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What changed in COMMUNITY HEALTH SYSTEMS INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of COMMUNITY HEALTH SYSTEMS INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+647 added−580 removedSource: 10-K (2026-02-19) vs 10-K (2025-02-19)

Top changes in COMMUNITY HEALTH SYSTEMS INC's 2025 10-K

647 paragraphs added · 580 removed · 472 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

179 edited+69 added−35 removed192 unchanged
Biggest changeYear Ended December 31, 2024 2023 2022 (Dollars in millions) Consolidated Data Number of hospitals (at end of period) (10) 76 78 87 Licensed beds (at end of period)(1) 11,403 11,902 12,832 Beds in service (at end of period)(2) 9,641 10,234 10,936 Admissions(3) 422,040 435,913 434,765 Adjusted admissions(4) 958,531 992,552 975,737 Patient days(5) 1,853,387 1,957,536 2,052,864 Average length of stay (days)(6) 4.4 4.5 4.7 Occupancy rate (beds in service)(7) 52.5 % 52.4 % 49.2 % Net operating revenues $ 12,634 $ 12,490 $ 12,211 Net inpatient revenues as a % of net operating revenues 47.8 % 46.6 % 46.8 % Net outpatient revenues as a % of net operating revenues 52.2 % 53.4 % 53.2 % Net (loss) income attributable to Community Health Systems, Inc. stockholders $ (516 ) $ (133 ) $ 46 Net (loss) income attributable to Community Health Systems, Inc. stockholders as a % of net operating revenues (4.1 )% (1.1 )% 0.4 % Adjusted EBITDA(8) $ 1,540 $ 1,453 $ 1,466 Adjusted EBITDA as a % of net operating revenues(8) 12.2 % 11.6 % 12.0 % Liquidity Data Net cash flows provided by operating activities $ 480 $ 210 $ 300 Net cash flows provided by operating activities as a % of net operating revenues 3.8 % 1.7 % 2.5 % Net cash flows used in investing activities $ (275 ) $ (26 ) $ (259 ) Net cash flows used in financing activities $ (206 ) $ (264 ) $ (430 ) 6 Year Ended December 31, 2024 2023 Increase (Dollars in millions) Same-Store Data(9) Admissions(3) 412,226 399,383 3.2 % Adjusted admissions(4) 937,404 912,530 2.7 % Patient days(5) 1,802,121 1,788,074 Average length of stay (days)(6) 4.4 4.5 Occupancy rate (beds in service)(7) 51.1 % 50.4 % Net operating revenues $ 12,426 $ 11,773 5.5 % Income from operations $ 1,529 $ 1,389 10.1 % Income from operations as a % of net operating revenues 12.3 % 11.8 % Depreciation and amortization $ 480 $ 473 (1) Licensed beds are the number of beds for which the appropriate state agency licenses for a facility regardless of whether the beds are actually available for patient use.
Biggest changeYear Ended December 31, 2025 2024 2023 (Dollars in millions) Consolidated Data Number of hospitals (at end of period) 69 76 78 Licensed beds (at end of period)(1) 10,458 11,403 11,902 Beds in service (at end of period)(2) 8,983 9,641 10,234 Admissions(3) 399,255 422,040 435,913 Adjusted admissions(4) 898,223 958,531 992,552 Patient days(5) 1,704,965 1,853,387 1,957,536 Average length of stay (days)(6) 4.3 4.4 4.5 Occupancy rate (beds in service)(7) 52.0 % 52.5 % 52.4 % Net operating revenues $ 12,485 $ 12,634 $ 12,490 Net inpatient revenues as a % of net operating revenues 47.9 % 47.8 % 46.6 % Net outpatient revenues as a % of net operating revenues 52.1 % 52.2 % 53.4 % Net income (loss) attributable to Community Health Systems, Inc. stockholders $ 509 $ (516 ) $ (133 ) Net income (loss) attributable to Community Health Systems, Inc. stockholders as a % of net operating revenues 4.1 % (4.1 )% (1.1 )% Adjusted EBITDA(8) $ 1,526 $ 1,540 $ 1,453 Adjusted EBITDA as a % of net operating revenues(8) 12.2 % 12.2 % 11.6 % Liquidity Data Net cash flows provided by operating activities $ 543 $ 480 $ 210 Net cash flows provided by operating activities as a % of net operating revenues 4.3 % 3.8 % 1.7 % Net cash flows provided by (used in) investing activities $ 847 $ (275 ) $ (26 ) Net cash flows used in financing activities $ (1,167 ) $ (206 ) $ (264 ) Year Ended December 31, 2025 2024 Increase (Dollars in millions) Same-Store Data(9) Admissions(3) 392,348 386,530 1.5 % Adjusted admissions(4) 881,808 876,287 0.6 % Patient days(5) 1,678,970 1,702,014 Average length of stay (days)(6) 4.3 4.4 Occupancy rate (beds in service)(7) 51.2 % 51.8 % Net operating revenues $ 12,234 $ 11,693 4.6 % Income from operations $ 1,522 $ 1,420 7.2 % Income from operations as a % of net operating revenues 12.4 % 12.1 % Depreciation and amortization $ 424 $ 451 (1) Licensed beds are the number of beds for which the appropriate state agency licenses for a facility regardless of whether the beds are actually available for patient use.
These include: • strengthening regional networks and local market operations; • expanding patient access points, health services and infrastructure; • recruiting and/or employing additional primary care physicians and specialists; and • developing a more consumer-centric experience and facilitating connections between episodes of care. 1 Strengthening Regional Networks and Local Market Operations .
These include: • strengthening regional networks and local market operations; • expanding patient access points, health services and infrastructure; • recruiting and/or employing additional primary care physicians and specialists; and 1 • developing a more consumer-centric experience and facilitating connections between episodes of care. Strengthening Regional Networks and Local Market Operations .
For further discussion of Consolidated EBITDA and how that measure is utilized in the calculation of covenants in the ABL Facility, see the Capital Resources section of Part II, Item 7 of this Form 10-K. 7 Adjusted EBITDA is not a measurement of financial performance under U.S. generally accepted accounting principles, or U.S. GAAP.
For further discussion of Consolidated EBITDA and how that measure is utilized in the calculation of covenants in the ABL Facility, see the Capital Resources section of Part II, Item 7 of this Form 10-K. Adjusted EBITDA is not a measurement of financial performance under U.S. generally accepted accounting principles, or U.S. GAAP.
We have a variety of financial relationships with physicians who refer patients to our hospitals. Physicians own interests in a number of our facilities. Physicians may also own our stock. We also have contracts with physicians providing for a variety of financial arrangements, including employment contracts, leases, management agreements and professional service agreements.
We have a variety of financial relationships with physicians who refer patients to our hospitals. Physicians own interests in a number of our facilities and may also own our stock. We also have contracts with physicians providing for a variety of financial arrangements, including employment contracts, leases, management agreements and professional service agreements.
Some of these initiatives include: • a centralized and proprietary transfer center offering services to connect emergency department and hospitalized patients requiring transfer to facilities that can best meet their needs; • centralized patient scheduling call centers and online scheduling to ease appointment scheduling; • patient navigation and next appointment scheduling from existing points of care; • expanding our network of outpatient services to create greater access and more convenience, including significant expansion of our ability to provide remote patient care; • availability of virtual healthcare for certain services provided in the hospital and for direct-to-consumer, on-demand virtual visits with physicians and other healthcare practitioners; • digital marketing and consumer engagement campaigns; and 2 • other technology-enabled initiatives that support connected healthcare experiences, such as patient portals, text message appointment reminders, gaps-in-care campaigns and post-discharge surveys.
Some of these initiatives include: • a centralized and proprietary transfer center offering services to connect emergency department and hospitalized patients requiring transfer to facilities that can best meet their needs; • centralized patient scheduling call centers and online scheduling to ease appointment scheduling; • patient navigation and next appointment scheduling from existing points of care; • expansion of our outpatient services network to create greater access and more convenience, including significant expansion of our ability to provide remote patient care; • availability of virtual healthcare for certain services provided in the hospital and for direct-to-consumer, on-demand virtual visits with physicians and other healthcare practitioners; • digital marketing and consumer engagement campaigns; and 2 • other technology-enabled initiatives that support connected healthcare experiences, such as patient portals, text message appointment reminders, gaps-in-care campaigns and post-discharge surveys.
Hospitals are required to publish a consumer-friendly list of standard charges for certain “shoppable” services (i.e., services that can be scheduled by a patient in advance) and associated ancillary services or, alternatively, maintain an online price estimator tool. CMS may impose civil monetary penalties for noncompliance with these price transparency requirements.
Hospitals also are required to publish a consumer-friendly list of standard charges for certain “shoppable” services (i.e., services that can be scheduled by a patient in advance) and associated ancillary services or, alternatively, maintain an online price estimator tool. CMS may impose civil monetary penalties for noncompliance with these price transparency requirements.
Antitrust enforcement in the healthcare industry is currently a priority of the Federal Trade Commission, or FTC, and the U.S. Department of Justice. We believe we are in compliance with such federal and state laws, but courts or regulatory authorities may reach a determination in the future that could adversely affect our operations. Certificates of Need.
