changes in our estimate of the reserve for professional liability claims during the years ended December 31, 2025, 2024 and 2023.
We are primarily self-insured for professional liability claims; however, we obtain excess insurance that transfers the risk of loss to a third-party insurer for claims in excess of our self-insured retentions. Our excess insurance is underwritten on a claims-made basis. For claims reported prior to June 1, 2002, substantially all of our professional and general liability risks were subject to a less than $1 million per occurrence self-insured retention and for claims reported from June 1, 2002 through June 1, 2003, these self-insured retentions were $2 million per occurrence. Substantially all claims reported after June 1, 2003 and before June 1, 2005 are self-insured up to $4 million per claim. Substantially all claims reported on or after June 1, 2005 and before June 1, 2014 are self-insured up to $5 million per claim. Substantially all claims reported on or after June 1, 2014 and before June 1, 2018 are self-insured up to $10 million per claim. Substantially all claims reported on or after June 1, 2018 are self-insured up to $15 million per claim. Management, on occasion, has selectively increased the insured risk at certain hospitals based upon insurance pricing and other factors and may continue that practice in the future.
Excess insurance for all hospitals has been purchased through commercial insurance companies and generally covers us for liabilities in excess of the self-insured retentions. The excess coverage consists of multiple layers of insurance, the sum of which totals up to $95 million per occurrence and in the aggregate for claims reported on or after June 1, 2003, up to $145 million per occurrence and in the aggregate for claims reported on or after January 1, 2008, up to $195 million per occurrence and in the aggregate for claims reported on or after June 1, 2010, and up to at least $215 million per occurrence and in the aggregate for claims reported on or after June 1, 2015. In addition, for integrated occurrence professional liability claims, there is an additional $50 million of excess coverage for claims reported on or after June 1, 2014 and an additional $75 million of excess coverage for claims reported on or after June 1, 2015 through June 1, 2020. The $75 million in integrated occurrence coverage will also apply to claims reported between June 1, 2020 and June 1, 2025 for events that occurred prior to June 1, 2020 but which were not previously known or reported. For certain policy years prior to June 1, 2014, if the first aggregate layer of excess coverage becomes fully utilized, then the self-insured retention will increase to $10 million per claim for any subsequent in that policy year until our total aggregate coverage is met. Beginning June 1, 2018, this drop-down provision in the excess policies attaches over the $15 million per claim self-insured retention.
Income Taxes
We must make estimates in recording provision for income taxes, including determination of deferred tax assets and deferred tax liabilities and any valuation allowances that might be required against the deferred tax assets. We believe that future income will enable us to realize certain deferred tax assets, subject to the valuation allowance we have established.
The total amount of unrecognized benefit that would impact the effective tax rate, if recognized, was $45 million at December 31, 2025. A total of $9 million of interest and penalties is included in the amount of liability for uncertain tax positions at December 31, 2025. It is our policy to recognize interest and penalties related to unrecognized benefits in our consolidated statements of income (loss) as income tax expense.
Our income tax returns for the 2021 and 2022 tax years are under examination by the Internal Revenue Service. We believe the result of this examination will not be material to our consolidated results of operations or consolidated financial position. We have extended the federal statute of limitations through December 31, 2026 for Community Health Systems, Inc. for the tax periods ended December 31, 2021 and 2022.
Recent Accounting Pronouncements
In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Topic 350): Targeted Improvements to the Accounting for Internal-Use Software.” This ASU modifies the criteria for when software costs may be capitalized by eliminating consideration of software project development stages and by enhancing guidance for the “probable-to-complete” threshold. This ASU is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption of this ASU is permitted. We are currently evaluating the impact that adoption of this ASU will have on our consolidated financial statements.
We have evaluated all other recently issued, but not yet effective, ASUs and do not expect the eventual adoption of such ASUs to have a material impact on our consolidated financial position or results of operations.
FORWARD-LOOKIN G STATEMENTS
This Form 10-K 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. Statements that are predictive in nature, 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. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these 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 Form 10-K. These factors include, among other things:
general economic and business conditions, both nationally and in the regions in which we operate, including the impact of challenging macroeconomic conditions and inflationary pressures, the current interest rate environment, current geopolitical instability, impacts from the imposition of, or changes in tariffs, as well as the impact on us of financial, credit, capital, political, and legislative conditions, including any federal government shutdowns;
the impact of current and future healthcare public policy developments and the implementation of new, and possible changes to existing, federal, state or local laws, regulations and policies affecting the healthcare industry, including changes affecting the structure of or funding for the Medicare and Medicaid programs and changes in the structure and administration of federal and state agencies and programs;
changes by the federal and state governments to state Medicaid programs, including the extent and nature of structural and funding changes and manner in which any such changes are implemented, and other developments that affect the administration of health insurance exchanges or alter or reduce the provision of, or payment for, healthcare to state residents through legislation, regulation or otherwise;
changes related to health insurance enrollment, including those affecting the beneficiary enrollment process and the stability of health insurance exchanges, and the expiration of the temporarily enhanced subsidies available for individuals to purchase coverage through Affordable Care Act marketplaces;
risks associated with our substantial indebtedness, leverage and debt service obligations, including our ability to refinance such indebtedness on acceptable terms or to incur additional indebtedness, and our ability to remain in compliance with debt covenants;
demographic changes;
changes in, or the failure to comply with, federal, state or local laws or governmental regulations affecting our business;
judicial developments impacting the Company or the healthcare industry, including the potential impact of the recent decisions of the U.S. Supreme Court regarding the actions of federal agencies;
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 to enter into and maintain provider arrangements with payors and the terms of these arrangements, which may be further affected by the increasing consolidation of health insurers and managed care companies and vertical integration efforts involving payors and healthcare providers;
changes in, or the failure to comply with, contract terms with payors and changes in reimbursement policies, methodologies or rates paid by federal or state healthcare programs or commercial payors;
security breaches, cyber-attacks, loss of data, other cybersecurity threats or incidents, including those experienced with respect to our information systems or the information systems of third parties with whom we conduct business, 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;
the development, adoption and use of emerging technologies, including artificial intelligence and machine learning;
any potential impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets, or changes in the useful lives of other intangible assets;
the effects related to the sequestration spending reductions pursuant to the Budget Control Act of 2011 and the potential for spending reductions under future legislation, including as may be required under the Pay-As-You-Go Act of 2010;
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 and increased reimbursement denials by insurers;
the impact of competitive labor market conditions, including in connection with our ability to hire and retain qualified nurses, physicians, other medical personnel and key management, and increased labor expenses arising from inflation and/or competition for such positions;
the inability of third parties with whom we contract to provide 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 key business functions, including our ability to realize the intended benefits of a new core enterprise resource planning system and the redesigned and consolidated processes which are supported by such system;
changes in U.S. 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 realize expected benefits from acquisitions such as increased growth in patient service revenues;
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 general liability, professional liability, cyber liability and directors’ and officers’ liability insurance;
any lapse in appropriations, and any hold on or cancellation of congressionally authorized spending or interruptions in the distribution of government funds, and the timeliness of reimbursement payments received under government programs;
effects related to pandemics, epidemics, outbreaks of infectious diseases or other public health crises;
any failure to comply with our obligations under license or technology agreements;
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 this Form 10-K and our other public filings with the SEC.
Although we believe that these forward-looking statements are based upon reasonable assumptions, these assumptions are inherently subject to significant regulatory, economic and competitive uncertainties and contingencies, which are difficult or impossible to predict accurately and may be beyond our control. Accordingly, we cannot give any assurance that our expectations will in fact occur, and we caution that actual results may differ materially from those in the forward-looking statements. Given these uncertainties, prospective investors are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this filing. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
Item 7A. Quantitative and Qualita tive Disclosures about Market Risk
We are exposed to market risk related to changes in market value of marketable securities including debt and equity securities held by our wholly-owned captive insurance subsidiaries as well as securities held for certain deferred compensation plans. Available-for-sale debt securities are reported at fair value as determined by quoted market prices, with unrealized gains and losses reported as a separate component of stockholders’ deficit. Trading securities are reported at fair value with unrealized gains and losses included in earnings. There was $5 million of comprehensive income resulting from the net unrealized gains on marketable securities during the year ended December 31, 2025.
We are exposed to market risk related to market illiquidity. Investments in debt and equity securities of our insurance subsidiaries could be impaired by the inability to access the capital markets. Should the insurance subsidiaries require significant amounts of cash in excess of normal cash requirements to pay claims and other expenses on short notice, we may have difficulty selling these investments in a timely manner or be forced to sell them at a price less than what we might otherwise have been able to in a normal market environment. We may be required to recognize credit-related impairments on our investment securities in future periods should issuers default on interest payments or should the fair market valuations of the securities deteriorate due to ratings downgrades or other issue-specific factors.
We are also exposed to market risk related to changes in interest rates, primarily as a result of the ABL Facility, which bears interest based on floating rates. At December 31, 2025, we had no outstanding borrowings under the ABL Facility.
The estimated fair value of our long-term debt, excluding finance leases, was approximately $10.0 billion at December 31, 2025. The estimates of fair value are based upon the quoted market prices for the same or similar issues of long-term debt with the same maturities. Based on a hypothetical 1% increase in interest rates, the potential annualized reduction to future pre-tax earnings would be approximately $106 million. To mitigate the impact of fluctuations in interest rates, we generally target a majority of our debt portfolio to be maintained at fixed rates.
Item 8. Financial Statemen ts and Supplementary Data
Index to Financial Statements
Page
Community Health Systems, Inc. Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 )
Consolidated Statements of Income (Loss) for the Years Ended December 31, 2025, 2024 and 2023
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2025, 2024 and 2023
Consolidated Balance Sheets as of December 31, 2025 and 2024
Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2025, 2024 and 2023
Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023
Notes to Consolidated Financial Statements
REPORT OF INDEPENDE NT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Community Health Systems, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Community Health Systems, Inc. and subsidiaries (the “Companyˮ) as of December 31, 2025 and 2024, the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ deficit, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statementsˮ). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 , in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 19, 2026 expressed an unqualified opinion on the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Patient Accounts Receivable — Refer to Note 1 - Basis of Presentation and Significant Accounting Policies to the financial statements
Critical Audit Matter Description
Patient accounts receivable are recorded net of implicit price concessions for insured and self-pay patients. The Company’s primary collection risks relate to uninsured patients and outstanding patient balances for which the primary insurance payor has paid some, but not all of the outstanding balance, with the remaining outstanding balance (generally deductibles and co-payments) owed by the patient. The Company estimates any adjustments to the transaction price for implicit price concessions by reserving a percentage of all self-pay accounts receivable without regard to aging category, based on collection history, adjusted for expected recoveries and any anticipated changes in trends.
Given that auditing management’s estimate of self-pay price concessions was complex and judgmental due to the significant data inputs and subjective assumptions utilized in determining related amounts, performing audit procedures to evaluate whether the self-pay price concessions were appropriately recorded as of December 31, 2025, required a high degree of auditor judgment and an increased extent of effort.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s estimate of implicit price concessions associated with self-pay accounts receivable included the following, among others:
We tested management’s internal controls that address the risks of material misstatement related to the Company’s estimation of implicit self-pay price concessions.
We evaluated management’s methodology and related assumptions, including cash collections, by comparing actual results to management’s historical estimates.
We developed an expectation for self-pay price concession by payor and compared it to the recorded balance.
We evaluated the appropriateness of the industry, economic, and Company factors that were used in determining the net realizable value of self-pay accounts receivable.
Professional Liability Claims — Refer to Note 16 - Commitments and Contingencies to the financial statements
Critical Audit Matter Description
As part of the Company’s business of providing health care services, they are subject to legal actions alleging liability on their part. The Company accrues for losses resulting from such liability claims, as well as loss adjustment expenses that are out-of-pocket and directly related to such liability claims. These direct out-of-pocket expenses include fees of outside counsel and experts.
The Company is self-insured for professional liability claims up to certain self-insured retention limits based on the policy year. Professional liabilities consist of the projected settlement value of reported and unreported claims. The self-insurance reserves are estimated based on the Company’s historical claims experience, supplemented with industry experience, as necessary, and is established using actuarial methods followed in the insurance industry.
Given the subjectivity of estimating the projected settlement value of reported and unreported claims, performing audit procedures to evaluate whether professional liability claims were appropriately recorded as of December 31, 2025, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the self-insured professional liability claims included the following, among others:
We tested management’s internal controls that address the risks of material misstatement related to professional liability claims, including those over the projection of the settlement value of reported and unreported claims.
We tested the underlying data that served as the basis for the actuarial analysis, including historical claims, to test that the inputs to the actuarial estimate were reasonable.
With the assistance of our actuarial specialists, we developed independent estimates of the professional liability claims, including loss data and industry claim development factors, and compared our estimates to management’s estimates.