Antitrust enforcement in the healthcare industry is currently a priority of the Federal Trade Commission, or FTC, and the U.S. Department of Justice. We believe we are in compliance with such federal and state laws, but courts or regulatory authorities may reach a determination in the future that could adversely affect our operations. 15 Certificates of Need.
However, these hospitals face competition from hospitals outside of their primary service area, including hospitals in urban areas that provide more complex services. Patients in those service areas may travel to these other hospitals for a variety of reasons, including the need for services we do not offer, payor networks that exclude our providers or physician referrals.
However, these hospitals face competition from hospitals outside of their primary service area, including hospitals in urban areas that provide more extensive or complex services. Patients in those service areas may travel to these other hospitals for a variety of reasons, including the need for services we do not offer, payor networks that exclude our providers or physician referrals.
However, we cannot provide assurance that governmental officials responsible for enforcing these laws will not assert that we, or transactions in which we are involved, are in violation of these laws. These laws may also be interpreted by the courts in a manner inconsistent with our interpretations. Emergency Medical Treatment and Active Labor Act.
However, we cannot provide assurance that governmental officials responsible for enforcing these laws will not assert that we, or transactions in which we are involved, are in violation of these restrictions. These laws may also be interpreted by the courts in a manner inconsistent with our interpretations. Emergency Medical Treatment and Active Labor Act.
We attempt to attract physicians and our physicians’ patients to our hospitals by offering quality services and facilities, convenient locations and state-of-the-art equipment. Some competitors are implementing physician alignment strategies, such as employing physicians, acquiring physician practice groups, and participating in ACOs or other clinical integration models.
We attempt to attract physicians and our physicians’ patients to our hospitals by offering quality services and facilities, convenient locations and state-of-the-art equipment. Some competitors are 23 implementing physician alignment strategies, such as employing physicians, acquiring physician practice groups, and participating in ACOs or other clinical integration models.
Other healthcare providers may also impact our ability to enter into contracts with third-party payors or negotiate favorable terms and conditions, including through their negotiation of exclusivity provisions. Price and clinical transparency initiatives and increasing vertical integration efforts involving third-party payers and healthcare providers, among other factors, may increase these challenges.
Other healthcare providers may also impact our ability to enter into contracts with third-party payors or negotiate favorable terms and conditions, including through their negotiation of exclusivity provisions. Price and clinical transparency initiatives and increasing vertical integration efforts involving third-party payors and healthcare providers, among other factors, may increase these challenges.
The failure of a particular activity to comply with the safe harbor regulations does not necessarily mean that the activity violates the Anti-Kickback Statute; however, such failure may lead to increased scrutiny by government enforcement authorities. 11 The OIG also provides guidance to healthcare providers by identifying types of activities that could violate the Anti-Kickback Statute.
The failure of a particular activity to comply with the safe harbor regulations does not necessarily mean that the activity violates the Anti-Kickback Statute; however, such failure may lead to increased scrutiny by government enforcement authorities. The OIG also provides guidance to healthcare providers by identifying types of activities that could violate the Anti-Kickback Statute.
We endeavor to advance the scale and breadth of inpatient and outpatient capabilities through both direct investments and strategic partnerships. We believe expanding our patient access footprint can attract new patients and increase patient retention, as well as our ability to connect patients from one episode of care to the next appropriate care setting.
We endeavor to advance the scale and breadth of inpatient and outpatient capabilities through both direct investments and strategic partnerships. We believe expanding our patient access footprint can attract new patients and increase patient retention, as well as improve our ability to connect patients from one episode of care to the next appropriate care setting.
Additionally, each physician owner who is a member of a physician-owned hospital’s medical staff must agree, as a condition of continued medical staff membership or admitting privileges, to disclose in writing to all patients whom 12 they refer to the hospital their (or an immediate family member’s) ownership interest in the hospital.
Additionally, each physician owner who is a member of a physician-owned hospital’s medical staff must agree, as a condition of continued medical staff membership or admitting privileges, to disclose in writing to all patients whom they refer to the hospital their (or an immediate family member’s) ownership interest in the hospital.
From time to time, companies in the healthcare industry, including ours, may be subject to actions under the FCA or similar state laws. 13 Corporate Practice of Medicine; Fee-Splitting. Some states prohibit unlicensed persons or business entities, including corporations, from employing physicians or certain other health professionals.
From time to time, companies in the healthcare industry, including ours, may be subject to actions under the FCA or similar state laws. Corporate Practice of Medicine; Fee-Splitting. Some states prohibit unlicensed persons or business entities, including corporations, from employing physicians or certain other health professionals.
Third, the bottom quartile of hospitals based on the national risk-adjusted hospital acquired condition, or HAC, rates in the previous year have their total inpatient operating Medicare payments reduced by 1%. Moreover, Medicare does not reimburse for care 16 related to certain HACs.
Third, the bottom quartile of hospitals based on the national risk-adjusted hospital acquired condition, or HAC, rates in the previous year have their total inpatient operating Medicare payments reduced by 1%. Moreover, Medicare does not reimburse for care related to certain HACs.
In addition to covering Medicare Part A and Part B benefits, the plans may choose to offer supplemental benefits and impose higher premiums and cost-sharing obligations. Similarly, managed Medicaid programs enable states to contract with private entities to handle program responsibilities like care management and claims adjudication.
In addition to covering Medicare Part A and Part B benefits, the plans may choose to offer supplemental benefits and impose higher premiums and cost-sharing obligations. 20 Similarly, managed Medicaid programs enable states to contract with private entities to handle program responsibilities like care management and claims adjudication.
CMS has implemented an expanded site-neutral payment policy for off-campus provider-based departments paid under the outpatient PPS. Under the policy, all off-campus provider-based departments are paid the Medicare Physician Fee Schedule, or MPFS, -equivalent rate for clinic visits, which is generally substantially lower than the outpatient PPS rate.
Further, CMS has implemented an expanded site-neutral payment policy for off-campus provider-based departments paid under the outpatient PPS. Under the policy, all off-campus provider-based departments are paid the Medicare Physician Fee Schedule, or MPFS, -equivalent rate for clinic visits, which is generally substantially lower than the outpatient PPS rate.
We also depend on the available labor pool of semi-skilled and unskilled employees in each of the markets in which we operate. In some of our markets, employers across various industries have increased their wages for these roles, which has created more competition for this sector of employees.
We also depend on the available labor pool of semi-skilled and unskilled employees in the markets in which we operate. In some of our markets, employers across various industries have increased their wages for these roles, which has created more competition for this sector of employees.
Each huddle consists of a three-part agenda: (1) a look back at any significant safety or quality issues in the 23 past 24 hours, (2) a look ahead to any anticipated safety or quality issues in the next 24 hours, and (3) a follow-up on safety critical issues requiring a rapid response.
Each huddle consists of a three-part agenda: (1) a look back at any significant safety or quality issues in the past 24 hours, (2) a look ahead to any anticipated safety or quality issues in the next 24 hours, and (3) a follow-up on safety critical issues requiring a rapid response.
Finally, we have expanded our hospital-based nursing programs through our partnership with Jersey College and have seven campuses open in six states. Partnerships with other local nursing programs have also been strengthened across the enterprise to expand clinical faculty and increase enrollment.
Finally, we have expanded our hospital-based nursing programs through our partnership with Jersey College and have six campuses open in six states. Partnerships with other local nursing programs have also been strengthened across the enterprise to expand clinical faculty and increase enrollment.
These reductions apply to certain other federally funded healthcare programs, including TRICARE. We anticipate that the federal deficit will continue to place pressure on government healthcare programs, and it is possible that future deficit reduction legislation will impose additional spending reductions. Medicaid.
These reductions apply to certain other federally funded healthcare programs, including TRICARE. We anticipate that the federal deficit will continue to place pressure on government healthcare programs, and it is possible that future legislation will impose additional spending reductions. Medicaid.
The OIG has identified the following incentive arrangements as potential violations of the Anti-Kickback Statute: • payment of any incentive by the hospital when a physician refers a patient to the hospital; • use of free or significantly discounted office space or equipment for physicians in facilities usually located close to the hospital; • provision of free or significantly discounted billing, nursing, or other staff services; • free training for a physician’s office staff, including management and laboratory techniques (but excluding compliance training); • guarantees that if the physician’s income fails to reach a predetermined level, the hospital will pay any portion of the remainder; • low-interest or interest-free loans or loans that may be forgiven if a physician refers patients to the hospital; • payment of the costs of a physician’s travel and expenses for conferences or an honorarium for speaker events; • payment of services that require few, if any, substantive duties by the physician, or payment for services in excess of the fair market value of the services rendered; • coverage on the hospital’s group health insurance plans at an inappropriately low cost to the physician; • purchasing goods or services from physicians at prices in excess of their fair market value; • rental of space in physician offices, at other than fair market value; or • physician-owned entities (often referred to as physician-owned distributorships ) that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician-owners for use on procedures that physician-owners perform on their own patients at hospitals or ASCs.
The OIG has identified the following incentive arrangements as potential violations of the Anti-Kickback Statute: • payment of any incentive by the hospital when a physician refers a patient to the hospital; • use of free or significantly discounted office space or equipment for physicians in facilities usually located close to the hospital; • provision of free or significantly discounted billing, nursing, or other staff services; • free training for a physician’s office staff, including management and laboratory techniques (but excluding compliance training); • guarantees that if the physician’s income fails to reach a predetermined level, the hospital will pay any portion of the remainder; • low-interest or interest-free loans or loans that may be forgiven if a physician refers patients to the hospital; • payment of the costs of a physician’s travel and expenses for conferences or an honorarium for speaker events; • payment of services that require few, if any, substantive duties by the physician, or payment for services in excess of the fair market value of the services rendered; • coverage on the hospital’s group health insurance plans at an inappropriately low cost to the physician; • purchasing goods or services from physicians at prices in excess of their fair market value; • rental of space in physician offices, at other than fair market value; or • physician-owned entities (often referred to as physician-owned distributorships) that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician-owners for use on procedures that physician-owners perform on their own patients at hospitals or ambulatory surgery centers.
Patients who are required to seek services from these other hospitals may subsequently shift their preferences to those hospitals for services we do provide. Our other hospitals, in selected urban service areas, may face competition from hospitals that are more established than our hospitals.
Patients who seek services from these other hospitals may subsequently shift their preferences to those hospitals for services we do provide. Our other hospitals, in selected urban service areas, may face competition from hospitals that are more established than our hospitals.
We have developed and implemented programs to support and monitor patient safety and quality of care that include: • standardized data and benchmarks to monitor clinical outcomes, hospital performance and quality improvement efforts; • recommended policies and procedures based on medical and scientific evidence; • training with evidence-based tools for improving patient safety and quality of care and patient, physician and employee satisfaction; • leveraging technology and information sharing around evidence-based clinical best practices; • training programs for hospital management and clinical staff regarding regulatory and reporting requirements; and • specific leadership methods and error-prevention tools to create safer care environments for patients and staff.
We have developed and implemented programs to support and monitor patient safety and quality of care that include: • standardized data and benchmarks to monitor clinical outcomes, hospital performance and quality improvement efforts; • recommended policies and procedures based on medical and scientific evidence; • training with evidence-based tools for improving patient safety and quality of care and patient, physician and employee satisfaction; • technology and information sharing based on evidence-based clinical best practices; • training programs for hospital management and clinical staff regarding regulatory and reporting requirements; and • specific leadership methods and error-prevention tools to create safer care environments for patients and staff.
Laws and regulations may impact our contract terms and ability to contract with third-party payors, such as laws that permit payors to guide patients to particular providers or eliminate restrictions on placing providers into preferred tiers.
Laws and regulations may impact our contract terms and ability to contract with third-party payors, such as state laws that permit payors to guide patients to particular providers or eliminate restrictions on placing providers into preferred tiers.
Throughout this Form 10-K, we refer to Community Health Systems, Inc., or the Parent Company, and its consolidated subsidiaries in a simplified manner and on a collective basis, using words like “we,” “our,” “us” and the “Company.” This drafting style is suggested by the Securities and Exchange Commission, or SEC, and 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.
Throughout this Annual Report on Form 10-K, or Form 10-K, we refer to Community Health Systems, Inc., or the Parent Company, and its consolidated subsidiaries in a simplified manner and on a collective basis, using words like “we,” “our,” “us” and the “Company.” This drafting style is suggested by the Securities and Exchange Commission, or SEC, and 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.
HHS is delaying enforcement with regard to good faith estimates to uninsured individuals that do not include expected charges for co-providers or co-facilities until the agency issues additional regulations.
HHS is indefinitely delaying enforcement with regard to good faith estimates to uninsured individuals that do not include expected charges for co-providers or co-facilities until the agency issues additional regulations.
This approach is intended to reinforce our company-wide commitment to operate strictly in accordance with the laws and regulations that govern our business. 21 Our company-wide compliance program has been in place since 1997.
This approach is intended to reinforce our company-wide commitment to operate strictly in accordance with the laws and regulations that govern our business. Our company-wide compliance program has been in place since 1997.
Providers participating in bundled payment initiatives accept accountability for costs and quality of care by agreeing to receive one payment for services provided to Medicare patients for certain medical conditions or episodes of care.
For example, providers participating in bundled payment initiatives accept accountability for costs and quality of care by agreeing to receive one payment for services provided to Medicare patients for certain medical conditions or episodes of care.
There can be no assurance that our arrangement with HealthTrust will continue to provide the discounts that we have historically received. 20 Competition The hospital industry is highly competitive.
There can be no assurance that our arrangement with HealthTrust will continue to provide the discounts that we have historically received. Competition The hospital industry is highly competitive.
Cost-reduction strategies by large employer groups and their affiliates may increase this competition. In most markets in which we are not the sole provider of general acute care health services, our primary competitor is a municipal or not-for-profit hospital. These hospitals are owned by tax-supported governmental agencies or not-for-profit entities supported by endowments and charitable contributions.
Cost-reduction strategies by payors, including large employer groups and their affiliates, may increase this competition. In most markets in which we are not the sole provider of general acute care health services, our primary competitor is a municipal or not-for-profit hospital. These hospitals are owned by tax-supported governmental agencies or not-for-profit entities supported by endowments and charitable contributions.
Regional networks are able to expand the breadth of services provided for our patients, centralize key services, deliver care in an organized and efficient way across the network, improve alignment with physicians and other providers, and make services more attractive to managed care and other payors. Currently, 46 of our hospitals operate in 12 unique regional networks.
Regional networks are able to expand the breadth of services provided for our patients, centralize key services, deliver care in an organized and efficient way across the network, improve alignment with physicians and other providers, and make services more attractive to managed care and other payors. Currently, 41 of our hospitals operate in 12 unique regional networks.
In addition, there is uncertainty regarding the potential impact of other reform efforts at the federal and state levels. For example, some members of Congress have proposed measures intended to accelerate the shift from traditional Medicare to Medicare Advantage or eliminating some or all of the consumer protections established by the Affordable Care Act.
There is uncertainty regarding the potential impact of other reform efforts at the federal and state levels. For example, some members of Congress have proposed measures intended to accelerate the shift from traditional Medicare to Medicare Advantage or eliminating some or all of the consumer protections established by the Affordable Care Act.
Healthcare facility operations are also subject to certain seasonal fluctuations, including decreases in patient utilization during holiday periods and increases in colder weather months. Variations in the prevalence and severity of outbreaks of illnesses have also resulted in, and may continue to result in, similar fluctuations of our business. 9 Government Regulation Overview.
Healthcare facility operations are also subject to certain seasonal fluctuations, including decreases in patient utilization during holiday periods and increases in colder weather months. Variations in the prevalence and severity of outbreaks of illnesses have also resulted in, and may continue to result in, similar fluctuations of our business. 10 Government Regulation Overview.
The number of people aged 85 and older is also expected to increase from 6 million in 2023 to 9 million by the year 2030. We believe that these anticipated increases will increase demand for healthcare services and the demand for innovative, more sophisticated means of delivering those services.
The number of people aged 85 and older is also expected to increase from 6 million in 2024 to 9 million by the year 2030. We believe that these anticipated increases will increase demand for healthcare services and the demand for innovative, more sophisticated means of delivering those services.
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 invalidated past payment cuts for hospitals participating in the 340B Drug Pricing Program. In light of the U.S.
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 invalidated past payment cuts for hospitals participating in the 340B Drug Pricing Program.
Through 2026, CMS expects expenditures to be influenced by the health sector’s transition away from pandemic-related policies, including expected declines in Medicaid enrollment and the expiration of enhanced subsidies available for purchasing health insurance through Affordable Care Act marketplaces.
Through 2027, CMS expects expenditures to be influenced by the health sector’s transition away from pandemic-related policies, including expected declines in Medicaid enrollment and the expiration of enhanced subsidies available for purchasing health insurance through Affordable Care Act marketplaces.
For items and services for which balance billing is prohibited (even when no balance billing occurs), the No Surprises Act establishes an independent dispute resolution, or IDR, process for providers and payers to handle payment disputes that cannot be resolved through direct negotiations.
For items and services for which balance billing is prohibited (even when no balance billing occurs), the No Surprises Act establishes an independent dispute resolution, or IDR, process for providers and payors to handle payment disputes that cannot be resolved through direct negotiations.
Statistics for 2023 include a full year of operations for 78 hospitals and partial periods for eight hospitals that were divested during the year, and one hospital in which we sold a majority ownership during the year, reflecting the operations of these hospitals prior to divestiture.
Statistics for 2023 include a full year of operations for 78 hospitals as well as partial periods for eight hospitals that were divested during the year, and one hospital in which we sold a majority ownership during the year, reflecting the operations of these hospitals prior to divestiture.
For example, federal regulations require hospitals to publish a list of their standard charges for all items and services, including discounted cash prices and payer-specific and de-identified negotiated charges, in a machine-readable, publicly accessible online file.
For example, federal regulations require hospitals to publish a list of their standard charges for all items and services, including discounted cash prices and payor-specific and de-identified negotiated charges, in a machine-readable, publicly accessible online file.
State-mandated nurse-staffing ratios or other measures to regulate staffing could significantly affect labor costs and have an adverse impact on revenues if we are required to limit patient admissions in order to comply with such requirements. 22 Our hospitals are staffed by licensed physicians, including both employed physicians and physicians who are not employees of our hospitals.
State-mandated nurse-staffing ratios or other measures to regulate staffing could significantly affect labor costs and have an adverse impact on our net operating revenues if we are required to limit patient admissions in order to comply with such requirements. Our hospitals are staffed by licensed physicians, including both employed physicians and physicians who are not employees of our hospitals.