/s/ Deloitte & Touche LLP
Nashville, Tennessee
February 19, 2026
We have served as the Company’s auditor since 1996.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEME NTS OF INCOME (LOSS)
Year Ended December 31,
(In millions, except share and per share data)
Net operating revenues
Operating expenses:
Salaries and benefits
Supplies
Other operating expenses
Lease cost and rent
Depreciation and amortization
Impairment and (gain) loss on sale of businesses, net
Total operating expenses
Income from operations
Interest expense, net of interest income of $ 2 , $ 3 and $ 2 in 2025, 2024
and 2023, respectively
Gain from early extinguishment of debt
Equity in earnings of unconsolidated affiliates
Income (loss) before income taxes
Provision for income taxes
Net income (loss)
Less: Net income attributable to noncontrolling interests
Net income (loss) attributable to Community Health
Systems, Inc. stockholders
Earnings (loss) per share attributable to Community Health Systems,
Inc. stockholders:
Basic
Diluted
Weighted-average number of shares outstanding:
Basic
Diluted
See accompanying notes to the consolidated financial statements.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Year Ended December 31,
(In millions)
Net income (loss)
Other comprehensive income (loss), net of income taxes:
Net change in fair value of available-for-sale debt securities, net
of tax of $ 1 , $ 0 and $ 1 for the years ended December 31, 2025,
2024 and 2023, respectively
Amortization and recognition of unrecognized pension cost
components, net of tax of $ 1 , $ 1 and $ 0 for the years ended
December 31, 2025, 2024 and 2023, respectively
Other comprehensive income
Comprehensive income (loss)
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income (loss) attributable to Community Health Systems,
Inc. stockholders
See accompanying notes to the consolidated financial statements.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED B ALANCE SHEETS
December 31, 2025
December 31, 2024
(In millions, except share data)
ASSETS
Current assets:
Cash and cash equivalents
Patient accounts receivable (Note 1)
Supplies
Prepaid income taxes
Prepaid expenses
Other current assets
Total current assets
Property and equipment
Land and improvements
Buildings and improvements
Equipment and fixtures
Property and equipment
Less accumulated depreciation and amortization
Property and equipment, net
Goodwill
Deferred income taxes
Other assets, net of accumulated amortization of $ 1,317 and $ 1,501 at December 31, 2025
and 2024, respectively
Total assets
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current maturities of long-term debt
Current operating lease liabilities
Accounts payable
Accrued liabilities:
Employee compensation
Accrued interest
Other
Total current liabilities
Long-term debt
Deferred income taxes
Long-term operating lease liabilities
Other long-term liabilities
Total liabilities
Redeemable noncontrolling interests in equity of consolidated subsidiaries
Commitments and contingencies (Note 16)
STOCKHOLDERS’ DEFICIT
Community Health Systems, Inc. stockholders’ deficit:
Preferred stock, $ .01 par value per share, 100,000,000 shares authorized;
none issued
Common stock, $ .01 par value per share, 300,000,000 shares authorized;
138,626,917 shares issued and outstanding at December 31, 2025, and
138,919,641 shares issued and outstanding at December 31, 2024
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated deficit
Total Community Health Systems, Inc. stockholders’ deficit
Noncontrolling interests in equity of consolidated subsidiaries
Total stockholders’ deficit
Total liabilities and stockholders’ deficit
See accompanying notes to the consolidated financial statements.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ST OCKHOLDERS’ DEFICIT
Community Health Systems, Inc. Stockholders
Redeemable
Noncontrolling
Common Stock
Additional
Paid-in
Accumulated
Other
Comprehensive
Accumulated
Noncontrolling
Total
Stockholders’
Interests
Shares
Amount
Capital
Loss
Deficit
Interests
Deficit
(In millions, except share data)
Balance, December 31, 2022
Comprehensive income (loss)
Contributions from noncontrolling interests
Distributions to noncontrolling interests
Purchase of subsidiary shares from noncontrolling interests
Other reclassifications of noncontrolling interests
Noncontrolling interests in acquired entity
Adjustment to redemption value of redeemable
noncontrolling interests
Cancellation of restricted stock for tax withholdings on
vested shares
Issuance of common stock in connection with the exercise
of stock options
Stock-based compensation
Balance, December 31, 2023
Comprehensive income (loss)
Contributions from noncontrolling interests
Distributions to noncontrolling interests
Purchase of subsidiary shares from noncontrolling interests
Other reclassifications of noncontrolling interests
Disposition of less-than-wholly owned hospital
Noncontrolling interests in acquired entity
Adjustment to redemption value of redeemable
noncontrolling interests
Cancellation of restricted stock for tax withholdings on
vested shares
Stock-based compensation
Balance, December 31, 2024
Comprehensive income
Contributions from noncontrolling interests
Distributions to noncontrolling interests
Purchase of subsidiary shares from noncontrolling interests
Disposition of less-than-wholly owned hospital
Cancellation of restricted stock for tax withholdings on
vested shares
Issuance of common stock in connection with the exercise
of stock options
Stock-based compensation
Balance, December 31, 2025
See accompanying notes to the consolidated financial statements.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEM ENTS OF CASH FLOWS
Year Ended December 31,
(In millions)
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization
Deferred income taxes
Stock-based compensation expense
Impairment and (gain) loss on sale of businesses, net
Gain from early extinguishment of debt
Other non-cash expenses, net
Changes in operating assets and liabilities, net of effects of acquisitions
and divestitures:
Patient accounts receivable
Supplies, prepaid expenses and other current assets
Accounts payable, accrued liabilities and income taxes
Other
Net cash provided by operating activities
Cash flows from investing activities:
Acquisitions of facilities and other related businesses
Purchases of property and equipment
Proceeds from disposition of hospitals and other ancillary operations
Proceeds from sale of property and equipment
Purchases of available-for-sale debt securities and equity securities
Proceeds from sales of available-for-sale debt securities and equity
securities
Purchases of investments in unconsolidated affiliates
Increase in other investments
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Repurchase of restricted stock shares for payroll tax withholding
requirements
Deferred financing costs and other debt-related costs
Proceeds from noncontrolling investors in joint ventures
Redemption of noncontrolling investments in joint ventures
Distributions to noncontrolling investors in joint ventures
Other borrowings
Issuance of long-term debt
Proceeds from ABL Facility
Repayments of long-term indebtedness
Net cash used in financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental disclosure of cash flow information:
Interest payments
Income tax payments, net of refunds
See accompanying notes to the consolidated financial statements.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRE SENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Business. Community Health Systems, Inc. is a holding company and operates no business in its own name. On a consolidated basis, Community Health Systems, Inc. and its subsidiaries (collectively the “Company”) own, lease and operate general acute care hospitals as well as outpatient facilities in communities across the country. At December 31, 2025, the Company’s subsidiaries own or lease 69 affiliated hospitals, with more than 10,000 beds, and operate more than 1,000 sites of care, including physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers. Throughout these notes to the consolidated financial statements, Community Health Systems, Inc. (the “Parent Company”) and its consolidated subsidiaries are referred to on a collective basis as the “Company.” This drafting style is not meant to indicate that the publicly-traded Parent Company or any particular subsidiary of the Parent Company owns or operates any asset, business, or property. The hospitals, operations and businesses described in this filing are owned and operated, and management services provided, by distinct and indirect subsidiaries of Community Health Systems, Inc.
At December 31, 2025 , Indiana, Alabama, Texas, Florida and Tennessee represent the only areas of significant geographic concentration. Net operating revenues generated by the Company’s hospitals in Indiana, as a percentage of consolidated net operating revenues, were 16.8 % in 2025 , 16.7 % in 2024 , and 17.1 % in 2023 . Net operating revenues generated by the Company’s hospitals in Alabama, as a percentage of consolidated net operating revenues, were 15.8 % in 2025 , 15.4 % in 2024 , and 14.4 % in 2023 . Net operating revenues generated by the Company’s hospitals in Texas, as a percentage of consolidated net operating revenues, were 11.9 % in 2025 , 12.5 % in 2024 , and 11.7 % in 2023 . Net operating revenues generated by the Company’s hospitals in Florida, as a percentage of consolidated net operating revenues, were 8.2 % in 2025 , 9.6 % in 2024 , and 11.1 % in 2023 . Net operating revenues generated by the Company’s hospitals in Tennessee, as a percentage of consolidated net operating revenues, were 8.3 % in 2025 , 7.7 % in 2024 , and 7.7 % in 2023 .
Use of Estimates . The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results could differ from these estimates under different assumptions or conditions.
Principles of Consolidation . The consolidated financial statements include the accounts of the Parent Company, its subsidiaries, all of which are controlled by the Parent Company through majority voting control, and variable interest entities for which the Company is the primary beneficiary. All intercompany accounts, profits and transactions have been eliminated. Noncontrolling interests in less-than-wholly-owned consolidated subsidiaries of the Parent Company are presented as a component of total equity in the consolidated balance sheets to distinguish between the interests of the Parent Company and the interests of the noncontrolling owners. Revenues, expenses and income from these subsidiaries are included in the consolidated amounts as presented in the consolidated statements of income (loss), along with a net income measure that separately presents the amounts attributable to the controlling interests and the amounts attributable to the noncontrolling interests for each of the periods presented. Noncontrolling interests that are redeemable or may become redeemable at a fixed or determinable price at the option of the holder or upon the occurrence of an event outside of the control of the Company are presented in mezzanine equity in the consolidated balance sheets.
Reclassifications . Certain prior period amounts have been reclassified to conform to the current period presentation within these notes to the consolidated financial statements.
Cost of Revenue . Substantially all of the Company’s operating expenses are “cost of revenue” items. Operating expenses that could be classified as general and administrative by the Company would include the Company’s corporate office costs at its Franklin, Tennessee office, which were $ 284 million, $ 304 million and $ 248 million for the years ended December 31, 2025, 2024 and 2023 , respectively. Included in these corporate office costs is stock-based compensation of $ 11 million, $ 17 million and $ 22 million for the years ended December 31, 2025, 2024 and 2023, respectively. The decrease in corporate office costs during the year ended December 31, 2025, compared to the same period in 2024, i s primarily due to the impact of certain non-recurring adjustments recorded in 2024.
Cash Equivalents . The Company considers highly liquid investments with original maturities of three months or less to be cash equivalents.
Supplies. Supplies, principally medical supplies, are stated at the lower of cost (first-in, first-out basis) or market.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Marketable Securities. The Company’s marketable securities consist of debt securities that are classified as trading or available-for-sale and equity securities. Available-for-sale debt securities are reported at fair value as determined by quoted market prices, with unrealized gains and losses reported as a separate component of stockholders’ deficit. Trading securities are reported at fair value with unrealized gains and losses included in earnings. Other comprehensive income (loss), net of tax, included unrealized gains of $ 5 million and $ 6 million during the years ended December 31, 2025 and 2023, respectively. There was no comprehensive income or loss resulting from unrealized gains and losses on marketable securities for the year ended December 31, 2024.
Property and Equipment . Property and equipment are recorded at cost. Depreciation is recognized using the straight-line method over the estimated useful lives of the land and improvements ( 3 to 20 years ), buildings and improvements ( 5 to 40 years ) and equipment and fixtures ( 3 to 18 years ). Costs capitalized as construction in progress were $ 121 million and $ 88 million at December 31, 2025 and 2024 , respectively. Expenditures for renovations and other significant improvements are capitalized; however, maintenance and repairs which do not improve or extend the useful lives of the respective assets are charged to operations as incurred. Interest capitalized related to construction in progress was $ 7 million, $ 17 million and $ 13 million for the years ended December 31, 2025, 2024 and 2023 , respectively. Purchases of property and equipment and internal-use software accrued in accounts payable and not yet paid were $ 109 million and $ 129 million at December 31, 2025 and 2024 , respectively.
The Company also leases certain facilities and equipment under finance leases (see Note 9) Such assets are amortized on a straight-line basis over the lesser of the term of the lease or the remaining useful lives of the applicable assets. During the year ended December 31, 2025 , the Company had non-cash investing activity of $ 1 million related to certain facility and equipment additions that were financed through finance leases and other debt.
Goodwill. Goodwill represents the excess of the fair value of the consideration conveyed in the acquisition over the fair value of net assets acquired. Goodwill arising from business combinations is not amortized. Goodwill is required to be evaluated for impairment at the same time every year and when an event occurs or circumstances change such that it is more likely than not that impairment may exist. The Company performs its annual testing of impairment for goodwill in the fourth quarter of each year. There was no goodwill impairment charge during the years ended December 31, 2025, 2024 and 2023 as a result of the Company’s annual impairment evaluation.
Other Assets. Other assets consist of the insurance recovery receivable from excess insurance carriers related to the Company’s self-insured professional liability and workers’ compensation insurance liability; costs to recruit physicians to the Company’s markets, which are deferred and expensed over the term of the respective physician recruitment contract, generally three years , and included in amortization expense; equity method investments; right-of-use (“ROU”) assets for operating leases; and capitalized internal-use software costs, which are expensed over the expected useful life, which is generally three years for routine software, and included in amortization expense.
Revenue Recognition.
Net Operating Revenues
Net operating revenues are recorded at the transaction price estimated by the Company to reflect the total consideration due from patients and third-party payors in exchange for providing goods and services in patient care. These services are considered to be a single performance obligation and have a duration of less than one year. Revenues are recorded as these goods and services are provided. The transaction price, which involves significant estimates, is determined based on the Company’s standard charges for the goods and services provided, with a reduction recorded for price concessions related to third-party contractual arrangements as well as patient discounts and other patient price concessions. During each of the years ended December 31, 2025, 2024 and 2023, the impact of changes to the inputs used to determine the transaction price was considered immaterial.
Currently, several states utilize supplemental reimbursement programs for the purpose of providing reimbursement to providers that is not specifically tied to an individual’s care, some of which offsets a portion of the cost of providing care to Medicaid and indigent patients. The programs are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. The programs are generally authorized by the Centers for Medicare & Medicaid Services (“CMS”) for a specified period of time and require CMS’s approval to be extended. Under these supplemental programs, the Company recognizes revenue and related expenses in the period in which amounts are estimable and payment is reasonably assured. Reimbursement under these programs is reflected in net operating revenues. Taxes or other program-related costs are reflected in other operating expenses.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company’s net operating revenues during the years ended December 31, 2025, 2024 and 2023 have been presented in the following table based on an allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage (in millions):
Year Ended December 31,
Medicare
Medicare Managed Care
Medicaid
Managed Care and other third-party payors
Self-pay
Total
Patient Accounts Receivable
Patient accounts receivable are recorded at net realizable value based on certain assumptions determined by each payor. For third-party payors including Medicare, Medicare Managed Care, Medicaid and Managed Care, the net realizable value is based on the estimated contractual reimbursement percentage, which is based on current contract prices or historical paid claims data by payor. For self-pay patient accounts receivable, which includes patients who are uninsured and the patient responsibility portion for patients with insurance, the net realizable value is determined using estimates of historical collection experience without regard to aging category. These estimates are adjusted for estimated conversions of patient responsibility portions, expected recoveries and any anticipated changes in trends.
Patient accounts receivable can be impacted by the effectiveness of the Company’s collection efforts. Additionally, significant changes in payor mix, business office operations, economic conditions or trends in federal and state governmental healthcare coverage and related policies could affect the net realizable value of patient accounts receivable. The Company also continually reviews the net realizable value of patient accounts receivable 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, the impact of recent acquisitions and dispositions and the impact of current macroeconomic conditions and other events.
Final settlements for some payors and programs are subject to adjustment based on administrative review and audit by third parties. As a result of these final settlements, the Company has recorded amounts due to third-party payors of $ 130 million and $ 125 million at December 31, 2025 and 2024 , respectively, and these amounts are included in accrued liabilities-other in the accompanying consolidated balance sheets. Amounts due from third-party payors were $ 154 million and $ 161 million at December 31, 2025 and 2024, respectively, and are included in other current assets in the accompanying consolidated balance sheets. Substantially all Medicare and Medicaid cost reports are final settled through 2022.
Charity Care
In the ordinary course of business, the Company renders services to patients who are financially unable to pay for hospital care. The Company’s policy is to not pursue collections for such amounts; therefore, the related charges for those patients who are financially unable to pay and that otherwise do not qualify for reimbursement from a governmental program are not reported in net operating revenues, and are thus classified as charity care. The Company determines amounts that qualify for charity care based on the patient’s household income relative to the federal poverty level guidelines, as established by the federal government. The Company made certain updates to its policy during the year ended December 31, 2025 in a manner which increased the number of accounts qualifying for charity care. This resulted in an increase in expenses related to charity care services during the year ended December 31, 2025, compared to the same period in 2024 as referenced below.
These charity care services are estimated to be $ 1.5 billion, $ 1.2 billion and $ 1.3 billion for the years ended December 31, 2025, 2024 and 2023 , respectively, representing the value (at the Company’s standard charges) of these charity care services that are excluded from net operating revenues. The estimated cost incurred by the Company to provide these charity care services to patients who are unable to pay was approximately $ 149 million, $ 117 million and $ 140 million for the years ended December 31, 2025, 2024 and 2023 , respectively. The estimated cost of these charity care services was determined using a ratio of cost to gross charges and applying that ratio to the gross charges associated with providing care to charity patients for the period.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Leases. Leases are recorded in the consolidated balance sheets through recognition of a liability for the discounted present value of future fixed lease payments and a corresponding ROU asset. The ROU asset recorded at commencement of the lease represents the right to use the underlying asset over the lease term in exchange for the lease payments. Leases with an initial term of 12 months or less that do not have an option to purchase the underlying asset that is deemed reasonably certain to be exercised are not recorded in the consolidated balance sheets; rather, rent expense for these leases is recognized on a straight-line basis over the lease term, or when incurred if a month-to-month lease. When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments. For leases where the implicit rate is not readily determinable, the Company’s incremental borrowing rate is utilized. The Company calculates its incremental borrowing rate on a quarterly basis using a third-party financial model that estimates the rate of interest the Company would have to pay to borrow an amount equal to the total lease payments on a collateralized basis over a term similar to the lease. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Physician Income Guarantees . The Company enters into physician recruiting agreements under which it supplements physician income to a minimum amount over a period of time, typically one year , while the physicians establish themselves in the community. As part of the agreements, the physicians are committed to practice in the community for a period of time, typically three years , which extends beyond their income guarantee period. The Company records an asset and liability for the estimated fair value of minimum revenue guarantees on new agreements and the asset is amortized over the life of each respective agreement. Adjustments to the ultimate value of the guarantee paid to physicians are recognized in the period that the change in estimate is identified. At December 31, 2025 and 2024 , the unamortized portion of these physician income guarantees was $ 6 million and $ 8 million, respectively, and is recorded in other assets in the consolidated balance sheets.
Concentrations of Credit Risk . The Company grants unsecured credit to its patients, most of whom reside in the service area of the Company’s facilities and are insured under third-party payor agreements. Because of the economic diversity of the Company’s facilities and non-governmental third-party payors, Medicare represents the only significant concentration of credit risk from payors. Patient a ccounts receivable, net of contractual allowances, from Medicare was $ 147 million and $ 175 million at December 31, 2025 and 2024, respectively, repre senting 5 % of consol idated net patient accounts receivable at both December 31, 2025 and 2024 .