Medicaid is a program funded jointly by state and federal governments, and administered by the states, that provides hospital and medical benefits to qualifying low-income individuals. The number of individuals enrolled in Medicaid declined in 2024 in comparison to 2023.
Medicaid is a program funded jointly by state and federal governments, and administered by the states, that provides hospital and medical benefits to qualifying low-income individuals. The number of individuals enrolled in Medicaid declined in 2025 in comparison to 2024.
These laws vary from state to state, are often vague and have seldom been interpreted by the courts or regulatory agencies. We structure our arrangements with healthcare providers to comply with the relevant state law.
These restrictions vary from state to state, are often vague and have seldom been interpreted by the courts or regulatory agencies. We structure our arrangements with healthcare providers to comply with the relevant state law.
In addition, Medicare reimbursement for hospitals and other providers is adjusted based on quality and efficiency measures, and CMS currently administers various accountable care organizations, or ACOs, and bundled payment demonstration projects. The CMS Innovation Center has highlighted the need to accelerate the movement to value-based care and drive broader system transformation. Fraud and Abuse Laws.
In addition, Medicare reimbursement for hospitals and other providers is adjusted based on quality and efficiency measures, and CMS currently administers various accountable care organizations, or ACOs, and bundled payment demonstration projects. The CMS Innovation Center has highlighted the need to accelerate the movement to value-based care and drive broader system transformation.
For a further discussion of our insurance coverage, see our discussion of professional liability claims in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Form 10-K. 24
For a further discussion of our insurance coverage, see our discussion of professional liability claims in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Form 10-K. 26
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. As of December 31, 2024, Indiana, Alabama, Texas and Florida represented our only areas of significant geographic concentration.
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. As of December 31, 2025, Indiana, Alabama, Texas, Florida and Tennessee represented our only areas of significant geographic concentration.
In addition, some states have also passed legislation requiring for-profit healthcare entities, including hospitals, to notify the state attorneys general or other designated entities in advance of sales or other transactions. Violations of federal or state antitrust laws can result in various sanctions, including criminal and civil penalties.
In addition, some states have also passed legislation requiring for-profit healthcare entities, including hospitals, to notify or obtain approval from the state attorneys general or other designated entities in advance of sales or other transactions. Violations of federal or state antitrust laws can result in various sanctions, including criminal and civil penalties.
The MPFS-equivalent rate for calendar year 2025 is approximately 40% of the outpatient PPS rate. CMS uses fee schedules to pay for physician services, physical, occupational and speech therapies, durable medical equipment, clinical diagnostic laboratory services, freestanding surgery center services, and certain other items and services.
The MPFS-equivalent rate for calendar year 2026 is approximately 40% of the outpatient PPS rate. 18 CMS uses fee schedules to pay for physician services, physical, occupational and speech therapies, durable medical equipment, clinical diagnostic laboratory services, freestanding surgery center services, and certain other items and services.
Moreover, the trend toward consolidation among private third-party payors tends to increase payor bargaining power over fee structures. Trends towards clinical and price transparency and value-based purchasing may also impact our competitive position by affecting patient volumes and our ability to attract patients.
Moreover, the trend toward consolidation among private third-party payors tends to increase payor bargaining power. Trends towards clinical and price transparency and value-based purchasing may also impact our competitive position by affecting patient volumes and our ability to attract patients.
Significant investments have been made in existing markets to expand the scale of inpatient offerings, including through increasing bed capacity and constructing new surgical and procedural suites.
We have made significant investments in existing markets to expand the scale of inpatient offerings, including through increasing bed capacity and constructing new surgical and procedural suites.
Price Transparency and Consumer Billing Limitations . The healthcare industry is subject to various federal and state initiatives and requirements related to price transparency and out-of-network charges, which may impact prices, our competitive position and the relationships between hospitals, insurers, patients, and ancillary providers.
The healthcare industry is subject to various federal and state initiatives and requirements related to price transparency and out-of-network charges, which may impact prices, our competitive position and the relationships between hospitals, insurers, patients, and ancillary providers.
The Medicare DSH adjustments and uncompensated care payments as a percentage of net operating revenues were 0.68% and 0.75% for the years ended December 31, 2024 and 2023, respectively. We also receive Medicare reimbursement for hospital outpatient services through a PPS. Services paid under the hospital outpatient PPS are grouped into ambulatory payment classifications, or APCs.
The Medicare DSH adjustments and uncompensated care payments as a percentage of net operating revenues were 0.59% and 0.68% for the years ended December 31, 2025 and 2024, respectively. We also receive Medicare reimbursement for hospital outpatient services through a PPS. Services paid under the hospital outpatient PPS are grouped into ambulatory payment classifications, or APCs.
MS-DRG payment rates were increased by the “market basket index” update of 3.3% and 3.4% for each of federal fiscal years 2024 and 2025, respectively, subject to certain adjustments. For federal fiscal year 2024 and 2025, the market basket update was reduced by 0.2 percentage points and 0.5 percentage points, respectively, for the productivity adjustment.
MS-DRG payment rates were increased by the “market basket index” update of 3.4% and 3.3% for each of federal fiscal years 2025 and 2026, respectively, subject to certain adjustments. For federal fiscal year 2025 and 2026, the market basket update was reduced by 0.5 percentage points and 0.7 percentage points, respectively, for the productivity adjustment.
Year Ended December 31, 2024 2023 2022 Medicare 18.1 % 19.9 % 20.9 % Medicare Managed Care 17.7 16.8 16.1 Medicaid 14.8 14.3 14.8 Managed Care and other third-party payors 48.1 47.9 47.5 Self-pay 1.3 1.1 0.7 Total 100.0 % 100.0 % 100.0 % As shown above, we receive a substantial portion of our revenues from the Medicare, Medicare Managed Care and Medicaid programs.
Year Ended December 31, 2025 2024 2023 Medicare 17.4 % 18.1 % 19.9 % Medicare Managed Care 18.0 17.7 16.8 Medicaid 16.0 14.8 14.3 Managed Care and other third-party payors 47.8 48.1 47.9 Self-pay 0.8 1.3 1.1 Total 100.0 % 100.0 % 100.0 % As shown above, we receive a substantial portion of our revenues from the Medicare, Medicare Managed Care and Medicaid programs.
Other legislative and executive branch initiatives related to health insurance could also result in increased prices for consumers 10 purchasing health insurance coverage or may permit the sale of insurance plans that do not satisfy current Affordable Care Act consumer protections, which could increase rates of uninsured and underinsured individuals and destabilize insurance markets.
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 satisfy current Affordable Care Act consumer protections. Any of these developments could increase rates of uninsured and underinsured individuals and destabilize insurance markets.
Item 1. Business of Commun ity Health Systems, Inc. Overview of Our Company 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 39 distinct markets across 15 states.
Item 1. Business of Commun ity Health Systems, Inc. Overview of Our Company 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.
These certificate of need, or CON, laws generally require that a state agency determine the public need and give approval prior to the construction or acquisition of facilities, significant capital expenditure or the addition of new services. We currently operate healthcare facilities in a number of states that have adopted CON laws.
These certificate of need, or CON, laws generally require that a state agency evaluate the public need for facilities or services and give approval prior to the construction or acquisition of facilities, significant capital expenditures or the addition of new services. We currently operate healthcare facilities in a number of states that have adopted CON laws.
We currently participate in 11 Medicare Shared Savings Program Accountable Care Organizations, which include approximately 3,000 employed and independent physicians in our communities. We look forward to continuing to realize the benefits of these organizations, including opportunities to improve quality, deepen clinical collaboration and demonstrate performance under a reimbursement system moving toward more value-based care arrangements.
We currently participate in 11 Medicare Shared Savings Program accountable care organizations, which include approximately 2,900 employed and independent physicians in our communities. We look forward to continuing to realize the benefits of these organizations, including opportunities to improve quality, deepen clinical collaboration, strengthen physician engagement and demonstrate performance under a reimbursement system moving toward more value-based care arrangements.
While these reviews and, in some instances, approval processes can add additional time to the closing of a hospital acquisition, we have not had any significant difficulties or delays in completing the acquisition process. There can be no assurance, however, that future actions on the state level will not seriously delay or even prevent our ability to acquire hospitals.
While these reviews and, in some instances, approval processes can add additional time to the closing of a hospital acquisition, we have not had any significant difficulties or delays in completing the acquisition process. There can be no assurance, however, that future actions on the state level will not seriously delay acquisitions or even prevent us from acquiring hospitals.
Medicare-approved ACOs that achieve quality performance standards established by HHS are eligible to share in a portion of the amounts saved by the Medicare program, but conversely, under some payment tracks, may be required to pay shared losses if quality-adjusted Medicare expenditures exceed an established benchmark. Participation in payment tracks with downside risk is increasing.
Medicare-approved ACOs that achieve quality performance standards established by HHS are eligible to share in a portion of the amounts saved by the Medicare program, but conversely, under some payment tracks, may be required to pay shared losses if quality-adjusted Medicare expenditures exceed an established benchmark.
In addition, hospitals may qualify for Medicare disproportionate share hospital, or DSH, payment adjustments when their percentage of low-income patients exceeds specified regulatory thresholds. A majority of our hospitals qualify to receive these adjustments. The methodology for calculating DSH payment adjustments is affected by shifts in CMS payment policy.