Accounting for the Impairment or Disposal of Long-Lived Assets. During the year ended December 31, 2025 , the Company recorded a net gain of approximately $ 406 million, comprised of (i) a gain of approximately $ 387 million related to the divestiture of four hospitals and the Company ’s laboratory outreach business, and (ii) additional cash consideration received of approximately $ 91 million, partially offset by (i) an approximately $ 34 million impairment charge to adjust the carrying value of long-lived assets at three hospitals that were divested at a price below carrying value, and (ii) an approximately $ 38 million impairment charge recorded to reduce the carrying value of several assets that were idled or disposed. During the year ended December 31, 2025 , approximately $ 451 million of goodwill was allocated from the hospital operations reporting unit associated with the disposal groups for which impairment charges or a gain on sale was recorded during the period.
During the year ended December 31, 2024 , the Company recorded a net expense of approximately $ 301 million, comprised of (i) an approximate $ 263 million impairment charge recorded to reduce the carrying value of several assets that were idled, disposed of or which were previously classified as held-for-sale, (ii) an approximate $ 34 million impairment charge recorded to reduce the carrying value of a hospital that was deemed held-for-sale based on the difference between carrying value of the hospital disposal group compared to the estimated fair value less costs to sell, and (iii) an approximate $ 8 million impairment charge to adjust the carrying value of long-lived assets at a hospital that was sold at a sales price below carrying value, partially offset by a gain of approximately $ 4 million related to the sale of one hospital. During the year ended December 31, 2024 , approximately $ 111 million of goodwill was allocated from the hospital operations reporting unit associated with the disposal groups for which impairment charges or a gain on sale was recorded during the period.
The Company will continue to evaluate the potential for impairment of the long-lived assets of hospitals and other held-and-used businesses as well as evaluate offers for potential sales, as applicable. Based on such analysis, additional impairment charges may be recorded in the future.
Income Taxes. The Company accounts for income taxes under the asset and liability method, in which deferred income tax assets and liabilities are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of income (loss) during the period in which the tax rate change becomes law.
Other Comprehensive Income (Loss) . Other comprehensive income (loss) is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Supplier Finance Program. The Company has an agreement with a third-party financial institution that allows participating suppliers the ability to finance payment obligations from the Company. The Company is not party to the agreements among suppliers and the third-party financial institution and does not receive compensation from this arrangement. The Company’s obligation to its suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decision to finance amounts under the arrangement. The Company has not pledged assets as security or provided guarantees as part of this program. The Company’s outstanding payment obligations under the supplier finance program, which are included in accounts pa yabl e in the Company’s consolidated balance sheets, totaled $ 2 million and $ 3 million at December 31, 2025 and 2024, respectively. Payment obligations under the program average approximately $ 20 million to $ 30 million per quar ter and are timely settled such that the inflows into the program approximate the outflows in each period presented.
Segment Reporting . A public company is required to report annual and interim financial and descriptive information about its reportable operating segments. Operating segments, as defined, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Aggregation of similar operating segments into a single reportable operating segment is permitted if the businesses have similar economic characteristics and meet the criteria established by U.S. GAAP. The Company operates a single operating segment represented by hospital operations (which includes the Company’s acute care hospitals and related healthcare entities that provide inpatient and outpatient healthcare services).
New Accounting Pronouncements . In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Topic 350): Targeted Improvements to the Accounting for Internal-Use Software.” This ASU modifies the criteria for when software costs may be capitalized by eliminating consideration of software project development stages and by enhancing guidance for the “probable-to-complete” threshold. This ASU is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption of this ASU is permitted. The Company is currently evaluating the impact that adoption of this ASU will have on its consolidated financial statements.
The Company has evaluated all other recently issued, but not yet effective, ASUs and does not expect the eventual adoption of these ASUs to have a material impact on its consolidated financial position or results of operations.
2. ACCOUNTING FOR STOCK-BASED COMPENSATION
Stock-based compensation awards have been granted under the Community Health Systems, Inc. Amended and Restated 2009 Stock Option and Award Plan, which was most recently amended and restated as of March 12, 2025 and most recently approved by the Company’s stockholders at the annual meeting of stockholders held on May 13, 2025 (the “2009 Plan”).
The 2009 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code and for the grant of stock options which do not so qualify, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance-based shares or units and other share awards. Persons eligible to receive grants under the 2009 Plan include the Company’s directors, officers, employees and consultants. To date, all options granted under the 2009 Plan have been “nonqualified” stock options for tax purposes. Generally, these options vest in one-third increments on each of the first three anniversaries of the option grant date and expire on the tenth anniversary of the option grant date. The exercise price of all options granted under the 2009 Plan is equal to the fair value of the Company’s common stock on the option grant date. At December 31, 2025 , 11,614,859 shares of unissued common stock were reserved for future grants under the 2009 Plan.
The following table reflects the impact of total compensation expense related to stock-based equity plans on the reported operating results for the respective periods (in millions):
Year Ended December 31,
Effect on income (loss) before income taxes
Effect on net income (loss)
During the year ended December 31, 2025, a reversal of approximately $ 4 million of stock-based compensation expense was recorded for restricted stock awards and stock options that were forfeited and cancelled. The Company routinely evaluates its assumption for forfeitures or cancellations and adjusts its estimate to account for employee departures, including retirement, in accordance with the terms of the 2009 Plan.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
At December 31, 2025 , $ 12 million of unrecognized stock-based compensation expense related to outstanding unvested stock options, restricted stock and RSUs (the terms of which are summarized below) was expected to be recognized over a weighted-average period of 20 months. Of that amount, $ 1 million related to outstanding unvested stock options was expected to be recognized over a weighted-average period of 20 months and $11 million related to outstanding unvested restricted stock and RSUs was expected to be recognized over a weighted-average period of 20 months. There were no modifications to awards during the years ended December 31, 2025, 2024 and 2023.
The fair value of stock options was estimated using the Black Scholes option pricing model with the following assumptions and weighted-average fair values during the years ended December 31, 2025, 2024 and 2023:
Year Ended December 31,
Expected volatility
Expected dividends
Expected term
6 years
6 years
6 years
Risk-free interest rate
In determining the expected term, the Company examined concentrations of option holdings and historical patterns of option exercises and forfeitures, as well as forward-looking factors, in an effort to determine if there were any discernible employee populations. From this analysis, in determining the expected term for the years ended December 31, 2025, 2024 and 2023, the Company identified one population, consisting of persons receiving grants of stock options. The computation of expected term was performed using the simplified method for all stock options granted in the periods presented. The simplified method was used as a result of the Company determining that historical exercise data does not provide a reasonable basis for the expected term of its grants, due primarily to the limited number of stock option exercises that have occurred.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The pre-vesting forfeiture rate is based on historical rates and forward-looking factors for each population identified. The Company adjusts the estimated forfeiture rate to its actual experience.
The expected volatility rate was estimated based on historical volatility. In determining expected volatility, the Company also reviewed the market-based implied volatility of actively traded options of its common stock and determined that historical volatility utilized to estimate the expected volatility rate did not differ significantly from the implied volatility.
Options outstanding and exercisable under the 2009 Plan as of December 31, 2025, and changes during each of the years in the three-year period prior to December 31, 2025, were as follows (in millions, except share and per share data):
Shares
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value as of
December 31,
Outstanding at December 31, 2022
Granted
Exercised
Forfeited and cancelled
Outstanding at December 31, 2023
Granted
Exercised
Forfeited and cancelled
Outstanding at December 31, 2024
Granted
Exercised
Forfeited and cancelled
Outstanding at December 31, 2025
6.4 years
Exercisable at December 31, 2025
5.5 years
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The weighted-average grant date fair value of stock options granted during the years ended December 31, 2025, 2024 and 2023 , was $ 2.27 , $ 2.19 and $ 4.61 , respectively. The aggregate intrinsic value (calculated as the number of in-the-money stock options multiplied by the difference between the Company’s closing stock price on the last trading day of the reporting period ($ 3.12 ) and the exercise price of the respective stock options) in the table above represents the amount that would have been received by the option holders had all option holders exercised their options on December 31, 2025. This amount changes based on the market value of the Company’s common stock. The aggregate intrinsic value of options exercised during the years ended December 31, 2025 and 2023 was less than $ 1 million. There were no stock option exercises during the year ended December 31, 2024. The aggregate intrinsic value of options vested and expected to vest approximates that of the outstanding options.
The Company has also awarded restricted stock under the 2009 Plan to employees of certain subsidiaries. With respect to time-based vesting restricted stock that has been awarded under the 2009 Plan, the restrictions on these shares have generally lapsed in one-third increments on each of the first three anniversaries of the award date . In addition, certain of the restricted stock awards granted to the Company’s senior executives have contained performance objectives required to be met in addition to any time-based vesting requirements. If the applicable performance objectives are not attained, these awards will be forfeited in their entirety. For performance-based awards, the performance objectives are measured cumulatively over a three-year period. If the applicable target performance objective is met at the end of the three-year period, then the restricted stock award subject to such performance objective will vest in full on the third anniversary of the award date. Additionally, for these performance-based awards, based on the level of achievement for the applicable performance objective within the parameters specified in the award agreement, the number of shares to be issued in connection with the vesting of the award may be adjusted to decrease or increase the number of shares specified in the original award. Notwithstanding the above-mentioned performance objectives and vesting requirements, the restrictions with respect to restricted stock granted under the 2009 Plan may earlier in the event of death, disability, change in control of the Company or, other than for performance-based awards, of employment by the Company for any reason other than for cause of the holder of the restricted stock. On March 1, 2025, restricted stock awards subject to performance objectives granted on March 1, 2022 vested based on the Company’s cumulative performance compared to performance objectives for the 2022 through 2024 performance period, which were set prior to the date of grant. Such awards vested at 16.8 % of the number of shares originally granted to the Company’s then executive chairman, chief executive officer and chief financial officer based on the performance objectives applicable to the then executive chairman, chief executive officer and chief financial officer, and at 21 % of the number of shares originally granted to other senior executives based on the performance objectives applicable to such other senior executives. Restricted stock awards subject to performance objectives that have not yet been are not considered outstanding for purposes of determining diluted earnings per share unless the performance objectives have been on the basis of results through the end of each respective reporting period.
Restricted stock outstanding under the 2009 Plan as of December 31, 2025, and changes during each of the years in the three-year period prior to December 31, 2025, were as follows:
Shares
Weighted-
Average Grant
Date Fair Value
Unvested at December 31, 2022
Granted
Vested
Forfeited
Unvested at December 31, 2023
Granted
Vested
Forfeited
Unvested at December 31, 2024
Granted
Vested
Forfeited
Unvested at December 31, 2025
RSUs have been granted to the Company’s non-management directors under the 2009 Plan. Each of the Company’s then serving non-management directors received grants under the 2009 Plan of 59,801 RSUs, 62,718 RSUs and 29,268 RSUs on March 1, 2025, 2024 and 2023, respectively. The March 2025, 2024 and 2023 grants each had a grant date fair value of approximately $ 180,000 . In addition to the grants set forth above, on March 1, 2024 and 2023, the Chairman of the Board of Directors was awarded an additional grant of 92,334 RSUs and 43,089 RSUs, respectively, each with a grant date fair value of approximately $ 265,000, as additional
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
compensation for serving as Chairman of the Board of Directors. Pursuant to the Company’s non-management director compensation program, on June 1, 2024, a new non-management director, who was elected to the Board of Directors at the Annual Meeting of the Company’s stockholders on May 7, 2024 (the “2024 Annual Meeting”) , received a grant of 62,718 RSUs (the same number of RSUs granted to the other non-management directors on March 1, 2024). Due to the higher closing price of the Company’s common stock on June 1, 2024 compared to March 1, 2024, the grant date fair value of the June 1, 2024 award was approximately $ 248,000 . Vesting of RSUs granted to non-management directors occurs in one-third increments on each of the first three anniversaries of the award date or upon the director’s earlier cessation of service on the Board of Directors, other than for cause. Each non-management director may elect, prior to the beginning of the calendar year in which the award is granted, to defer the receipt of shares of the Company’s common stock issuable upon vesting until either his or her (i) separation from service with the Company or (ii) attainment of an age specified in advance by the non-management director. A total of seven directors elected to defer the receipt of shares of the Company’s common stock upon vesting of the RSUs granted on March 1, 2025 to a future date. A total of five directors elected to the receipt of shares of the Company’s common stock upon vesting of the RSUs granted on March 1, 2024 to a future date, and the non-management director who was elected to the Board of Directors at the 2024 Annual Meeting elected to the receipt of shares of the Company’s common stock upon vesting of the RSUs granted on June 1, 2024 to a future date. A total of four directors elected to the receipt of shares of the Company’s common stock upon vesting of the RSUs granted on March 1, 2023 to a future date.
RSUs outstanding under the 2009 Plan as of December 31, 2025, and changes during each of the years in the three-year period prior to December 31, 2025, were as follows:
Shares
Weighted-
Average Grant
Date Fair Value
Unvested at December 31, 2022
Granted
Vested
Forfeited
Unvested at December 31, 2023
Granted
Vested
Forfeited
Unvested at December 31, 2024
Granted
Vested
Forfeited
Unvested at December 31, 2025
3. ACQUISITIONS, DIVESTITURES AND CLOSURES
Acquisitions
The Company accounts for all transactions that represent business combinations using the acquisition method of accounting, where the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquired entity are recognized and measured at their fair values on the date the Company obtains control in the acquiree. Such fair values that are not finalized for reporting periods following the acquisition date are estimated and recorded as provisional amounts. Adjustments to these provisional amounts during the measurement period (defined as the date through which all information required to identify and measure the consideration transferred, the assets acquired, the liabilities assumed and any noncontrolling interests has been obtained, limited to one year from the acquisition date) are recorded when identified. Goodwill is determined as the excess of the fair value of the consideration conveyed in the acquisition over the fair value of the net assets acquired.
The Company accounts for asset acquisitions pursuant to a cost accumulation model. Direct transaction costs are recognized as part of the cost of an acquisition. The Company also evaluates which elements of a transaction should be accounted for as part of an asset acquisition and which should be accounted for separately. The cost of an asset acquisition, including transaction costs, is allocated to identifiable assets acquired and liabilities assumed based on a relative fair value basis. Goodwill is not recognized in an asset acquisition.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
During the years ended December 31, 2025, 2024 and 2023 , one or more subsidiaries of the Company paid approximately $ 1 million, $ 25 million and $ 38 million, respectively, to acquire the operating assets and related businesses of certain physician practices, clinics, ambulatory surgery centers, urgent care centers and other ancillary businesses that operate within the communities served by the Company’s affiliated hospitals. During the year ended December 31, 2024, a majority of the amount paid related to the Company’s purchase of a group of urgent care centers operating in and around Tucson, Arizona. During the year ended December 31, 2023, a majority of the amount paid related to the Company’s purchase of certain assets from American Physician Partners (“APP”). This transaction, which resulted in the Company recording a definite-lived intangible asset for the acquisition of an assembled workforce, was accounted for as an asset acquisition. In connection with these acquisitions, inclusive of the urgent care centers and APP, the Company allocated the purchase price to property and equipment, working capital, intangible assets, noncontrolling interests and goodwill.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Divestitures
The following table provides a summary of hospitals that the Company divested (or, in the cases of Lutheran Rehabilitation Hospital, in which the Company sold a majority ownership interest, Merit Health Biloxi and Merit Health Madison, in which the Company divested its 50 % ownership interest, and in the case of Cedar Park Regional Medical Center, in which the Company divested its 80 % ownership interest) during the years ended December 31, 2025, 2024 and 2023.