In addition, hospitals may qualify for Medicare disproportionate share hospital, or DSH, payment adjustments when their percentage of low-income patients exceeds specified regulatory thresholds. A majority of our hospitals qualify to receive these adjustments. The methodology for calculating DSH payment adjustments is affected by shifts in CMS payment policy and is also subject to frequent, ongoing litigation.
In addition to the Medicare reimbursement reductions and adjustment discussed above, the Budget Control Act of 2011, or BCA, requires automatic spending reductions to reduce the federal deficit, resulting in a uniform percentage reduction across all Medicare programs of 2% per fiscal year that extends through the first eight months of federal fiscal year 2032.
In addition to the Medicare reimbursement reductions and adjustments discussed above, the Budget Control Act of 2011, or BCA, requires automatic spending reductions to reduce the federal deficit, resulting in a uniform percentage reduction across all Medicare programs of 2% per fiscal year that extends through the first five months of federal fiscal year 2033.
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 distributed lump sum payments to affected 340B providers as the remedy for calendar years 2018 through 2022.
As a result and to achieve budget neutrality, CMS reduced payment rates for non-drug services under the outpatient PPS for calendar year 2023, and distributed lump sum payments to affected 340B providers as the remedy for calendar years 2018 through 2022.
Net operating revenues generated by our hospitals in Texas, as a percentage of consolidated net operating revenues, were 12.5% in 2024, 11.7% in 2023 and 11.7% in 2022. Net operating revenues generated by our hospitals in Florida, as a percentage of consolidated net operating revenues, were 9.6% in 2024, 11.1% in 2023 and 11.6% in 2022.
Net operating revenues generated by our 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 our 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.
HHS is required to perform compliance audits. In addition to enforcement by HHS, state attorneys general are authorized to bring civil actions seeking either injunction or damages in response to violations of HIPAA privacy and security regulations that threaten the privacy of state residents.
In addition to enforcement by HHS, state attorneys general are authorized to bring civil actions seeking either injunction or damages in response to violations of HIPAA privacy and security regulations that threaten the privacy of state residents.
At December 31, 2024, our subsidiaries own or lease 76 affiliated hospitals, with more than 11,000 beds, and operate more than 1,000 sites of care, including physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers.
At 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.
For calendar year 2024, CMS estimated an increase in hospital outpatient PPS payments of 3.1%, reflecting a market basket increase of 3.3%, with a negative 0.2 percentage point productivity adjustment. For calendar year 2025, CMS estimated an increase in hospital outpatient PPS payments of 2.9%, reflecting a market basket increase of 3.4%, with a negative 0.5 percentage point productivity adjustment.
For calendar year 2025, CMS estimated an increase in hospital outpatient PPS payments of 2.9%, reflecting a market basket increase of 3.4%, with a negative 0.5 percentage point productivity adjustment. For calendar year 2026, CMS estimated an increase in hospital outpatient PPS payments of 2.6%, reflecting a market basket increase of 3.3%, with a negative 0.7 percentage point productivity adjustment.
The current term of this agreement expires in December 2025, with automatic renewal terms of one year unless either party terminates by giving notice of non-renewal. At December 31, 2024, we had a 12.6% ownership interest in HealthTrust. By participating in this organization, we are able to procure items at competitively priced rates for our hospitals.
The current term of this agreement expires in December 2026, with automatic renewal terms of one year unless either party terminates by giving notice of non-renewal. At December 31, 2025, we had an 11.7% ownership interest in HealthTrust. By participating in this organization, we are able to procure items at competitively priced rates for our hospitals.
Net operating revenues generated by our hospitals in Indiana, as a percentage of consolidated net operating revenues, were 16.7% in 2024, 17.1% in 2023 and 17.3% in 2022. Net operating revenues generated by our hospitals in Alabama, as a percentage of consolidated net operating revenues, were 15.4% in 2024, 14.4% in 2023 and 13.3% in 2022.
Net operating revenues generated by our 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 our 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.
Adjusted EBITDA, also a non-GAAP financial measure, is EBITDA adjusted to add back net income attributable to noncontrolling interests and to exclude loss (gain) from early extinguishment of debt, impairment and (gain) loss on sale of businesses, expense from third-party consulting costs associated with significant process and systems redesign across multiple functions as part of the Company’s previously disclosed multi-year initiative to modernize and consolidate technology platforms and associated processes, expense related to government and other legal matters and related costs, expense related to employee termination benefits and other restructuring charges, the impact of a change in estimate to increase the professional liability claims accrual recorded during the fourth quarter of 2022 with respect to claims incurred in prior years related to divested locations as well as a change in estimate to increase such accrual recorded during the third quarter of 2024, and the gain on sale by HealthTrust of a majority interest in CoreTrust completed during the fourth quarter of 2022.
Adjusted EBITDA, also a non-GAAP financial measure, is EBITDA adjusted to add back net income attributable to noncontrolling interests and to exclude loss (gain) from early extinguishment of debt, impairment and (gain) loss on sale of businesses, expense from third-party consulting costs associated with significant process and systems redesign across multiple functions as part of the Company’s previously disclosed multi-year initiative to modernize and consolidate technology platforms and associated processes, expense related to government and other legal matters and related costs, expense related to employee termination benefits and other restructuring charges and the impact of a change in estimate to increase the professional liability claims accrual recorded during the third quarter of 2024.
Hospitals, as the largest category of care in the healthcare market, will be among those impacted most directly by this increase in demand. Based on data compiled for us, the populations of the service areas where our hospitals are located grew 6.9% from 2019 to 2024 and are expected to grow by 3.4% from 2024 to 2029.
Hospitals, as the largest category of care in the healthcare market, will be among those impacted most directly by this increase in demand. Based on data compiled for us, the populations of the service areas where our hospitals are located grew 3.6% from 2020 to 2025 and are expected to grow by 3.2% from 2025 to 2030.
Reasons for this activity include: • ample supply of available capital; • valuation levels; • financial performance issues, including challenges associated with changes in reimbursement and collectability of self-pay revenue; • the desire to enhance the local availability of healthcare in the community; • the need and ability to recruit primary care physicians and specialists; • the need to achieve general economies of scale and to gain access to standardized and centralized functions, including favorable supply agreements and access to professional liability coverage; • changes to healthcare payment models that emphasize cost-effective delivery of service and quality of outcomes for the entire episode of care; and • regulatory changes. 5 The payor industry is also consolidating and acquiring health services providers in an effort to offer more expansive, competitive programs.
Reasons for this activity include: • ample supply of available capital; • valuation levels; • financial performance issues, including challenges associated with changes in reimbursement and collectability of self-pay revenue; • the desire to enhance the local availability of healthcare in the community; • the need and ability to recruit primary care physicians and specialists; 5 • the need to achieve general economies of scale and to gain access to standardized and centralized functions, including favorable supply agreements and access to professional liability coverage; • changes to healthcare payment models that emphasize cost-effective delivery of service and quality of outcomes for the entire episode of care; and • regulatory changes.
States generally have broad discretion to define which hospitals qualify for the Medicaid DSH payments and to determine payment amounts, but CMS published a final rule in February 2024 affecting how states calculate hospital-specific caps for the payments.
Medicaid DSH payments are funded by both the federal government and state governments. States generally have broad discretion to define which hospitals qualify for the Medicaid DSH payments and to determine payment amounts, but CMS published a final rule in February 2024 affecting how states calculate hospital-specific caps for the payments.
Census Bureau, in 2024, there were nearly 59 million Americans aged 65 or older in the U.S., comprising approximately 17.7% of the total U.S. population. By the year 2030, the number of Americans aged 65 or older is expected to climb to 71 million, or 20.6% of the total population.
Census Bureau, in 2025, there were nearly 61 million Americans aged 65 or older in the U.S., comprising approximately 18.0% of the total U.S. population. By the year 2030, the number of Americans aged 65 or older is expected to climb to 71 million, or 20.6% of the total population.
Alternatively, providers may participate in the MIPS track, under which physicians receive performance-based payment incentives or payment reductions based on their performance with respect to clinical quality, resource use, clinical improvement activities and meeting Promoting Interoperability standards related to the meaningful use of EHRs.
Providers electing the MIPS track receive payment incentives or payment reductions based on their performance with respect to clinical quality, resource use, clinical improvement activities and meeting Promoting Interoperability standards related to the meaningful use of EHRs.
We have a Code of Conduct, which applies to all directors, officers, employees and consultants, and a confidential disclosure program to enhance the statement of ethical responsibility expected of our employees and business associates who work in the accounting, financial reporting and asset management areas of our Company. Our Code of Conduct is posted on our website at www.chs.net/company-overview/compliance.
We have a Code of Conduct, which applies to all directors, officers, employees and consultants, and a confidential disclosure program to enhance the statement of ethical responsibility expected of our employees and business associates who work in the accounting, financial reporting and asset management areas of our Company.
Healthcare providers may be significantly impacted by changes specific to the Medicaid program, including changes resulting from legislative and administrative actions at the federal and state levels. Changes at the federal level may impact funding for, or the structure of, the Medicaid program and may shape administration of the program at the state level.
Healthcare providers may be significantly impacted by 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 program at the state level.