Hospital
Buyer
City, State
Licensed
Beds
Effective Date
2025 Divestitures:
Merit Health Biloxi
Memorial Health System
Biloxi, MS
February 1, 2025
ShorePoint Health - Port Charlotte
AdventHealth
Port Charlotte, FL
March 1, 2025
ShorePoint Health - Punta Gorda
AdventHealth
Punta Gorda, FL
March 1, 2025
Lake Norman Regional Medical Center
Duke University Health System, Inc.
Mooresville, NC
April 1, 2025
Merit Health Madison
University of Mississippi Medical Center
Canton, MS
May 1, 2025
Cedar Park Regional Medical Center
Ascension Health
Cedar Park, TX
June 30, 2025
Northwest Health Physicians’ Specialty Hospital
Washington Regional Medical Center
Fayetteville, AR
December 1, 2025
2024 Divestitures:
Tennova Healthcare - Cleveland
Hamilton Health Care Systems, Inc.
Cleveland, TN
August 1, 2024
Davis Regional Medical Center
Iredell Memorial Hospital
Statesville, NC
October 1, 2024
2023 Divestitures:
Greenbrier Valley Medical Center
Vandalia Health, Inc.
Ronceverte, WV
January 1, 2023
Plateau Medical Center
Vandalia Health, Inc.
Oak Hill, WV
April 1, 2023
Medical Center of South Arkansas
SARH Holdings, Inc.
El Dorado, AR
July 1, 2023
Lutheran Rehabilitation Hospital
Select Medical Corporation
Fort Wayne, IN
September 1, 2023
AllianceHealth Ponca City
Integris Health
Ponca City, OK
November 1, 2023
AllianceHealth Woodward
Integris Health
Woodward, OK
November 1, 2023
Bravera Health Brooksville
Tampa General Hospital
Brooksville, FL
December 1, 2023
Bravera Health Spring Hill
Tampa General Hospital
Spring Hill, FL
December 1, 2023
Bravera Health Seven Rivers
Tampa General Hospital
Crystal River, FL
December 1, 2023
Effective August 1, 2024, the Company completed the sale of Tennova Healthcare – Cleveland to Hamilton Health Care Systems, Inc. In addition to the base purchase price of approximately $ 160 million which was received at a preliminary closing on July 31, 2024, the Company is entitled to receive additional cash consideration contingent upon potential modifications to supplemental reimbursement programs as more specifically provided in the asset purchase agreement underlying the transaction. Modifications to the applicable supplemental reimbursement programs were approved as of June 30, 2025, and a third party was engaged during the three months ended September 30, 2025 to calculate the additional consideration due to the Company. In connection therewith, the Company received additional cash consideration of approximately $ 91 million in October 2025 under the terms of the asset purchase agreement. Such amount qualified for recognition as impairment (gain) loss on sale of businesses in the Company’s consolidated statements of income (loss) during the three months ending December 31, 2025. Additional cash consideration may be received in one or more future periods, or a portion of the consideration previously received may be returned by the Company to the buyer, subject to periodic reconciliations as set forth in the asset purchase agreement.
On December 1, 2025, the Company completed the transaction contemplated by that certain asset purchase agreement dated as of July 22, 2025, as amended, pursuant to which Laboratory Corporation of America Holdings acquired select assets and assumed certain leases of the ambulatory outreach business of the Company’s subsidiaries across 13 states, including certain patient service centers and in-office phlebotomy locations. The total purchase price paid to the Company at the closing of this transaction was $ 194 million, before certain transaction expenses.
On October 24, 2025, the Company entered into a definitive agreement to sell Regional Hospital of Scranton ( 186 licensed beds) and Moses Taylor Hospital ( 122 licensed beds) in Scranton, Pennsylvania, as well as Wilkes-Barre General Hospital ( 369 licensed beds) in Wilkes-Barre, Pennsylvania, and certain related businesses to affiliates of Tenor Health Foundation. These hospitals did not meet the criteria for classification as held-for-sale as of December 31, 2025. This disposition was completed on February 1, 2026, as further described in Note 17.
On October 30, 2025, the Company entered into a definitive agreement to sell its 80 % ownership interests in two joint ventures which respectively own and operate Tennova Healthcare - Clarksville ( 270 licensed beds) and certain ancillary businesses located in Clarksville, Tennessee, to subsidiaries of Vanderbilt University Medical Center (“VUMC”) for $ 600 million, subject to adjustment based on the closing net working capital and the closing balance of amounts due to the joint ventures from the Company. VUMC
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
previously held a minority ownership interest in these joint ventures and purchased the remaining ownership interests through this transaction. This hospital was classified as held-for-sale as of December 31, 2025. This disposition was completed on February 1, 2026, as further described in Note 17.
The following table discloses amounts included in the consolidated balance sheet for hospitals classified as held-for-sale as of December 31, 2025 and 2024 (in millions). Other current assets primarily includes patient accounts receivable and prepaid expenses. Other assets, net, primarily includes the net property and equipment and goodwill for the hospitals held-for-sale. Accrued liabilities primarily includes lease obligations for the hospitals held-for-sale. No divestitures or potential divestitures meet the criteria for reporting as a discontinued operation at December 31, 2025, 2024, or 2023.
December 31,
Other current assets
Other assets, net
Accrued liabilities
4. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The changes in the carrying amount of goodwill for the years ended December 31, 2025 and 2024 are as follows (in millions):
Balance, beginning balance
Goodwill
Accumulated impairment losses
Goodwill acquired as part of acquisitions during current year
Goodwill allocated to hospitals divested or held-for-sale
Balance, end of year
Goodwill
Accumulated impairment losses
Goodwill allocated to hospitals divested or held-for-sale reflects the net activity of changing the classification of entities as held-and-used or held-for-sale during the years ended December 31, 2025 and 2024.
Goodwill is allocated to each identified reporting unit, which is defined as an operating segment or one level below the operating segment (referred to as a component of the entity). Management has determined that the Company’s operating segment meets the criteria to be classified as a reporting unit. At December 31, 2025, after giving effect to the 2025 acquisition and divestiture activity, the Company had approximately $ 3.3 billion of goodwill recorded.
Goodwill is evaluated for impairment annually and when an event occurs or circumstances change that, more likely than not, reduce the fair value of the reporting unit below its carrying value. The Company performed its last annual goodwill impairment evaluation during the fourth quarter of 2025 using an October 31, 2025 measurement date, which indicated no impairment.
The Company estimates the fair value of the reporting unit using both a discounted cash flow model as well as a market multiple model. The cash flow forecasts are adjusted by an appropriate discount rate based on the Company’s estimate of a market participant’s weighted-average cost of capital. These models are both based on the Company’s best estimate of future revenues and operating expenses and are reconciled to the Company’s consolidated market capitalization, with consideration of the amount a potential acquirer would be required to pay, in the form of a control premium, in order to gain sufficient ownership to set policies, direct operations and control management decisions.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The determination of fair value in the Company’s goodwill impairment analysis is based on an estimate of fair value for the reporting unit utilizing known and estimated inputs at the evaluation date. Some of those inputs include, but are not limited to, the most recent price of the Company’s common stock and fair value of long-term debt, the Company’s recent financial results, estimates of future revenue and expense growth, estimated market multiples, expected capital expenditures, income tax rates, costs of invested capital and a discount rate.
Future estimates of fair value could be adversely affected if the actual outcome of one or more of the assumptions described above changes materially in the future, including as a result of any decline in the Company’s stock price and the fair value of its long-term debt, an increase in the volatility of the Company’s stock price and the fair value of its long-term debt, lower-than-expected hospital volumes and/or net operating revenues, higher market interest rates, increased operating costs or other adverse impacts on the Company’s financial results. Such changes impacting the calculation of fair value could result in a material impairment charge in the future.
The determination of fair value of the Company’s hospital operations reporting unit as part of its goodwill impairment measurement represents a Level 3 fair value measurement in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs.
Intangible Assets
No intangible assets other than goodwill were acquired during the year ended December 31, 2025. During the year ended December 31, 2024, the Company acquired goodwill as well as definite-lived intangible assets for the acquisition of assembled workforces. The gross carrying amount of the Company’s other intangible assets subject to amortization was $ 27 million and $ 28 million at December 31, 2025 and 2024 , respectively, and the net carrying amount was $ 7 million and $ 15 million at December 31, 2025 and 2024 , respectively. The carrying amount of the Company’s other intangible assets not subject to amortization was $ 35 million and $ 38 million at December 31, 2025 and 2024, respectively. Other intangible assets are included in other assets, net on the Company’s consolidated balance sheets. The Company’s intangible assets include an assembled workforce and various contract-based intangible assets related to operating licenses, management contracts, or non-compete agreements entered into in connection with prior acquisitions.
The weighted-average remaining amortization period for the intangible assets subject to amortization is approximately one year. There are no expected residual values related to these intangible assets. Amortization expense on these intangible assets was $ 8 million, $ 9 million and $ 5 million during the years ended December 31, 2025, 2024 and 2023, respectively . Amortization expense on intangible assets is estimated to be $ 6 million and $ 1 million in 2026 and 2027.
The gross carrying amount of capitalized software for internal use was approximately $ 960 million and $ 982 million a t December 31, 2025 and 2024 , respectively, and the net carrying amount was approximately $ 102 million and $ 119 million at December 31, 2025 and 2024 , respectively. The estimated amortization period for capitalized internal-use software is generally three years . There is no expected residual value for capitalized internal-use software. At December 31, 2025, there were approximatel y $ 40 million of capitalized costs for internal-use software that is currently in the development stage and will begin amortization once the soft ware project is complete and ready for its intended use. Amortization expense on capitalized internal-use software was $ 62 million, $ 80 million and $ 80 million during the years ended December 31, 2025, 2024 and 2023, respectively. Amortization expense on capitalized internal-use software is estimated to be $ 48 million in 2026, $ 29 million in 2027, $ 15 million in 2028, $ 8 million in 2029, $ 2 million in 2030 and less than $ 1 million thereafter.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
5. INCOME TAXES
The provision for income taxes consists of the following (in millions):
Year Ended December 31,
Current:
Federal
State
Deferred:
Federal
State
Total provision for income taxes for income
The following table reconciles the differences between the statutory federal income tax rate and the effective tax rate for the year ended December 31, 2025 (dollars in millions):
Year Ended December 31, 2025
Amount
Provision for income taxes at statutory federal rate
State income taxes, net of federal income tax
benefit (1)
Nontaxable or Nondeductible Items
Net income attributable to noncontrolling interests
Nondeductible goodwill
Permanent differences
Change in valuation allowance
Tax Credits
Work opportunity tax credits
Change in uncertain tax position
Other
Provision for income taxes and effective
tax rate for income
State taxes in Alabama and Texas comprise the majority (greater than 50%) of the tax effect in this category.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
As previously disclosed for the years ended December 31, 2024 and December 31, 2023, prior to the adoption of ASU 2023-09, the following table reconciles the differences between the statutory federal income tax rate to the effective income tax rate (dollars in millions):
Year Ended December 31,
Amount
Amount
Provision for income taxes at statutory federal rate
State income taxes, net of federal income tax
benefit
Net income attributable to noncontrolling interests
Change in valuation allowance
Change in uncertain tax position
Nondeductible goodwill
Amended return adjustments
Change in tax refunds
Permanent differences
Provision to return
Other
Provision for income taxes and effective
tax rate for income
The Company’s effective tax rates were 6.6 %, ( 27.9 )% and 92.3 % for the years ended December 31, 2025, 2024 and 2023, respectively. The change in the Company’s effective tax rate for the year ended December 31, 2025, when compared to the year ended December 31, 2024, was primarily due to the tax effects of the federal budget reconciliation legislation, which was enacted on July 4, 2025 and the effects of which were recorded during the year ended December 31, 2025 . A decrease in valuation allowances stemming from increased interest deductibility and increased bonus depreciation resulted in an income tax benefit of approximately $ 163 million during the year ended December 31, 2025 . This income tax benefit reduced the effective tax rate by 22.5 % for the year ended December 31, 2025. The decrease in the Company’s effective tax rate for the year ended December 31, 2024, when compared to the year ended December 31, 2023, was primarily due to a decrease in non-deductible goodwill related to divested hospitals and a decrease in (loss) income before income taxes in 2024 compared to 2023.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Deferred income taxes are based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities under the provisions of the enacted tax laws. Deferred income taxes at December 31, 2025 and 2024 consist of (in millions):
December 31,
Assets
Liabilities
Assets
Liabilities
Net operating loss and credit carryforwards
Property and equipment
Self-insurance liabilities
Prepaid expenses
Intangibles
Investments in unconsolidated affiliates
Other liabilities
Long-term debt and interest
Patient accounts receivable
IRC Section 163(j) interest limitation
Accrued vacation
Accrued bonus
Other comprehensive income
Right-of-use assets
Right-of-use liability
Stock-based compensation
Deferred compensation
Other
Total
Valuation allowance
Total deferred income taxes
The Company believes that the net deferred tax assets will ultimately be realized, except as noted below. Its conclusion is based on its estimate of future taxable income and the expected timing of temporary difference reversal s. The Company has gross federal net operating loss carryforwards of approximately $ 246 million and state net operating loss carryforwards of approximately $ 9.9 billion, which expire from 2026 through 2045 . The Company’s tax affected federal and state net operating loss and credit carryforwards are approximately $ 52 million and $ 529 million, respectively. A valuation allowance of approximately $ 1.0 billion has been recognized for federal and state net operating loss carryforwards, state credit carryforwards and federal and state deferred tax assets that the Company does not expect to be able to realize. With respect to the deferred tax liability pertaining to intangibles, as included above, goodwi ll purchased in connection with certain of the Company’s business acquisitions is amortizable for income tax reporting purposes. However, for financial reporting purposes, there is no corresponding amortization allowed with respect to such purchased goodwill.
The valuation allowance for federal and state jurisdictions where the Company concluded that the associated deferred tax assets would not be realized decreased by $ 158 million and $ 17 million, respectively, for the year ended December 31, 2025 , and increased by $ 144 million and $ 91 million, respectively, for the year ended December 31, 2024.
The total amount of unrecognized benefit that would affect the effective tax rate, if recognized, was $ 45 million as of December 31, 2025 . A total of $ 9 million of interest and penalties is included in the amount of the liability for uncertain tax positions at December 31, 2025. It is the Company’s policy to recognize interest and penalties related to unrecognized benefits in its consolidated statements of income (loss) as income tax expense.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following is a tabular reconciliation of the total amount of unrecognized tax benefit for the years ended December 31, 2025, 2024 and 2023 (in millions):
Year Ended December 31,
Unrecognized tax benefit, beginning of year
Gross increases — tax positions in current period
Reductions — tax positions in prior period
Settlements
Unrecognized tax benefit, end of year
The Company’s income tax return for the 2018 tax year was effectively settled with the Internal Revenue Service in 2024. The settlement was not material to the Company’s consolidated results of operations or consolidated financial position. The Company’s income tax return for the 2021 and 2022 tax years are under examination by the Internal Revenue Service. The Company believes the result of this examination will not be material to its consolidated results of operations or consolidated financial position. The Company has extended the federal statute of limitations through December 31, 2026 for Community Health Systems, Inc. for the tax periods ended December 31, 2021 and 2022.
Cash paid for income taxes, net of refunds received, were as follows (in millions):
Year Ended
December 31,
Federal
State
Foreign
Total cash paid for income taxes, net of refunds received
During the year ended December 31, 2025, the Company purchased $ 50 million of solar tax credits at a discounted amount of $ 47 million. Such solar tax credits are considered federal estimated income tax payments. The $ 3 million discount is recorded as a federal income tax benefit for the year ended December 31, 2025.
The state of Alabama was the only jurisdiction that exceeded 5 percent of the total cash paid for income taxes, net of refunds received, which was $ 14 million for the year ended December 31, 2025.
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, cash paid for income taxes, net of refunds received, was $ 171 million and $ 91 million, respectively.
During the years ended December 31, 2025, 2024 and 2023 , approximately $ 169 million, $ 17 million and $ 47 million, respectively, of cash paid for taxes related to gains on hospitals divested during the periods.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
6. LONG-TERM DEBT
Long-term debt, net of unamortized debt issuance costs and discounts or premiums, consists of the following (in millions):
December 31,
8 % Senior Secured Notes due 2027
5⅝% Senior Secured Notes due 2027
6⅞ % Senior Notes due 2028
6 % Senior Secured Notes due 2029
5¼ % Senior Secured Notes due 2030
4¾ % Senior Secured Notes due 2031
10⅞ % Senior Secured Notes due 2032
10¾ % Senior Secured Notes due 2033
9¾ % Senior Secured Notes due 2034
6⅞ % Junior-Priority Secured Notes due 2029
6⅛ % Junior-Priority Secured Notes due 2030
ABL Facility
Finance lease and financing obligations
Other
Less: Unamortized deferred debt issuance costs
Total debt
Less: Current maturities
Total long-term debt
6⅞% Senior Notes due 2028
On November 19, 2019, CHS/Community Health Systems, Inc., a wholly-owned subsidiary of Community Health Systems, Inc., (“CHS”) issued approximately $ 1.7 billion aggregate principal amount of the 6⅞% Senior Notes due April 1, 2028 (“the 6⅞% Senior Notes due 2028”) in connection with the 2019 Exchange Offer. No cash proceeds were received in the 2019 Exchange Offer. The 6⅞% Senior Notes due 2028 bear interest at a rate of 6.875 % per annum, payable semi-annually in arrears on April 1 and October 1 of each year. Interest on the 6⅞% Senior 2028 Notes accrues from the initial issuance date of the 6⅞% Senior Notes due 2028. Interest is calculated on the basis of a 360-day year comprised of 12 30-day months. The 6⅞% Senior Notes due 2028 are scheduled to mature on April 1, 2028 . The 6⅞% Senior Notes due 2028 are unconditionally guaranteed on a senior-priority unsecured basis by the Company and each of the CHS current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS᾿ outstanding senior notes) and certain other long-term debt of CHS.
CHS may redeem some or all of the 6⅞% Senior Notes due 2028 at any time on or after April 1, 2023 upon not less than 15 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the periods set forth below:
Period
Redemption Price
April 1, 2024 to March 31, 2025
April 1, 2025 to March 31, 2028
On December 7, 2020, CHS entered into a privately negotiated agreement with a multi-asset investment manager who has certain funds and accounts which are holders of the 6⅞% Senior Notes due 2028. Pursuant to the agreement, the Company exchanged $ 700 million aggregate principal amount of the 6⅞% Senior Notes due 2028 for an aggregate consideration of $ 400 million of cash and 10 million newly issued shares of the Company’s common stock. The exchange transaction was completed on December 9, 2020 and the shares of common stock issued in the exchange were not, and are not required to be, registered under the Securities Act of 1933 pursuant to an exemption from registration provisions via Section 3(a)(9) of the Securities Act of 1933. A gain from early extinguishment of debt of approximately $ 205 million was recognized associated with this exchange.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
During the year ended December 31, 2020, the Company extinguished $ 226 million in principal of the 6⅞% Senior Notes due 2028 through open market repurchases and approximately $ 7 million via a tender offer that commenced on October 30, 2020 and expired on November 30, 2020 . During the year ended December 31, 2025, CHS completed a tender offer in May 2025 for its outstanding 6⅞ % Senior Unsecured Notes due 2028, pursuant to which the Company purchased $ 584 million in aggregate principal amount, or approximately 93 %, of these outstanding notes, that was funded using cash on hand. Upon completion of the tender offer, approximately $ 42 million principal amount of the 6⅞% Senior Unsecured Notes due 2028 remained outstanding.
6% Senior Secured Notes due 2029
On December 28, 2020, CHS completed a private offering of $ 900 million aggregate principal amount of 6% Senior Secured Notes due January 15, 2029 (the “6% Senior Secured Notes due 2029”). The proceeds of the offering were used, together with proceeds from the 5⅝% Senior Secured Notes due 2027 described above, to repurchase approximately $ 2.579 billion of the outstanding principal amount of 6¼% Senior Secured Notes due 2023 that were validly tendered and accepted for purchase pursuant to the early tender deadline of a tender offer that launched on December 11, 2020, and to pay related fees. The remaining principal value of 6¼% Senior Secured Notes due 2023 that were not validly tendered as of the early tender deadline were redeemed or repurchased via the completion of the tender offer on January 11, 2021 or redemption on January, 28, 2021. The 6% Senior Secured Notes due 2029, which mature on January 15, 2029 , bear interest at a rate of 6% per year payable semi-annually in arrears on January 15 and July 15 of each year, commencing on July 15, 2021. The 6 % Senior Secured Notes due 2029 are unconditionally guaranteed on a senior-priority secured basis by each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS.
The 6% Senior Secured Notes due 2029 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 6% Senior Secured Notes due 2029.
CHS is entitled, at its option, to redeem all or a portion of the 6% Senior Secured Notes due 2029 at any time prior to January 15, 2024, upon not less than 15 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 6% Senior Secured Notes due 2029 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 6% Senior Secured Notes due 2029.
CHS may redeem up to 40 % of the aggregate principal amount of the 6% Senior Secured Notes due 2029 at any time prior to January 15, 2024 using the net proceeds from certain equity offerings at the redemption price of 106.000 % of the principal amount of the 6% Senior Secured Notes due 2029 redeemed, plus accrued and unpaid interest, if any.
At any time and from time to time on or after January 15, 2024, CHS may redeem the 6% Senior Secured Notes due 2029 in whole or in part, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 6% Senior Secured Notes due 2029 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the 12 month period beginning on January 15 of the years indicated below:
Period
Redemption Price
January 15, 2025 to January 14, 2026
January 15, 2026 to January14, 2029
5¼% Senior Secured Notes due 2030
On February 4, 2022 , CHS completed a private offering of $ 1.535 billion aggregate principal amount of 5¼% Senior Secured Notes due May 15, 2030 (the “5¼% Senior Secured Notes due 2030”). The proceeds of the offering were used to redeem the 6⅝% Senior Secured Notes due 2025 on February 4, 2022, and to pay related fees and expenses. The 5¼% Senior Secured Notes due 2030 bear interest at a rate of 5.250 % per year payable semi-annually in arrears on May 15 and November 15, commencing on November 15, 2022. The 5¼% Senior Secured Notes due 2030 are unconditionally guaranteed on a senior-priority secured basis by each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The 5¼% Senior Secured Notes due 2030 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 5¼% Senior Secured Notes due 2030.
CHS is entitled, at its option, to redeem all or a portion of the 5¼% Senior Secured Notes due 2030 at any time prior to May 15, 2025, upon not less than 10 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 5¼% Senior Secured Notes due 2030 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 5¼% Senior Secured Notes due 2030.
CHS may redeem up to 40 % of the aggregate principal amount of the 5¼% Senior Secured Notes due 2030 at any time prior to May 15, 2025 using the net proceeds from certain equity offerings at a redemption price of 105.250 % of the principal amount of the 5¼% Senior Secured Notes due 2030 redeemed, plus accrued and unpaid interest, if any. In addition, any time prior to May 15, 2025, but not more than once during each 12 month period , CHS may redeem up to 10 % of the original aggregate principal amount of the 5¼% Senior Secured Notes due 2030 at a redemption price equal to 103 % of the principal amount of the 5¼% Senior Secured Notes due 2030 to be redeemed, plus accrued and unpaid interest, if any.
At any time and from time to time on or after May 15, 2025 , CHS may redeem the 5¼% Senior Secured Notes due 2030 in whole or in part, upon not less than 10 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 5¼% Senior Secured Notes due 2030 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the 12 month period beginning on May 15 of the years indicated below:
Period
Redemption Price
May 15, 2025 to May 14, 2026
May 15, 2026 to May 14, 2027
May 15, 2027 to May 14, 2030
4¾% Senior Secured Notes due 2031
On February 9, 2021 , CHS completed a private offering of $ 1.095 billion aggregate principal amount of 4¾% Senior Secured Notes due February 15, 2031 (the “4¾% Senior Secured Notes due 2031 ”). The proceeds of the offering, together with cash on hand, were used to redeem the 8⅝ % Senior Secured Notes due 2024 on February 9, 2021, and to pay related fees and expenses. The 4¾% Senior Secured Notes due 2031 bear interest at a rate of 4.750% per year payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2021. The 4¾% Senior Secured Notes due 2031 are unconditionally guaranteed on a senior-priority secured basis by each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS.
The 4¾% Senior Secured Notes due 2031 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 4¾% Senior Secured Notes due 2031.
CHS is entitled, at its option, to redeem all or a portion of the 4¾ % Senior Secured Notes due 2031 at any time prior to February 15, 2026 , upon not less than 15 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 4¾% Senior Secured Notes due 2031 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 4¾% Senior Secured Notes due 2031 .
The Company may redeem up to 40 % of the aggregate principal amount of the 4¾ % Senior Secured Notes due 2031 at a ny time prior to February 15, 2026, but not more than once during each 12 month period , CHS may redeem up to 10 % of the original aggregate principal amount of the 4¾ % Senior Secured Notes due 2031 at a redemption price equal to 103 % of the principal amount of the 4¾ % Senior Secured Notes due 2031 to be redeemed, plus accrued and unpaid interest, if any.
At any time and from time to time on or after February 15, 2026 , CHS may redeem the 4¾ % Senior Secured Notes due 2031 in whole or in part, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 4¾% Senior Secured Notes due 2031 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the 12 month period beginning on February 15 of the years indicated below:
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Period
Redemption Price
February 15, 2026 to February 14, 2027
February 15, 2027 to February 14, 2028
February 15, 2028 to February 14, 2029
February 15, 2029 to February 14, 2031
10⅞% Senior Secured Notes due 2032
On December 22, 2023, CHS completed a private offering of $ 1.000 billion aggregate principal amount of 10⅞ % Senior Secured Notes due January 15, 2032 (the “ 10⅞ % Senior Secured Notes due 2032 ”). The proceeds of the offering, together with cash on hand, were used to redeem $ 985 million aggregate principal value of the 8% Senior Secured Notes due 2026 on December 28, 2023, and to pay related fees and expenses. The 10⅞ % Senior Secured Notes due 2032 bear interest at a rate of 10.875 % per year payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2024 . The 10⅞% Senior Secured Notes due 2032 are unconditionally guaranteed on a senior-priority secured basis by the Company and each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS.
The 10⅞ % Senior Secured Notes due 2032 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 10⅞% Senior Secured Notes due 2032.
CHS is entitled, at its option, to redeem all or a portion of the 10⅞ % Senior Secured Notes due 2032 at any time prior to February 15, 2027 , upon not less than 10 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 10⅞ % Senior Secured Notes due 2032 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 10⅞ % Senior Secured Notes due 2032 .
CHS may redeem up to 40 % of the aggregate principal amount of the 10⅞ % Senior Secured Notes due 2032 at any time prior to February 15, 2027 using the net proceeds from certain equity offerings at a redemption price of 110.875 % of the principal amount of the 10⅞ % Senior Secured Notes due 2032 redeemed, plus accrued and unpaid interest, if any. In addition, any time prior to February 15, 2027, but not more than once during each 12 month period , CHS may redeem up to 10 % of the original aggregate principal amount of the 10⅞ % Senior Secured Notes due 2032 at a redemption price equal to 103 % of the principal amount of the 10⅞ % Senior Secured Notes due 2032 to be redeemed, plus accrued and unpaid interest, if any.
At any time and from time to time on or after February 15, 2027 , CHS may redeem the 10⅞ % Senior Secured Notes due 2032 in whole or in part, upon not less than 10 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 10⅞ % Senior Secured Notes due 2032 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the 12 month period beginning on February 15 of the years indicated below:
Period
Redemption
Price
February 15, 2027 to February 14, 2028
February 15, 2028 to February 14, 2029
February 15, 2029 to January 14, 2032
On June 5, 2024, CHS completed the offering of an additional $ 1.225 billion aggregate principal amount of its outstanding 10.875 % Senior Secured Notes due 2032 (the “Tack-On Notes”) at an issue price of 102.000 %, plus accrued and unpaid interest from December 22, 2023 to the closing date (which equaled approximately $ 60 million). The Tack-On Notes are part of the same series as, and rank equally with, the 10⅞ % Senior Secured Notes due 2032 issued in December 2023. Following the issuance of the Tack-On Notes, the total aggregate principal amount of outstanding 10⅞ % Senior Secured Notes due 2032 is $ 2.225 billion.
Proceeds from the offering of the Tack-On Notes, together with cash on hand, were used to redeem all $ 1.116 billion of the outstanding 8.000 % Senior Secured Notes due 2026 , to fund repurchases of the Company’s 6⅞ % Senior Notes due 2028 as noted below, to pay related fees and expenses and for general corporate purposes. Approximately $ 98 million of the proceeds from the Tack-On Notes, was also used to extinguish $ 130 million principal value of the Company’s 6⅞ % Senior Notes due 2028 in a privately negotiated transaction.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
During the three months ended December 31, 2025, the Company exercised a special call provision to redeem 10 % or approximately $ 223 million, in principal amount of the 10.875 % Senior Secured Notes due 2032 , at a redemption price of 103 % of the principal amount, plus accrued and unpaid interest.
10¾% Senior Secured Notes due 2033
On May 9, 2025 , CHS completed the offering of $ 700 million aggregate principal amount 10.750 % Senior Secured Notes due June 15, 2033 (the “ 10¾ % Senior Secured Notes due 2033”). The Company used the proceeds from issuance of the 10¾ % Senior Secured Notes due 2033, together with cash on hand, to redeem all of its 8 % Senior Secured Notes due 2027 and to pay related fees and expenses. The 10¾ % Senior Secured Notes due 2033 bear interest at a rate of 10.750 % per year payable semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2025. The 10¾ % Senior Secured Notes due 2033 are unconditionally guaranteed on a senior-priority secured basis by the Company and each of the current and future domestic subsidiaries that provide guarantees under the ABL Facility (as defined below), any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS.
The 10¾ % Senior Secured Notes due 2033 and the related guarantees are secured by shared (i) first-priority liens on the collateral that also secures on a first-priority basis CHS’ senior-priority secured notes and (ii) second-priority liens on the collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 10¾ % Senior Secured Notes due 2033.
CHS is entitled, at its option, to redeem all or a portion of the 10¾ % Senior Secured Notes due 2033 at any time prior to June 15, 2030, upon not less than 10 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 10¾ % Senior Secured Notes due 2033 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 10¾ % Senior Secured Notes due 2033.
CHS may redeem up to 35 % of the aggregate principal amount of the 10¾ % Senior Secured Notes due 2033 at any time prior to June 15, 2030 using the net proceeds from certain equity offerings at a redemption price of 103.000 % of the principal amount of the 10¾ % Senior Secured Notes due 2033 redeemed, plus accrued and unpaid interest, if any.
At any time and from time to time on or after June 15, 2030, CHS may redeem the 10¾% Senior Secured Notes due 2033 in whole or in part, upon not less than 10 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 10¾ % Senior Secured Notes due 2033 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the twelve-month period beginning on June 15 of the years indicated below:
Period
Redemption Price
June 15, 2030 to June 14, 2031
June 15, 2031 to June 14, 2032
June 15, 2032 to June 14, 2033
9¾% Senior Secured Notes due 2034
On August 12, 2025 , CHS completed an offering of $ 1.790 billion principal amount of 9.750 % Senior Secured Notes due 2034 (the “ 9¾ % Senior Secured Notes due 2034”). The Company used the proceeds from the issuance of the 9¾ % Senior Secured Notes due 2034to redeem $ 1.743 billion principal amount of its 5.625 % Senior Secured Notes due 2027, or approximately 99 % of the total outstanding principal amount, that were validly tendered and accepted for purchase pursuant to a tender offer that launched on July 28, 2025, and was completed on August 25, 2025, and to pay related fees and expenses. Upon completion of the tender offer, approximately $ 14 million principal amount of the 5.625 % Senior Secured Notes due 2027 remained outstanding. The 9¾ % Senior Secured Notes due 2034 bear interest at a rate of 9.750 % per year payable semi-annually in arrears on March 15 and September 15 of each year, commencing on March 15, 2026. The 9¾ % Senior Secured Notes due 2034 are unconditionally guaranteed on a senior-priority secured basis by the Company and each of the current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The 9¾ % Senior Secured Notes due 2034 and the related guarantees are secured by shared (i) first-priority liens on the collateral that also secures on a first-priority basis CHS’ senior-priority secured notes and (ii) second-priority liens on the collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 9¾ % Senior Secured Notes due 2034.