If the actual charges to an uninsured or self-pay patient exceed the good faith estimate by an amount deemed to be substantial by regulation (which is currently $400) or the provider furnishes an item or service that was not included in the good faith estimate, the patient may invoke a patient-provider dispute resolution process established by regulation to challenge the higher amount.
If the actual charges to an uninsured or self-pay patient exceed the good faith estimate by an amount deemed to be substantial by regulation (which is currently $400), the patient may invoke a patient-provider dispute resolution process established by regulation to challenge the higher amount. Payment Medicare.
We are working on ways to create more enduring relationships with our patients by providing services that help people navigate their healthcare journeys and enable more seamless connections across episodes of care in our healthcare systems, hospitals, and physician practices.
We are working on ways to enhance the patient experience by providing services that help people navigate their healthcare journeys and enable more seamless connections across episodes of care in our healthcare systems, hospitals, and physician practices.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example, a final rule issued in May 2024 reduces state burdens for implementing some SDP arrangements, with the intent of helping states use these arrangements to implement value-based initiatives. Commercial payors are transitioning toward value-based reimbursement arrangements as well. For example, many commercial payors require hospitals to report quality data and restrict reimbursement for certain preventable adverse events.
Biggest changeCommercial payors are also transitioning toward value-based reimbursement arrangements. For example, many commercial payors require hospitals to report quality data and restrict reimbursement for certain preventable adverse events. We expect value-based purchasing programs, including programs that condition reimbursement on patient outcome measures or involve downside risk, to become more common and to involve a higher percentage of reimbursement amounts.
However, not-for-profit hospital systems and other for-profit hospital companies generally attempt to acquire the same type of hospitals as we may desire to acquire. Some of the competitors for our acquisitions have greater financial resources than we have. Furthermore, some hospitals are sold through an auction process, which may result in higher purchase prices than we believe are reasonable.
However, not-for-profit hospital systems and other for-profit hospital companies generally attempt to acquire the same type of hospital as we may desire to acquire. Some of the competitors for our acquisitions have greater financial resources than we have. Furthermore, some hospitals are sold through an auction process, which may result in higher purchase prices than we believe are reasonable.
These laws and regulations include requirements related to licensure, certification, and enrollment with government programs; the necessity and adequacy of medical care; quality of medical equipment and services; qualifications and supervision of medical and support personnel; the provision of services via telehealth; operating policies and procedures; screening, stabilization and transfer of individuals who have emergency medical conditions; restrictions on the provision of medical care, including with respect to reproductive care; distribution, maintenance and dispensing of pharmaceuticals and controlled substances; billing and coding for services; proper handling of overpayments; classification of levels of care provided; preparing and filing cost reports; relationships with referral sources and referral recipients; maintenance of adequate records; hospital use; rate-setting; building codes; environmental protection; patient, workforce and public safety; privacy and security; interoperability and refraining from information blocking; development and use of AI/ML and other predictive algorithms; debt collection; limits or prohibitions on balance billing and billing for out-of-network services; and communications with patients and consumers.
These laws and regulations include requirements related to licensure, certification, and enrollment with government programs; the necessity and adequacy of medical care; quality of medical equipment and services; qualifications and supervision of medical and support personnel; the provision of services via telehealth; operating policies and procedures; screening, stabilization and transfer of individuals who have emergency medical conditions; restrictions on the provision of medical care, including with respect to reproductive care; distribution, maintenance and dispensing of pharmaceuticals and controlled substances; billing and coding for services; proper handling of overpayments; classification of levels of care provided; preparing and filing cost reports; relationships with referral sources and referral recipients; maintenance of adequate records; hospital use; rate-setting; building codes; environmental 41 protection; patient, workforce and public safety; privacy and security; interoperability and refraining from information blocking; development and use of AI/ML and other predictive algorithms; debt collection; limits or prohibitions on balance billing and billing for out-of-network services; and communications with patients and consumers.
In addition, government and commercial payors as well as other third parties from whom we receive payment for our services attempt to control healthcare costs by, for example, requiring hospitals and other providers to discount payments for their services in exchange for exclusive or preferred participation in their benefit plans, reducing coverage of inpatient and emergency room services and shifting care to outpatient settings, implementing site-neutral payment policies to align payment for services across care settings, using utilization review tools including prior authorizations and implementing alternative payment models.
Government and commercial payors as well as other third parties from whom we receive payment for our services attempt to control healthcare costs by, for example, requiring hospitals and other providers to discount payments for their services in exchange for exclusive or preferred participation in their benefit plans, reducing coverage of inpatient and emergency room services and shifting care to outpatient settings, implementing site-neutral payment policies to align payment for services across care settings, using utilization review tools including prior authorizations and implementing alternative payment models.
Other risks we face during periods of economic weakness include potential declines in the population covered by commercial insurance, increased patient decisions to postpone or cancel elective and non-emergency healthcare procedures (including delaying surgical procedures), which may lead to poorer health and higher acuity interventions, potential increases in the uninsured and underinsured populations, increased adoption of health plan structures that shift financial responsibility to patients, and increased difficulties in collecting patient receivables for copayment and deductible receivables.
Other risks we face, particularly during periods of economic weakness include potential declines in the population covered by commercial insurance, increased patient decisions to postpone or cancel elective and non-emergency healthcare procedures (including delaying surgical procedures), which may lead to poorer health and higher acuity interventions, potential increases in the uninsured and underinsured populations, increased adoption of health plan structures that shift financial responsibility to patients, and increased difficulties in collecting patient receivables for copayment and deductible receivables.
For information that is not subject to HIPAA and deemed to be “personal health records,” the FTC may also impose penalties for violations of the Health Breach Notification Rule, or HBNR, to the extent we are considered a “personal health record-related entity” or “third party service provider.” The FTC has taken several enforcement actions under HBNR and indicated that the FTC will continue to protect consumer privacy through greater use of the agency’s enforcement authorities.
For information that is not subject to HIPAA and deemed to be “personal health records,” the FTC may also impose penalties for violations of the Health Breach 42 Notification Rule, or HBNR, to the extent we are considered a “personal health record-related entity” or “third party service provider.” The FTC has taken several enforcement actions under HBNR and indicated that the FTC will continue to protect consumer privacy through greater use of the agency’s enforcement authorities.
Moreover, any significant cybersecurity event may require us to devote significant management time and resources to address and respond to any such event, interfere with the pursuit of other important business strategies and initiatives, and cause us to incur additional expenditures, which could be material, including to investigate such events, remedy cybersecurity problems, recover lost data, prevent future compromises and adapt systems and practices in response to such events.
Moreover, any significant cybersecurity event may require us to devote significant management time and resources to address and respond to any such event, interfere with the pursuit of other important business strategies and initiatives, and cause us to incur additional 46 expenditures, which could be material, including to investigate such events, remedy cybersecurity problems, recover lost data, prevent future compromises and adapt systems and practices in response to such events.
Challenging macroeconomic conditions in the United States have also resulted in, and may continue to result in, increased budget deficits at federal, state and local governmental levels, which may negatively impact spending for health and human services programs, including Medicare, Medicaid and similar programs that represent significant third-party payor sources for our healthcare facilities.
Challenging macroeconomic conditions in the United States have also resulted in, and may continue to result in, increased budget deficits at federal, state and local governmental levels, which may negatively impact government spending for health and human services programs, including Medicare, Medicaid and similar programs that represent significant third-party payor sources for our healthcare facilities.
In addition, challenging macroeconomic conditions in the United States (including elevated interest rates) have had, and may continue to have, an adverse impact on capital market conditions, which could limit our ability to refinance existing indebtedness or obtain additional debt or equity financing on acceptable terms or at all.
In addition, challenging macroeconomic conditions in the United States (including elevated interest rates) have had, and may continue to have, an adverse impact on capital and financial market conditions, which could limit our ability to refinance existing indebtedness or obtain additional debt or equity financing on acceptable terms or at all.
However, if we are unable to compete effectively with other hospitals and other healthcare providers and patients seek healthcare services at providers other than our hospitals and affiliated businesses, we could experience declines in patient volumes, which could adversely affect our business. 31 We may be adversely affected by consolidation among health insurers and other industry participants.
However, if we are unable to compete effectively with other hospitals and other healthcare providers and patients seek healthcare services at providers other than our hospitals and affiliated businesses, we could experience declines in patient volumes, which could adversely affect our business. We may be adversely affected by consolidation among health insurers and other industry participants.
We may be required to continue to enhance wages and benefits to recruit and retain nurses, other healthcare professionals and medical support personnel, and/or to hire more expensive temporary or contract personnel. In addition, in some markets in which we operate, a shortage of available nurses, other healthcare professionals and medical support personnel has been an operating issue.
We may also be required to continue to enhance wages and benefits to recruit and retain nurses, other healthcare professionals and medical support personnel, and/or to hire more expensive temporary or contract personnel. In addition, in some markets in which we operate, a shortage of available nurses, other healthcare professionals and medical support personnel has been an operating issue.
Examples of these laws include HIPAA, the Stark Law, the federal Anti-Kickback Statute, the federal False Claims Act, the EMTALA and similar state laws. 39 There are heightened coordinated civil and criminal enforcement efforts by both federal and state government agencies relating to the healthcare industry, including the hospital segment.