CHS is entitled, at its option, to redeem all or a portion of the 9¾ % Senior Secured Notes due 2034 at any time prior to August 15, 2028, upon not less than 10 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 9¾ % Senior Secured Notes due 2034 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 9¾ % Senior Secured Notes due 2034.
CHS may redeem up to 40 % of the aggregate principal amount of the 9¾ % Senior Secured Notes due 2034 at any time prior to August 15, 2028 using the net proceeds from certain equity offerings at a redemption price of 109.750 % of the principal amount of the 9¾ % Senior Secured Notes due 2034 redeemed, plus accrued and unpaid interest, if any. In addition, any time prior to August 15, 2028, but not more than once during each 12 month period, CHS may redeem up to 10 % of the original aggregate principal amount of the 9¾ % Senior Secured Notes due 2034 at a redemption price equal to 103 % of the principal amount of the 9¾ % Senior Secured Notes due 2034 to be redeemed, plus accrued and unpaid interest, if any.
At any time and from time to time on or after August 15, 2028, CHS may redeem the 9¾ % Senior Secured Notes due 2034 in whole or in part, upon not less than 10 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 9¾ % Senior Secured Notes due 2034 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the twelve-month period beginning on August 15 of the years indicated below:
Period
Redemption Price
August 15, 2028 to August 14, 2029
August 15, 2029 to August 14, 2030
August 15, 2030 to August 14, 2034
6⅞% Junior-Priority Secured Notes due 2029
On February 2, 2021 , CHS completed a private offering of $ 1.775 billion aggregate principal amount of 6⅞ % Junior-Priority Secured Notes due April 15, 2029 (the “6⅞% Junior-Priority Secured Notes due 2029 ”). The proceeds of the offering, together with cash on hand, were used to redeem the 9⅞ % Junior-Priority Secured Notes due 2023 in February 2021 and to pay related fees and expenses. The 6⅞ % Junior-Priority Secured Notes due 2029 bear interest at a rate of 6.875 % per year payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2021. The 6⅞ % Junior-Priority Secured Notes due 2029 are unconditionally guaranteed on a junior-priority secured basis by the Company and each of the current and future domestic subsidiaries of CHS that provide guarantees under CHS’ ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS.
The 6⅞ % Junior-Priority Secured Notes due 2029 and the related guarantees are secured by shared (i) second-priority liens on the Non-ABL Priority Collateral that secures on a first-priority basis CHS’ senior-priority secured notes and (ii) third-priority liens on the ABL-Priority Collateral that secures on a first-priority basis the ABL Facility (and also secures on a second-priority basis CHS’ senior-priority secured notes), in each case subject to permitted liens described in the indenture governing the 6⅞ % Junior-Priority Secured Notes due 2029 .
At any time and from time to time on or after April 15, 2024 , CHS may redeem the 6⅞ % Junior-Priority Secured Notes due 2029 in whole or in part, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 6⅞% Junior-Priority Secured Notes due 2029 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the 12 month period beginning on April 15 of the years indicated below:
Period
Redemption Price
April 15, 2025 to April 14, 2026
April 15, 2026 to April 14, 2029
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
6⅛% Junior-Priority Secured Notes due 2030
On May 19, 2021 , CHS completed a private offering of $ 1.440 billion aggregate principal amount of 6⅛ % Junior-Priority Secured Notes due April 1, 2030 (the “6⅛% Junior-Priority Secured Notes due 2030 ”). The proceeds of the offering, together with cash on hand, were used to redeem the 8⅛% Junior-Priority Secured Notes due 2024 on May 19, 2021, and to pay related fees and expenses. The 6⅛% Junior-Priority Secured Notes due 2030 bear interest at a rate of 6.125% per year payable semi-annually in arrears on April 1 and October 1, commencing on October 1, 2021 . The 6⅛% Junior-Priority Secured Notes due 2030 are unconditionally guaranteed on a junior-priority secured basis by each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL Facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS.
The 6⅛% Junior-Priority Secured Notes due 2030 and the related guarantees are secured by shared (i) second-priority liens on the Non-ABL Priority Collateral and (ii) third-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 6⅛% Junior-Priority Secured Notes due 2030.
CHS is entitled, at its option, to redeem all or a portion of the 6⅛% Junior-Priority Secured Notes due 2030 at any time prior to April 1, 2025 , upon not less than 15 nor more than 60 days’ notice, at a price equal to 100 % of the principal amount of the 6⅛% Junior-Priority Secured Notes due 2030 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 6⅛% Junior-Priority Secured Notes due 2030.
At any time and from time to time on or after April 1, 2025 , CHS may redeem the 6⅛ % Junior-Priority Secured Notes due 2030 in whole or in part, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 6⅛% Junior-Priority Secured Notes due 2030 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the 12 month period beginning on April 1 of the years indicated below:
Period
Redemption Price
April 1, 2025 to March 31, 2026
April 1, 2026 to March 31, 2027
April 1, 2027 to March 31, 2030
During the years ended December 31, 2025, 2024 and 2023, the Company extinguished a portion of certain series of its outstanding notes through open market repurchases, privately negotiated transactions, tender offers, and redemptions, as follows (in millions):
December 31,
5⅝ % Senior Secured Notes due 2027
6⅞ % Senior Notes due 2028
6 % Senior Secured Notes due 2029
6⅞ % Junior-Priority Secured Notes due 2029
6⅛ % Junior-Priority Secured Notes due 2030
10⅞ % Senior Secured Notes due 2032
Total principal amount of debt extinguished
Financing and repayment transactions discussed above, including open market repurchases and privately negotiated transactions, resulted in a pre-tax and after-tax gain from early extinguishment of debt of $ 97 million and $ 107 million, respectively, for the year ended December 31, 2025 , a pre-tax and after-tax gain from early extinguishment of debt of $ 25 million and $ 27 million, respectively, for the year ended December 31, 2024 , a pre-tax and after-tax loss from early extinguishment of $ 72 million and $ 61 million, respectively, for the year ended December 31, 2023.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
ABL Facility
On June 5, 2024, the Company and CHS entered into the Second Amendment and Restatement Agreement (the “Amendment”) to refinance and replace the amended and restated asset-based loan (“ABL”) credit agreement (the “ABL Credit Agreement” and, as amended by the Amendment, the “Amended and Restated ABL Credit Agreement”), dated as of November 22, 2021, with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other agents party thereto. Pursuant to the Amended and Restated ABL Credit Agreement, the lenders have extended to CHS a revolving asset-based loan facility in the maximum aggregate principal amount of $ 1.0 billion, subject to borrowing base capacity (the “ABL Facility”). The ABL Facility includes borrowing capacity available for letters of credit of $ 200 million. CHS and all domestic subsidiaries of CHS that guarantee CHS’ other outstanding senior and senior secured indebtedness guarantee the obligations of CHS under the ABL Facility. Subject to certain exceptions, all obligations under the ABL Facility and the related guarantees are secured by a perfected first-priority security interest in substantially all of the receivables, deposit, collection and other accounts and contract rights, books, records and other instruments related to the foregoing of the Company, CHS and the guarantors, as well as a perfected junior-priority third lien security interest in substantially all of the other assets of the Company, CHS and the guarantors, subject to customary exceptions and intercreditor arrangements. At December 31, 2025 , the Company had no outstanding borrowings and approximately $ 786 million of additional borrowing capacity (after taking into consideration the $ 34 million of outstanding letters of credit) under the ABL Facility. The issued letters of credit were primarily in support of potential insurance-related and certain bonds. Letters of credit were reduced during the year ended December 31, 2025 by $ 32 million, primarily due to a reduction in collateral for an insurance-related bond.
Borrowings under the ABL Facility bear interest at a rate per annum equal to an applicable percentage, plus, at the borrower’s option, either (a) a base rate or (b) the Federal Reserve’s secured overnight financing rate (“SOFR”). The applicable margin under the ABL Facility is determined based on excess availability as a percentage of the maximum commitment amount under the ABL Facility at a rate per annum of 0.75 %, 1.00 % and 1.25 % for loans based on the base rate and 1.75 %, 2.00 % and 2.25 % for loans based on SOFR. The applicable commitment fee rate under the ABL Facility is determined based on average utilization as a percentage of the maximum commitment amount under the ABL Facility at a rate per annum of either 0.25 % or 0.375 % times the unused portion of the ABL Facility.
Principal amounts outstanding under the ABL Facility, if any, will be due and payable in full on June 5, 2029. The ABL Facility includes a 91-day springing maturity applicable if more than $ 350 million in the aggregate principal amount of the 5⅝% Senior Secured Notes due 2027 or any indebtedness incurred to refinance the foregoing are scheduled to mature or similarly become due on a date prior to June 5, 2029. In such event, principal amounts outstanding under the ABL Facility will be accelerated and all amounts outstanding under the ABL Facility will become immediately due and payable.
The ABL Facility contains customary representations and warranties, subject to limitations and exceptions, and customary covenants restricting the Company’s ability, subject to certain exceptions, to, among other things (1) declare dividends, make distributions or redeem or repurchase capital stock, (2) prepay, redeem or repurchase other debt, (3) incur liens or grant negative pledges, (4) make loans and investments and enter into acquisitions and joint ventures, (5) incur additional indebtedness or provide certain guarantees, (6) engage in mergers, acquisitions and asset sales, (7) conduct transactions with affiliates, (8) alter the nature of the Company’s, CHS’ or the guarantors’ businesses, (9) grant certain guarantees with respect to physician practices, (10) engage in sale and leaseback transactions or (11) change the Company’s fiscal year. The Company is also required to comply with a consolidated fixed charge coverage ratio, upon certain triggering events described below, and various affirmative covenants. The consolidated fixed charge coverage ratio is calculated as the ratio of (x) consolidated EBITDA (as defined in the ABL Facility) less capital expenditures to (y) the sum of consolidated interest expense (as defined in the ABL Facility), scheduled principal payments, income taxes and restricted payments made in cash or in permitted investments. For purposes of calculating the consolidated fixed charge coverage ratio, the calculation of consolidated EBITDA as defined in the ABL Facility is a trailing 12-month calculation that begins with the Company’s consolidated net income, with certain adjustments for interest, taxes, depreciation and amortization, net income attributable to noncontrolling interests, stock compensation expense, costs, and the financial impact of other non-cash or non-recurring items recorded during any such 12-month period. The consolidated fixed charge coverage ratio is a required covenant only in periods where the total borrowings outstanding under the ABL Facility reduce the amount available in the facility to less than the of (i) $ 95 million or (ii) 10 % of the calculated borrowing base. As a result, in the event the Company has less than $ 95 million available under the ABL Facility, the Company would need to comply with the consolidated fixed charge coverage ratio. At December 31, 2025, the Company is not subject to the consolidated fixed charge coverage ratio as such triggering event had not occurred during the year ended December 31, 2025.
In addition, in the event the amount of borrowings and letters of credit outstanding at any time under the ABL Facility exceeds the borrowing base at such time, the Company will be required to, first, repay outstanding borrowings and, second, replace or cash collateralize outstanding letters of credit, in an aggregate amount sufficient to eliminate such excess.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Events of default under the ABL Facility include, but are not limited to, (1) CHS’ failure to pay principal, interest, fees or other amounts under the ABL Facility Agreement when due (taking into account any applicable grace period), (2) any representation or warranty proving to have been materially incorrect when made, (3) covenant defaults subject, with respect to certain covenants, to an available cure and applicable grace periods, (4) bankruptcy and insolvency events, (5) a cross default to certain other debt, (6) certain undischarged judgments (not paid within an applicable grace period), (7) a change of control (as defined), (8) certain ERISA-related defaults and (9) the invalidity or impairment of specified security interests, guarantees or subordination provisions in favor of the ABL agent or lenders under the ABL Facility.
At December 31, 2025, the scheduled maturities of long-term debt outstanding, including finance lease and financing obligations for each of the next five years and thereafter are as follows (in millions):
Year Ending December 31,
Amount
Thereafter
Total maturities
Less: Deferred debt issuance costs
Less: Unamortized note discount
Total long-term debt
The Company paid interest of approximately $ 804 million, $ 741 million and $ 801 million on borrowings during the years ended December 31, 2025, 2024 and 2023 , respectively.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments has been estimated by the Company using available market information at December 31, 2025 and 2024, and valuation methodologies considered appropriate. The estimates presented in the table below are not necessarily indicative of amounts the Company could realize in a current market exchange (in millions):
December 31, 2025
December 31, 2024
Carrying
Estimated
Fair
Carrying
Estimated
Fair
Amount
Value
Amount
Value
Assets:
Cash and cash equivalents
Investments in equity securities
Available-for-sale debt securities
Trading securities
Liabilities:
8% Senior Secured Notes due 2027
5⅝% Senior Secured Notes due 2027
6⅞% Senior Notes due 2028
6% Senior Secured Notes due 2029
5¼% Senior Secured Notes due 2030
4¾% Senior Secured Notes due 2031
10⅞% Senior Secured Notes due 2032
10¾% Senior Secured Notes due 2033
9¾% Senior Secured Notes due 2034
6⅞% Junior-Priority Secured Notes due 2029
6⅛% Junior-Priority Secured Notes due 2030
ABL Facility and other debt
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The carrying value of the Company’s long-term debt in the above table is presented net of unamortized deferred debt issuance costs. The estimated fair value is determined using the methodologies discussed below in accordance with accounting standards related to the determination of fair value based on the U.S. GAAP fair value hierarchy as discussed in Note 8 - Fair Value. The estimated fair value for financial instruments with a fair value that does not equal its carrying value is considered a Level 1 valuation. The Company utilizes the market approach and obtains indicative pricing through publicly available subscription services such as Bloomberg to determine fair values where relevant.
Cash and cash equivalents. The carrying amount approximates fair value due to the short-term maturity of these instruments (less than three months).
Investments in equity securities. Estimated fair value is based on closing price as quoted in public markets.
Available-for-sale debt securities. Estimated fair value is based on closing price as quoted in public markets or other various valuation techniques.
Trading securities. Estimated fair value is based on closing price as quoted in public markets.
Senior Notes, Senior Secured Notes and Junior-Priority Secured Notes. Estimated fair value is based on the closing market price for these notes.
ABL Facility and other debt. The carrying amount of the ABL Facility and all other debt approximates fair value due to the nature of these obligations.
8. FAIR VALUE
Fair Value Hierarchy
Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Company utilizes the U.S. GAAP fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumption about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
The inputs used to measure fair value are classified into the following fair value hierarchy:
Level 1:
Quoted market prices in active markets for identical assets or liabilities.
Level 2:
Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3:
Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 includes values determined using pricing models, discounted cash flow methodologies, or similar techniques reflecting the Company’s own assumptions.
In instances where the determination of the fair value hierarchy measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment of factors specific to the asset or liability. Transfers between levels within the fair value hierarchy are recognized by the Company on the date of the change in circumstances that requires such transfer. There were no transfers between levels during the years ended December 31, 2025 or 2024.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table sets forth, by level within the fair value hierarchy, the financial assets recorded at fair value on a recurring basis at December 31, 2025 and 2024 (in millions):
December 31, 2025
Level 1
Level 2
Level 3
Investments in equity securities
Available-for-sale debt securities
Trading securities
Total assets
December 31, 2024
Level 1
Level 2
Level 3
Investments in equity securities
Available-for-sale debt securities
Trading securities
Total assets
Investments in Equity Securities, Available-for-Sale Debt Securities and Trading Securities
Investments in equity securities classified as Level 1 are measured using quoted market prices. Level 2 available-for-sale debt securities and trading securities primarily consist of bonds and notes issued by the United States government and its agencies and domestic and foreign corporations. The estimated fair values of these securities are determined using various valuation techniques, including a multi-dimensional relational model that incorporates standard observable inputs and assumptions such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids/offers and other pertinent reference data.