Examples of these laws include HIPAA, the Stark Law, the federal Anti-Kickback Statute, the federal False Claims Act, the EMTALA and similar state laws. There are heightened coordinated civil and criminal enforcement efforts by both federal and state government agencies relating to the healthcare industry, including the hospital segment.
These risks include incidents involving ransomware and other malicious software, phishing, advanced persistent threats, social engineering, credential stuffing or distributed denial-of-service attacks, or other attempts by third 43 parties to access, acquire, use, disclose, misappropriate or manipulate our information or disrupt our operations.
These risks include incidents involving ransomware and other malicious software, phishing, advanced persistent threats, social engineering, credential stuffing or distributed denial-of-service attacks, or other attempts by third parties to access, acquire, use, disclose, misappropriate or manipulate our information or disrupt our operations.
If interest rates remain at their current elevated levels or increase, this could adversely impact our ability to refinance existing indebtedness or obtain additional debt financing on acceptable terms or at all, and otherwise could increase our debt service obligations in connection with future debt refinancings.
If interest rates remain at their current levels or increase, this could adversely impact our ability to refinance existing indebtedness or obtain additional debt financing on acceptable terms or at all, and otherwise could increase our debt service obligations in connection with future debt refinancings.
Further, our ability to collect patient responsibility accounts may be limited by statutory, regulatory and investigatory initiatives, including private lawsuits directed at hospital charges and collection practices for uninsured and underinsured patients and regulatory restrictions on charges for out-of-network services.
Our ability to collect patient responsibility accounts may be limited by statutory, regulatory and investigatory initiatives, including private lawsuits directed at hospital charges and collection practices for uninsured and underinsured patients and regulatory restrictions on charges for out-of-network services.
Additionally, federal and state consumer protection laws are increasingly being applied by FTC and states’ attorneys general to regulate the collection, use, storage, and disclosure of 40 personal or personally identifiable information, through websites or otherwise, and to regulate the presentation of website content.
Additionally, federal and state consumer protection laws are increasingly being applied by FTC and states’ attorneys general to regulate the collection, use, storage, and disclosure of personal or personally identifiable information, through websites or otherwise, and to regulate the presentation of website content.
Additionally, the rapid evaluation and increased adoption of AI technologies may heighten our cybersecurity risks by making cyber-attacks more difficult to detect, contain and mitigate, particularly with detection devices that use voice recognition or authentication.
Additionally, the rapid evaluation and increased adoption of AI and ML technologies may heighten our cybersecurity risks by making cyber-attacks more difficult to detect, contain and mitigate, particularly with detection devices that use voice recognition or authentication.
The estimate must be provided in advance of the scheduled date for the item or service or upon request and cover items and 33 services that are reasonably expected to be provided together with the primary item or services, including those that may be provided by other providers.
The estimate must be provided in advance of the scheduled date for the item or service or upon request and cover items and services that are reasonably expected to be provided together with the primary item or services, including those that may be provided by other providers.
Our revenues are somewhat concentrated in a relatively small number of states, which makes us particularly sensitive to regulatory and economic changes in those states. Our revenues are particularly sensitive to regulatory and economic changes in states in which we generate a significant portion of our revenues, including Indiana, Alabama, Texas and Florida.
Our revenues are somewhat concentrated in a relatively small number of states, which makes us particularly sensitive to regulatory and economic changes in those states. Our revenues are particularly sensitive to regulatory and economic changes in states in which we generate a significant portion of our revenues, including Indiana, Alabama, Texas, Florida and Tennessee.
If we are unable to adequately contract with providers, or effectively respond to and mitigate the potential impact of third-party providers not fulfilling their contracts, our admissions may decrease, and our operating performance, capacity and growth prospects may be adversely affected, which may adversely impact our business and financial results. 37 Risks Related to Legal Proceedings We are the subject of various legal, regulatory and governmental proceedings that, if resolved unfavorably, could have an adverse effect on us, and we may be subject to other loss contingencies, both known and unknown.
If we are unable to adequately contract with providers, or effectively respond to and mitigate the potential impact of third-party providers not fulfilling their contracts, our admissions may decrease, and our operating performance, capacity and growth prospects may be adversely affected, which may adversely impact our business and financial results. 39 Risks Related to Legal Proceedings We are the subject of various legal, regulatory and governmental proceedings that, if resolved unfavorably, could have an adverse effect on us, and we may be subject to other loss contingencies, both known and unknown.
However, there is no assurance that potential divestitures will be completed or, if they are completed, the aggregate amount of proceeds we will receive, that potential divestitures will be completed within our targeted timeframe, or that potential divestitures will be completed on terms favorable to us.
However, there is no assurance that potential divestitures will be completed or, if they are completed, the aggregate amount of proceeds we will receive, that potential divestitures will be completed within our targeted timeframe, or that potential divestitures will be completed on 31 terms favorable to us.
Trends toward transparency and value-based purchasing may have an impact on our competitive position, ability to obtain and maintain favorable contract terms, and patient volumes in ways that are difficult to predict.
Trends toward transparency and value-based purchasing may also have an impact on our competitive position, ability to obtain and maintain favorable contract terms, and patient volumes in ways that are difficult to predict.
As a result, the most significant competition for providers of general acute care services are hospitals outside of our primary service areas, typically hospitals in larger urban areas that provide more complex services.
As a result, the most significant competition for providers of general acute care services are hospitals outside of our primary service areas, typically hospitals in larger urban areas that provide more complex 32 services.
If any of our hospitals or other provider types achieve poor results (or results that are lower than our competitors) on the quality measures or on patient satisfaction surveys, we may attract fewer patients.
If any of our hospitals or other provider types achieve poor results (or results that are lower than our competitors) on quality measures or on patient satisfaction surveys, we may attract fewer patients.
While we believe we are adapting our business strategies to compete in a value-based reimbursement environment, we are unable at this time to predict how this trend will affect our results of operations.
While we believe we are adapting our business strategies to compete in a value-based reimbursement 37 environment, we are unable at this time to predict how this trend will affect our results of operations.
If the information systems on which we rely fail or are interrupted or if our access to these systems is limited in the future, or if we experience data loss or manipulation, it could result in unauthorized disclosure, misuse, loss or alteration of such data, interruptions and delays in our normal business operations, potential liability under applicable laws, regulatory penalties, and damage to our reputation.
If the information systems on which we rely fail or are interrupted or if our access to these systems is limited in the future, or if we experience data loss or manipulation, it could result in harm to patients, unauthorized disclosure, misuse, loss or alteration of such data, interruptions and delays in our normal business operations, potential liability under applicable laws, regulatory penalties, and damage to our reputation.
Third-party providers of hospital-based physicians, including those with whom we contract, have experienced significant disruption in the form of regulatory changes, including those stemming from enactment of the No Surprises Act, challenging labor market conditions resulting from a shortage of physicians and inflationary wage-related pressures, as well as increased competition through consolidation of physician groups.
Third-party providers of hospital-based physicians, including those with whom we contract, have experienced significant disruption in the form of policy changes, including those stemming from enactment of the No Surprises Act, challenging labor market conditions resulting from a shortage of physicians and inflationary wage-related pressures, as well as increased competition through consolidation of physician groups.
Price and clinical transparency initiatives and increasing vertical integration efforts involving third-party payers and healthcare providers may also impact our ability to obtain or maintain favorable contract terms. For example, hospitals are required to publish online payor-specific negotiated charges and de-identified minimum and maximum charges.
Price and clinical transparency initiatives and increasing vertical integration efforts involving third-party payors and healthcare providers may also impact our ability to obtain or maintain favorable contract terms. For example, hospitals are required to publish online payor-specific negotiated charges and de-identified minimum and maximum charges.
We may be adversely affected by the growth in patient responsibility accounts as a result of the adoption of plan structures, including health savings accounts, narrow networks and tiered networks, that shift greater responsibility for care to individuals through greater exclusions and copayment and deductible amounts.
We may be adversely affected by the growth in patient responsibility accounts as a result of the adoption of plan structures, including high-deductible health plans and health savings accounts, narrow networks and tiered networks, that shift greater responsibility for care to individuals through greater exclusions and copayment and deductible amounts.
If we perform at a level below the outcomes demonstrated by our competitors, are unable to meet or exceed the quality performance standards under any applicable value-based purchasing program or otherwise fail to effectively provide or coordinate the efficient delivery of quality healthcare services, our reputation in the industry 35 may be negatively impacted, we may receive reduced reimbursement amounts and we may owe repayments to payors, causing our revenues to decline.
If we perform at a level below the outcomes demonstrated by our competitors, are unable to meet or exceed the quality performance standards under any applicable value-based purchasing program or otherwise fail to effectively provide or coordinate the efficient delivery of quality healthcare services, our reputation in the industry may be negatively impacted, we may receive reduced reimbursement amounts and we may owe repayments to payors, causing our net operating revenues to decline.
The current cyber threat environment presents increased risk for all companies, particularly companies in the healthcare industry, as the volume and intensity of cyber-attacks on hospitals and health systems has continued to increase, and we expect to experience an increase in cybersecurity threats in the future.
The current cyber threat environment presents increased risk for all companies, particularly companies in the healthcare industry, as the volume and intensity of cyber-attacks on hospitals and health systems have continued to increase, and we expect to experience an increase in cybersecurity threats in the future.