Supplemental information regarding the Company’s available-for-sale debt securities (all of which had no withdrawal restrictions) is set forth in the table below (in millions):
Gross
Gross
Estimated
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Values
At December 31, 2025:
Government
Corporate
Mortgage and asset-backed securities
Total available-for-sale debt securities
Gross
Gross
Estimated
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Values
At December 31, 2024:
Government
Corporate
Mortgage and asset-backed securities
Total available-for-sale debt securities
At December 31, 2025 and 2024 , investments with aggregate estimated fair values of approximately $ 111 million ( 225 investments) and $ 141 million ( 274 investments), respectively, generated the gross unrealized losses disclosed in the above table. At each reporting date, the Company performs an evaluation of impaired securities to determine if the unrealized losses are other-than-temporary. This evaluation considers a number of factors including, but not limited to, the length of time and extent to which the fair value has been less than cost, and management’s ability and intent to hold the securities until fair value recovers. Based on the results of this evaluation, management concluded that at December 31, 2025 , there were no other-than-temporary losses related to available-for-sale debt securities. The recent declines in value of the securities and/or length of time they have been below cost, as well as the Company’s ability and intent to hold the securities for a reasonable period of time sufficient for a projected recovery of fair value, have caused management to conclude that the securities, that have generated gross unrealized losses, were not other-than-temporarily impaired. Management will continue to monitor and evaluate the recoverability of the Company’s available-for-sale debt securities.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The contractual maturities of debt-based securities held by the Company at December 31, 2025 and 2024, excluding mutual fund holdings, are set forth in the table below (in millions). Expected maturities will differ from contractual maturities because the issuers of the debt securities may have the right to prepay their obligations without prepayment penalties.
December 31, 2025
December 31, 2024
Amortized
Estimated
Amortized
Estimated
Cost
Fair Values
Cost
Fair Values
Within 1 year
After 1 year and through year 5
After 5 years and through year 10
After 10 years
Gross realized gains and losses on sales of available-for-sale debt securities are summarized in the table below (in millions):
Year Ended December 31,
Realized gains
Realized losses
Other investment income, which includes interest and dividends, related to all investment securities was $ 9 million, $ 8 million and $ 7 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Net losses and gains recognized during the years ended December 31, 2025, 2024 and 2023 for investments in equity securities, which are broken out between investments sold during the year and investments held at the end of the year, are summarized in the table below (in millions):
Year Ended December 31,
Net gains and (losses) recognized during the year on equity securities
Less: Net gains and (losses) recognized during the year on equity
securities sold during the year
Unrealized gains and (losses) recognized during the year on equity
securities held at the end of year
9. LEASES
The Company utilizes operating and finance leases for the use of certain hospitals, medical office buildings, and medical equipment. All lease agreements generally require the Company to pay maintenance, repairs, property taxes and insurance costs, which are variable amounts based on actual costs incurred during each applicable period. Such costs are not included in the determination of the ROU asset or lease liability. Variable lease cost also includes escalating rent payments that are not fixed at commencement but are based on an index that is determined in future periods over the lease term based on changes in the Consumer Price Index or other measures of cost inflation. Most leases include one or more options to renew the lease at the end of the initial term, with renewal terms that generally extend the lease at the then market rate of rental payment. Certain leases also include an option to buy the underlying asset at or a short time prior to the termination of the lease. All such options are at the Company’s discretion and are evaluated at the commencement of the lease, with only those that are reasonably certain of exercise included in determining the appropriate lease term.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The components of lease cost and rent expense for the years ended December 31, 2025, 2024 and 2023 are as follows (in millions):
Year Ended December 31,
Lease Cost
Operating lease cost:
Operating lease cost
Short-term rent expense
Variable lease cost
Sublease income
Total operating lease cost
Finance lease cost:
Amortization of ROU assets
Interest on finance lease liabilities
Total finance lease cost
Supplemental balance sheet information related to leases was as follows (in millions):
Balance Sheet Classification
December 31, 2025
December 31, 2024
Operating Leases:
Operating Lease ROU Assets
Other assets, net
Finance Leases:
Finance Lease ROU Assets
Property and equipment
Land and improvements
Buildings and improvements
Equipment and fixtures
Property and equipment
Less: accumulated depreciation and amortization
Property and equipment, net
Current finance lease liabilities
Current maturities of long-term debt
Long-term finance lease liabilities
Long-term debt
Supplemental cash flow information related to leases for the years ended December 31, 2025, 2024 and 2023 are as follows (in millions):
Year Ended December 31,
Cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)
Operating cash flows from finance leases
Financing cash flows from finance leases
ROU assets obtained in exchange for new finance lease liabilities
ROU assets obtained in exchange for new operating lease liabilities
Weighted-average remaining lease term:
Operating leases
9 years
9 years
9 years
Finance leases
27 years
30 years
30 years
Weighted-average discount rate:
Operating leases
Finance leases
Included in the change in other operating assets and liabilities in the consolidated statements of cash flows.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Commitments relating to noncancellable operating and finance leases and financing obligations for each of the next five years and thereafter are as follows (in millions):
Financing
Year Ending December 31,
Operating
Finance
Obligations
Thereafter
Total minimum future payments
Less: Imputed interest
Total liabilities
Less: Current portion
Long-term liabilities
As of December 31, 2025 , there were approximately $ 19 million of assets underlying approved but pending leases that have not yet commenced, primarily for leases of various real estate and medical equipment.
10. EMPLOYEE BENEFIT PLANS
The Company maintains various benefit plans, including defined contribution plans, a defined benefit plan and deferred compensation plans, for which certain of the Company’s subsidiaries are the plan sponsors. The CHS/Community Health Systems, Inc. Retirement Savings Plan is a defined contribution plan that covers the majority of the Company’s employees. Employees at locations whose employment is covered by collective bargaining agreements are generally eligible to participate in the CHS/Community Health Systems, Inc. Standard 401(k) Plan. Total expense to the Company under the 401(k) plans was $ 66 million, $ 73 million and $ 64 million for the years ended December 31, 2025, 2024 and 2023, respectively, and is recorded in salaries and benefits expense in the consolidated statements of income (loss).
The Company maintains unfunded deferred compensation plans that allow participants to defer receipt of a portion of their compensation. The liability for the deferred compensation plans was $ 134 million and $ 129 million at December 31, 2025 and 2024, respectively, and is included in other long-term liabilities in the consolidated balance sheets. Assets designated to pay benefits under these plans are discussed below.
The Company provides an unfunded Supplemental Executive Retirement Plan (“SERP”) for certain members of its executive management. The Company uses a December 31 measurement date for the benefit obligations and a January 1 measurement date for its net periodic costs for the SERP. Variances from actuarially assumed rates will result in increases or decreases in benefit obligations and net periodic cost in future periods. Benefits expense under the SERP was $ 7 million, $ 7 million and $ 8 million for the years ended December 31, 2025, 2024 and 2023 , respectively. The accrued benefit liability for the SERP totaled $ 51 million and $ 43 million at December 31, 2025 and 2024, respectively. The weighted-average assumptions used in determining net periodic cost for the year ended December 31, 2025 were a discount rate of 5.5 % and an annual salary increase of 3.0 %. The weighted-average assumptions used in determining net periodic cost for the year ended December 31, 2024 were a discount rate of 4.9 % and an annual salary increase of 3.0 %.
During 2025, certain members of executive management of the Company that were participants in the SERP retired and met the requirements for payout of their SERP retirement benefit. The SERP payout provisions require payment to the participant in an actuarially determined lump sum amount six months after the participant retires from the Company. There were no material settlement losses during the years ended December 31, 2025, 2024 and 2023.
At December 31, 2025 , the Company had assets of $ 128 million in a non-qualified plan trust generally designated to pay benefits of the deferred compensation plans and the SERP, consisting of equity securities of $ 8 million and company-owned life insurance contracts of $ 120 million. At December 31, 2024 , the Company had assets of $ 129 million in a non-qualified plan trust generally designated to pay benefits of the deferred compensation plans and the SERP, consisting of equity securities of $ 11 million and company-owned life insurance contracts of $ 118 million.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company previously maintained the CHS/Community Health Systems, Inc. Retirement Income Plan (“Pension Plan”), which was a defined benefit, non-contributory pension plan that covered certain employees at three of its formerly owned hospitals. The Pension Plan was terminated in 2024 upon transfer of the remaining lifetime obligation of the Pension Plan to a third-party via an irrevocable annuity contract. Settlement of the Pension Plan resulted in recognition of a $ 3 million charge during the year ended December 31, 2024. Benefits expense under the Pension Plan was $ 4 million for the year ended December 31, 2024, inclusive of the aforementioned settlement charge. Benefits expense under the Pension Plan was less than $ 1 million for the year ended December 31, 2023.
11. STOCKHOLDERS’ DEFICIT
Authorized capital shares of the Company include 400,000,000 shares of capital stock consisting of 300,000,000 shares of common stock and 100,000,000 shares of preferred stock. Each of the aforementioned classes of capital stock has a par value of $ 0.01 per share. Shares of preferred stock, none of which were outstanding at December 31, 2025, may be issued in one or more series having such rights, preferences and other provisions as determined by the Board of Directors without approval by the holders of common stock.
The Company is a holding company, which operates through its subsidiaries. The ABL Facility and the indentures governing each series of the Company’s outstanding notes contain various covenants under which the assets of the subsidiaries of the Company are subject to certain restrictions relating to, among other matters, dividends and distributions, as referenced in the paragraph below.
The ABL Facility and the indentures governing each series of the Company’s outstanding notes restrict the Company’s subsidiaries from, among other matters, paying dividends and making distributions to the Company, which thereby limits the Company’s ability to pay dividends and/or repurchase stock. At December 31, 2025, under the most restrictive test in these agreements (and subject to certain exceptions), the Company has approximately $ 300 million o f capacity to pay permitted dividends and/or repurchase shares of stock or make other restricted payments.
The following schedule discloses the effects of changes in the Company’s ownership interest in its less-than-wholly-owned subsidiaries on Community Health Systems, Inc. stockholders’ deficit (in millions):
Year Ended December 31,
Net income (loss) attributable to Community Health Systems,
Inc. stockholders
Transfers to the noncontrolling interests:
Net (decrease) increase in Community Health Systems, Inc.
paid-in-capital for purchase of subsidiary partnership interests
Net transfers to the noncontrolling interests
Change to Community Health Systems, Inc. stockholders’ deficit
from net income (loss) attributable to Community Health Systems,
Inc. stockholders and transfers to noncontrolling interests
12. EARNINGS PER SHARE
The following table sets forth the components of the denominator for the computation of basic and diluted earnings (loss) per share for net income (loss) attributable to Community Health Systems, Inc. stockholders:
Year Ended December 31,
Weighted-average number of shares outstanding — basic
Effect of dilutive securities:
Restricted stock awards
Employee stock options
Other equity-based awards
Weighted-average number of shares outstanding — diluted
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company generated a net loss attributable to Community Health Systems, Inc. stockholders during the years ended December 31, 2024 and 2023, so the effect of dilutive securities is not considered because their effect would be antidilutive. If the Company had generated net income, the effect of stock awards and options on the diluted shares calculation would have been an increase of 1,333,424 sha res and 422,487 shares during the years ended December 31, 2024 and 2023, respectively.
Year Ended December 31,
Dilutive securities outstanding not included in the computation of earnings
per share because their effect is antidilutive:
Employee stock options and restricted stock awards
13. EQUITY INVESTMENTS
In March 2005, the Company began purchasing items, primarily medical supplies, medical equipment and pharmaceuticals, under an agreement with HealthTrust Purchasing Group, L.P. (“HealthTrust”), a group purchasing organization in which the Company is a noncontrolling partner. As of December 31, 2025 , the Company had an 11.7 % ownership interest in HealthTrust.
The Company’s investment in all of its unconsolidated affiliates was $ 138 million and $ 152 million at December 31, 2025 and 2024, respectively, and is included in other assets, net in the accompanying consolidated balance sheets. Included in the Company’s results of operations is the Company’s equity in pre-tax earnings from its investments in unconsolidated affiliates, which was $ 9 million, $ 10 million and $ 8 million for the years ended December 31, 2025, 2024 and 2023, respectively.
14. SEGMENT INFORMATION
The Company is principally engaged in the provision of healthcare services, including a broad range of general and specialized hospital healthcare services and outpatient services. Services are delivered within hospitals that the Company owns or operates as well as related healthcare entities that exist to support and supplement services provided in their associated hospital, including, for example, physician practices, urgent care centers, freestanding emergency departments, occupations medicine clinics, imaging centers, cancer centers and ambulatory surgery centers.
The Company has a single reportable segment represented by hospital operations which includes its general acute care hospitals and related healthcare entities that provide inpatient and outpatient healthcare services. The Company defined its single reportable segment consistent with the manner in which internally reported financial information is regularly reviewed by the Company’s chief executive officer who is the Company’s chief operating decision maker (“CODM”). Resources are allocated and financial performance is assessed on a consolidated basis. T he individual serving as the Company’s CODM changed effective October 1, 2025, in connection with the appointment of Kevin J. Hammons as the Company’s interim Chief Executive Officer on such date (Mr. Hammons was subsequently appointed Chief Executive Officer effective on December 10, 2025).
The CODM does not review assets at a different level or category than the amounts disclosed in the consolidated balance sheets.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The CODM uses net income (loss), as presented in the consolidated statements of income (loss), to assess performance and allocate resources. Net income (loss) is used in the annual budgeting process as well as throughout the period when projecting or forecasting quarterly and full-year performance. The CODM considers budget-to-actual and actual versus prior period (prior month, prior year, etc.) variances on a periodic basis as a means of assessing performance. The following segment information, including significant segment expenses, is presented in millions:
Year Ended December 31,
Net operating revenues
Less:
Salaries and benefits
Supplies
Medical specialist fees
Other segment items
Depreciation and amortization
Interest expense
Interest income
Impairment and (gain) loss on sale of businesses, net
Gain from early extinguishment of debt
Equity in earnings of unconsolidated affiliates
Provision for income taxes
Net income (loss)
Other segment items include various purchased services and other operating expenses including, for example, lease cost and rent expense, contract labor, repairs and maintenance, utilities, professional liability claims expense and software maintenance fees.
15. COMPREHENSIVE LOSS
The following tables present information about items reclassified out of accumulated other comprehensive loss (“AOCL”) by component for the years ended December 31, 2025 and 2024 (in millions, net of tax):
Change in
Fair Value of
Change in
Available-for-Sale
Unrecognized
Debt
Pension Cost
Securities
Components
AOCL
Balance at December 31, 2024
Other comprehensive income
(loss) before reclassifications
Amounts reclassified from
AOCL
Net current-period other
comprehensive income (loss)
Balance at December 31, 2025
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Change in
Fair Value of
Change in
Available-for-Sale
Unrecognized
Debt
Pension Cost
Securities
Components
AOCL
Balance at December 31, 2023
Other comprehensive income
before reclassifications
Amounts reclassified from
AOCL
Net current-period other
comprehensive income
Balance at December 31, 2024
There were no significant reclassifications to net income (loss) out of AOCL for the years ended December 31, 2025 and 2024 .
16. COMMITMENTS AND CONTINGENCIES
Construction and Other Capital Commitments. Pursuant to a hospital purchase agreement from the Company’s March 1, 2016 acquisition of Northwest Health – Starke, formerly known as Starke Hospital, the Company is committed to make an investment of up to $ 15 million toward the construction of a replacement facility in Starke County, Indiana. Construction is required to be completed by the earlier of (i) five years after the Company enters into a new lease (or amendment to the existing lease) with Starke County, Indiana, or (ii) September 30, 2026 . The Company has not entered into a new lease (or amendment to the existing lease) with Starke County, Indiana.
Physician Recruiting Commitments. As part of its physician recruitment strategy, the Company provides income guarantee agreements to certain physicians who agree to relocate to its communities and commit to remain in practice there. Under such agreements, the Company is required to make payments to the physicians in excess of the amounts they earned in their practice up to the amount of the income guarantee. These income guarantee periods are typically for 12 months. Such payments are recoverable by the Company from physicians who do not fulfill their commitment period, which is typically three years , to the respective community. At December 31, 2025, the maximum potential amount of future payments under these guarantees in excess of the liability recorded is $ 5 million.
Professional Liability Claims. As part of the Company’s business of providing healthcare services, it is subject to legal actions alleging liability on its part. The Company accrues for losses resulting from such liability claims, as well as loss adjustment expenses that are out-of-pocket and directly related to such liability claims. These direct out-of-pocket expenses include fees of outside counsel and experts. The Company does not accrue for costs that are part of corporate overhead, such as the costs of in-house legal and risk management departments. The losses resulting from professional liability claims primarily consist of estimates for known claims, as well as estimates for incurred but not reported claims. The estimates are based on specific claim facts, historical claim reporting and payment patterns, the nature and level of hospital operations, and actuarially determined projections. The actuarially determined projections are based on the Company’s actual claim data, including historic reporting and payment patterns, which have been gathered over the life of the Company. As discussed below, since the Company purchases excess insurance on a -made basis that transfers risk to third-party insurers, the estimated liability for professional and general liability includes an amount for the covered by excess insurance. The Company also records a receivable for the expected reimbursement of covered by this excess insurance. Since the Company believes that the amount and timing of its future payments are reliably determinable, it discounts the amount that is accrued for resulting from professional liability .
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The net present value of the projected payments was discounted using a weighted-average risk-free rate of approximately 3.5 % in 2025 , and 3.7 % in both 2024 and 2023 . This liability is adjusted for new claims information in the period such information becomes known. The Company’s estimated liability for professional and general liability claims was $ 638 million and $ 573 million at December 31, 2025 and 2024 , respectively. The estimated undiscounted claims liability was $ 703 million and $ 635 million at December 31, 2025 and 2024 , respectively. The current portion of the liability for professional and general liability claims was $ 157 million and $ 145 million at December 31, 2025 and 2024, respectively, and is included in other accrued liabilities in the accompanying consolidated balance sheets, with the long-term portion recorded in other long-term liabilities. Professional liability expense includes the losses resulting from professional liability claims and loss adjustment expense, as well as excess insurance premiums, and is presented within other operating expenses or, for increased losses specifically attributable to certain divestitures, within and () on sales of businesses, net in the accompanying consolidated statements of income ().
The Company’s processes for obtaining and analyzing claims and incident data are standardized across all of its businesses and have been consistent for many years. The Company monitors the outcomes of the medical care services that it provides and for each reported claim, the Company obtains various information concerning the facts and circumstances related to that claim. In addition, the Company routinely monitors current key statistics and volume indicators in its assessment of utilizing historical trends. The average lag period between claim occurrence and payment of a final settlement is between three and four years , although the facts and circumstances of individual claims could result in the timing of such payments being different from this average. Since claims are paid promptly after settlement with the claimant is reached, settled claims represent approximately 4 % or less of the total liability at the end of any period.
For purposes of estimating its individual claim accruals, the Company utilizes specific claim information, including the nature of the claim, the expected claim amount, the year in which the claim occurred and the laws of the jurisdiction in which the claim occurred. Once the case accruals for known claims are determined, information is stratified by loss layers and retentions, accident years, reported years and geography. Several actuarial methods are used against this data to produce estimates of ultimate paid losses and reserves for incurred but not reported claims. Each of these methods uses company-specific historical claims data and other information. This company-specific data includes information regarding the Company’s business, including historical paid losses and loss adjustment expenses, historical and current case loss reserves, actual and projected hospital statistical data, a variety of hospital census information, employed physician information, professional liability retentions for each policy year, geographic information and other data.
Based on these analyses, the Company determines its estimate of the professional liability claims. The determination of management’s estimate, including the preparation of the reserve analysis that supports such estimate, involves subjective judgment of management. Changes in reserve data or the trends and factors that influence reserve data may signal fundamental shifts in the Company’s future claim development patterns or may simply reflect single-period anomalies. Even if a change reflects a fundamental shift, the full extent of the change may not become evident until years later. Moreover, since the Company’s methods and models use different types of data and the Company selects its liability from the results of all of these methods, it typically cannot quantify the precise impact of such factors on its estimates of the liability. Due to the Company’s standardized and consistent processes for handling claims and the long history and depth of company-specific data, the Company’s methodologies have historically produced reliably determinable estimates of ultimate paid losses. Management considers any changes in the amount and pattern of its historical paid losses up through the most recent reporting period to identify any fundamental shifts or trends in claim development experience in determining the estimate of professional liability . However, due to the subjective nature of this estimate and the impact that previously shifts in actual claim experience can have, future estimates of professional liability could be impacted when actual paid develop based on assumptions and settlement events that were not previously known or anticipated.
During the year ended December 31, 2023, the Company experienced an increase in the amounts paid or expected to be paid to settle outstanding professional liability claims, compared to the same period in the prior year and to previous actuarially determined estimates due to adverse claim developments. During the year ended December 31, 2024, in connection with the Company’s periodic review of the professional liability claims accrual, the Company, with input from the Company’s third-party actuary, considered recent increases in the amounts paid to resolve outstanding professional liability claims arising in prior periods as well as recent increases in individual claim accruals for unresolved prior period claims. The emergence in the period of adverse developments, including from social inflationary pressures, impacted the actuarially determined estimate for the resolution of professional liability claims and resulted in an upward revision to the professional liability claims accrual estimate in the amount of $ 149 million during the year ended December 31, 2024, the majority of which increase in estimate related to locations. There were no other significant changes in the Company’s estimate of the reserve for professional liability during the years ended December 31, 2025, 2024 and 2023.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company is primarily self-insured for professional liability claims; however, the Company obtains excess insurance that transfers the risk of loss to a third-party insurer for claims in excess of the Company’s self-insured retentions. The Company’s excess insurance is underwritten on a claims-made basis. For claims reported prior to June 1, 2002, substantially all of the Company’s professional and general liability risks were subject to a less than $ 1 million per occurrence self-insured retention and for claims reported from June 1, 2002 through June 1, 2003, these self-insured retentions were $ 2 million per occurrence. Substantially all claims reported after June 1, 2003 and before June 1, 2005 are self-insured up to $ 4 million per claim. Substantially all claims reported on or after June 1, 2005 and before June 1, 2014 are self-insured up to $ 5 million per claim. Substantially all claims reported on or after June 1, 2014 and before June 1, 2018 are self-insured up to $ 10 million per claim. Substantially all claims reported on or after June 1, 2018 are self-insured up to $ 15 million per claim. Management, on occasion, has selectively increased the insured risk at certain hospitals based upon insurance pricing and other factors and may continue that practice in the future.
Excess insurance for all hospitals has been purchased through commercial insurance companies and generally covers the Company for liabilities in excess of the self-insured retentions. The excess coverage consists of multiple layers of insurance, the sum of which totals up to $ 95 million per occurrence and in the aggregate for claims reported on or after June 1, 2003, up to $ 145 million per occurrence and in the aggregate for claims reported on or after January 1, 2008, up to $ 195 million per occurrence and in the aggregate for claims reported on or after June 1, 2010, and up to at least $ 215 million per occurrence and in the aggregate for claims reported on or after June 1, 2015. In addition, for integrated occurrence professional liability claims, there is an additional $ 50 million of excess coverage for claims reported on or after June 1, 2014 and an additional $ 75 million of excess coverage for claims reported on or after June 1, 2015 through June 1, 2020. The $ 75 million in integrated occurrence coverage will also apply to claims reported between June 1, 2020 and June 1, 2025 for events that occurred prior to June 1, 2020 but which were not previously known or reported. For certain policy years prior to June 1, 2014, if the first aggregate layer of excess coverage becomes fully utilized, then the self-insured retention will increase to $ 10 million per claim for any subsequent in that policy year until the Company’s total aggregate coverage is met. Beginning June 1, 2018, this drop-down provision in the excess policies attaches over the $ 15 million per claim self-insured retention.
Legal Matters. The Company is a party to various legal, regulatory and governmental proceedings incidental to its business. Based on current knowledge, management does not believe that loss contingencies arising from pending legal, regulatory and governmental matters will have a material adverse effect on the consolidated financial position or liquidity of the Company. However, in light of the inherent uncertainties involved in pending legal, regulatory and governmental matters, some of which are beyond the Company’s control, and the very large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to the Company’s results of operations or cash flows for any particular reporting period.
With respect to all legal, regulatory and governmental proceedings, the Company considers the likelihood of a negative outcome. If the Company determines the likelihood of a negative outcome with respect to any such matter is probable and the amount of the loss can be reasonably estimated, the Company records an accrual for the estimated loss for the expected outcome of the matter. If the likelihood of a negative outcome with respect to material matters is reasonably possible and the Company is able to determine an estimate of the possible loss or a range of loss, whether in excess of a related accrued liability or where there is no accrued liability, the Company discloses the estimate of the possible loss or range of loss. However, the Company is unable to estimate a possible loss or range of in some instances based on the significant uncertainties involved in, and/or the preliminary nature of, certain legal, regulatory and governmental matters.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Summary of Recorded Amounts
The table below presents a reconciliation of the beginning and ending liability balances (in millions) during the years ended December 31, 2025 and 2024, with respect to the Company’s determination of the contingencies of the Company in respect of which an accrual has been recorded. The liability at December 31, 2025 is comprised of individually insignificant amounts for various matters.
Probable
Contingencies
Balance at December 31, 2023
Expense
Reserve for insured claim
Cash payments
Balance at December 31, 2024
Expense
Reserve for insured claim
Cash payments
Balance at December 31, 2025
In accordance with applicable accounting guidance, the Company establishes a liability for litigation, regulatory and governmental matters for which, based on information currently available, the Company believes that a negative outcome is known or is probable and the amount of the loss is reasonably estimable. For all such matters (whether or not discussed in this contingencies footnote), such amounts have been recorded in other accrued liabilities in the consolidated balance sheets and are included in the table above. Due to the uncertainties and difficulty in predicting the ultimate resolution of these contingencies, the actual amount could differ from the estimated amount reflected as a liability in the consolidated balance sheets.
17. SUBSEQUENT EVENTS
The Company has evaluated all material events occurring subsequent to the balance sheet date for events requiring disclosure or recognition in the consolidated financial statements.
On January 20, 2026, the Company entered into a definitive agreement pursuant to which The Health Care Authority of the City of Huntsville (d/b/a Huntsville Hospital Health System) agreed to acquire substantially all of the assets, and assume certain liabilities, from the Company related to Crestwood Medical Center ( 180 licensed beds) in Huntsville, Alabama, and ancillary businesses for $ 450 million of cash, subject to adjustment for net working capital and any finance leases assumed.
On February 1, 2026, a subsidiary of the Company completed the sale of its 80 % interest in two joint ventures which respectively own and operate Tennova Healthcare - Clarksville ( 270 licensed beds) and certain ancillary businesses located in Clarksville, Tennessee to subsidiaries of VUMC, pursuant to a definitive agreement entered into on October 30, 2025. The Company received proceeds from this sale of approximately $ 623 million of cash, after giving effect to estimated working capital and before certain transaction expenses (subject to a post-closing working capital adjustment). In addition, contemporaneous with the closing of the transaction, in connection with the balance of certain amounts due to the joint ventures from the Company and in accordance with the terms of the purchase agreement, subsidiaries of the Company distributed approximately $ 23 million of cash to VUMC for their share of amounts owed to the joint ventures by the Company. Prior to this transaction, VUMC held a minority interest in the joint ventures, and purchased the remaining interests in the joint ventures through this transaction.
On February 1, 2026, subsidiaries of the Company completed the sale of Regional Hospital of Scranton ( 186 licensed beds) and Moses Taylor Hospital ( 122 licensed beds) in Scranton, Pennsylvania, as well as Wilkes-Barre General Hospital ( 369 licensed beds) in Wilkes-Barre, Pennsylvania, and certain related businesses to affiliates of Tenor Health Foundation, pursuant to a definitive agreement entered into on October 24, 2025. The Company received cash proceeds from the sale of these hospitals of approximately $ 33 million plus a $ 15 million promissory note from the buyer. Additional cash consideration may be received in one or more future periods by the Company contingent upon collections of certain patient accounts receivable during the 90-day period following the closing effective date.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
On February 2, 2026, the Company exercised a special call provision to redeem 10 % or approximately $ 223 million, in principal amount of the 10.875 % Senior Secured Notes due 2032 , at a redemption price of 103 % of the principal amount, plus accrued and unpaid interest (this redemption was in addition to the Company ’ s exercise of this special call provision to redeem 10 % or approximately $ 223 million, in principal amount of the 10.875 % Senior Secured Notes due 2032 during the three months ended December 31, 2025, as disclosed above in Note 6 - Long Term Debt) .
18. CONDENSED FINA NCIAL INFORMATION OF PARENT COMPANY
Parent Company Only
Condensed Balance Sheets
(In millions)
December 31,
ASSETS
Prepaid income taxes
Total current assets
Deferred income taxes
Other assets, net
Total assets
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Intercompany payable
Deferred income taxes
Other long-term liabilities
Total liabilities
Community Health Systems, Inc. stockholders’ deficit:
Preferred stock
Common stock
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated deficit
Total Community Health Systems, Inc. stockholders’ deficit
Total liabilities and stockholders’ deficit
See note to condensed financial statements of Parent Company.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Parent Company Only
Condensed Statements of Income (Loss)
(In millions)
Year Ended December 31,
Net operating revenues
Operating expenses:
Salaries and benefits
Supplies
Other operating expenses
Lease cost and rent
Pandemic relief funds
Depreciation and amortization
Impairment and (gain) loss on sale of businesses, net
Total operating expenses
Income from operations
Interest expense, net
Gain from early extinguishment of debt
Equity in (earnings) loss of unconsolidated affiliates
Income (loss) before income taxes
Provision for income taxes
Net income (loss)
Less: Net income attributable to noncontrolling interests
Net income (loss) attributable to Community Health Systems, Inc.
stockholders
See note to condensed financial statements of Parent Company.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Parent Company Only
Condensed Statements of Comprehensive Income (Loss)
(In millions)
Year Ended December 31,
Net income (loss)
Equity in other comprehensive (loss) income of affiliates,
net of income taxes:
Net change in fair value of available-for-sale debt securities, net of tax
Amortization and recognition of unrecognized pension cost
components, net of tax
Other comprehensive income
Comprehensive income (loss)
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income (loss) attributable to Community Health Systems,
Inc. stockholders
See note to condensed financial statements of Parent Company.
Parent Company Only
Condensed Statements of Cash Flows
(In millions)
Year Ended December 31,
Cash flows from operating activities:
Net cash used in operating activities
Cash flows from investing activities:
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Repurchase of restricted stock shares for payroll tax
withholding requirements
Changes in intercompany balances with affiliates, net
Net cash provided by financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
See note to condensed financial statements of Parent Company.
Basis of Presentation
The Parent Company is a holding company and operates no business in its own name; all of the Company’s business operations are conducted through subsidiaries of the Parent Company. The Company’s outstanding indebtedness restricts the ability of subsidiaries to dividend or otherwise provide funds to the Parent Company. Accordingly, these financial statements have been presented on a “parent-only” basis. Under parent-only presentation, the Parent Company’s investments in its consolidated subsidiaries are presented under the equity method of accounting. These parent-only financial statements should be read in conjunction with consolidated financial statements of Community Health Systems, Inc.