Risks Related to Human Capital • Our performance depends on our ability to recruit and retain quality physicians. 25 • Our labor costs have been, and may continue to be, adversely affected by competitive labor market conditions and the shortage of qualified nurses and other healthcare personnel. • We may be unable to attract, hire and retain a highly qualified and diverse workforce, including key management. • We may be adversely impacted by the inability of third parties with whom we contract to provide hospital-based physicians as the result of industry-wide disruptions in the market for outsourced medical specialists.
Risks Related to Human Capital • Our performance depends on our ability to recruit and retain quality physicians. • Our labor costs have been, and may continue to be, adversely affected by competitive labor market conditions and the shortage of qualified nurses and other healthcare personnel. • We may be unable to attract, hire and retain a highly qualified and diverse workforce, including senior management personnel and key employees. 27 • We may be adversely impacted by the inability of third parties with whom we contract to provide hospital-based physicians as the result of industry-wide disruptions in the market for outsourced medical specialists.
For example, the FTC uses its consumer protection authority to initiate enforcement actions in response to data breaches. Failing to take appropriate steps to keep consumers’ personal information secure may violate the Federal Trade Commission Act, or the FTCA.
For example, the FTC uses its consumer protection authority to initiate enforcement actions in response to data breaches. Failing to take appropriate steps to keep consumers’ personal information secure may violate the Federal Trade Commission Act.
Moreover, while we have insurance coverage in place designed to address certain aspects of cybersecurity risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise.
Moreover, while we have insurance coverage in place designed to address certain aspects of cybersecurity risks, such insurance coverage may exclude certain types of claims or otherwise be insufficient to cover all losses or all types of claims that may arise.
We performed our last annual 42 goodwill impairment evaluation during the fourth quarter of 2024 using the October 31, 2024 measurement date, which indicated no impairment. We could record material impairment charges in the future if our estimates or assumptions with respect to such fair value determination change in the future.
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. We could record material impairment charges in the future if our estimates or assumptions with respect to such fair value determination change in the future.
Any of the foregoing could have an adverse effect on our business, financial condition or results of operations. 45 Item 1B. Unresolve d Staff Comments None
Any of the foregoing could have an adverse effect on our business, financial condition or results of operations. 47 Item 1B. Unresolve d Staff Comments None
For example, seasonal fluctuations in the severity of influenza and other critical illnesses, such as COVID-19, unplanned shutdowns or unavailability of our facilities due to weather or other unforeseen events, decreases in trends in high-acuity service offerings, changes in competition from other service providers, turnover in physicians affiliated with our hospitals, governmental restrictions on the provision of medical care and changes in medical practices, treatment regimens and medical technology can have an impact on the demand for services at our hospitals and affiliated providers.
For example, seasonal fluctuations in the severity of influenza and other illnesses, unplanned shutdowns or unavailability of our facilities due to weather or other unforeseen events, decreases in trends in high-acuity service offerings, changes in competition from other service providers, turnover in physicians affiliated with our hospitals, governmental restrictions on the provision of medical care and changes in medical practices, treatment regimens and medical technology can have an impact on the demand for services at our hospitals and affiliated providers.
In addition, in certain markets where we operate, there are large teaching hospitals that provide highly specialized facilities, equipment and services that may not be available at our hospitals. At December 31, 2024, 47 of our hospitals competed with one or more non-affiliated hospitals in their respective primary service areas.
In addition, in certain markets where we operate, there are large teaching hospitals that provide highly specialized facilities, equipment and services that may not be available at our hospitals. At December 31, 2025, 33 of our hospitals competed with one or more non-affiliated hospitals in their respective primary service areas.
Changes in licensure or other regulations, recognition of new provider types or payment models and industry consolidation could negatively impact our competitive position. For example, in states with certificate of need or similar prior approval requirements, removal of these requirements could remove 30 barriers to entry and increase competition in our service areas.
Changes in licensure or other regulations, recognition of new provider types or payment models and industry consolidation could negatively impact our competitive position. For example, in states with CON or similar prior approval requirements, removal of these requirements could remove barriers to entry and increase competition in our service areas.
Risks Related to Our Business • If we are unable to complete divestitures as advisable, our performance could be adversely affected. • The impact of past acquisitions, as well as potential future acquisitions, could have a negative effect on our operations. • If we are unable to effectively compete, patients could use other hospitals and healthcare providers. • We may be adversely affected by consolidation among health insurers and other industry participants. • The failure to obtain our medical supplies at favorable prices could cause our operating results to decline. • Our revenues may decline if reimbursement rates are reduced or if we do not maintain favorable contract terms with payors. • Growth in self-pay volume or deterioration in collectability could adversely affect our financial performance. • Some of the non-urban communities in which we operate face challenging economic conditions. • The demand for our services can be impacted by factors beyond our control. • The emergence and effects related to a future pandemic, epidemic, outbreak of an infectious disease or other public health crisis could adversely impact our business and operations. • The industry trend towards value-based purchasing may negatively impact our business. • Our revenues are somewhat concentrated in a relatively small number of states. • If the redesign and consolidation of key business functions, including through implementation of a core ERP system, does not achieve targeted outcomes, our business and financial results may be adversely impacted.
Risks Related to Our Business • If we are unable to complete divestitures as advisable, our performance could be adversely affected. • The impact of past acquisitions, as well as potential future acquisitions, could have a negative effect on our operations. • If we are unable to effectively compete, patients could use other hospitals and healthcare providers. • We may be adversely affected by consolidation among health insurers and other industry participants. • The failure to obtain our medical supplies at favorable prices could cause our operating results to decline. • Our revenues may decline if reimbursement rates are reduced or if we do not maintain favorable contract terms with payors. • Growth in self-pay volume or deterioration in collectability could adversely affect our financial performance. • Some of the non-urban communities in which we operate face challenging economic conditions. • The demand for our services can be impacted by factors beyond our control. • The emergence and effects related to a future pandemic, epidemic, outbreak of an infectious disease or other public health crisis could adversely impact our business and operations. • The industry trend towards value-based purchasing may negatively impact our business. • Our revenues are somewhat concentrated in a relatively small number of states.
However, changes in the law’s implementation, subsequent legislation and regulations, state initiatives and other factors have and may continue to affect the number of individuals 38 that elect to obtain public or private health insurance or the scope of such coverage, if obtained, and may impact our payer mix.
Changes in the law’s implementation, subsequent legislation and regulations, state initiatives and other factors have and may continue to affect the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if obtained, and may impact our payor mix.
Under a rule finalized by HHS in July 2024, a hospital found to have engaged in information blocking will not qualify as a “meaningful electronic health record user” under the Medicare Promoting Interoperability Program and as a result will lose 75% of the annual market basket increase it would otherwise receive, and MIPS-eligible clinicians, ACOs and ACO participants face similar disincentives.
A hospital found to have engaged in information blocking will not qualify as a “meaningful electronic health record user” under the Medicare Promoting Interoperability Program and as a result will lose 75% of the annual market basket increase it would otherwise receive, and MIPS-eligible clinicians, ACOs and ACO participants face similar disincentives.
We also depend on the available labor pool of semi-skilled and unskilled employees in each of the markets in which we operate. In some of our markets, employers across various industries have increased their wages for these roles, which has created more competition for this sector of employees.
We also depend on the available labor pool of semi-skilled and unskilled employees in each of the markets in which we operate and the available labor pool may not be sufficient for our demands. In some of our markets, employers across various industries have increased their wages for these roles, which has created more competition for this sector of employees.
Moreover, it is difficult to predict whether, when, or what additional deficit reduction initiatives may be proposed by Congress, but future legislation may include additional Medicare spending reductions, which may adversely affect our business and financial results.
Moreover, it is difficult to predict whether, when, or what additional deficit or other spending reduction initiatives may be proposed by Congress, but future legislation may include or otherwise result in additional Medicare and Medicaid spending reductions, which may adversely affect our business and financial results.
For example, as a result of sequestration measures that extend through the first eight months of federal fiscal year 2032, Medicare payments are automatically reduced by 2% per fiscal year.
For example, as a result of sequestration measures that extend through the first five months of federal fiscal year 2033, Medicare payments are automatically reduced by 2% per fiscal year.
We compete with other healthcare 36 providers in recruiting and retaining qualified facility management and personnel responsible for the daily operations of our healthcare facilities, including nurses, other non-physician healthcare professionals and medical support personnel. The healthcare industry has been experiencing a challenging labor market arising out of current macroeconomic conditions.
We compete with other healthcare providers in recruiting and retaining qualified facility management and personnel responsible for the daily operations of our healthcare facilities, including nurses, other non-physician healthcare professionals and medical support personnel. The healthcare industry has been experiencing challenging labor market conditions.
As of December 31, 2024, we had outstanding borrowings of $341 million under the ABL Facility. If we default on our obligations to pay our indebtedness, or if we otherwise fail to comply with the various covenants in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing our indebtedness.
As of December 31, 2025, we had no outstanding borrowings under the ABL Facility. 30 If we default on our obligations to pay our indebtedness, or if we otherwise fail to comply with the various covenants in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing our indebtedness.
Federal agencies oversee, regulate and otherwise affect many aspects of our business, including through Medicare and Medicaid payment and coverage policies, policies affecting the size of the uninsured population, administration of state Medicaid programs and enforcement and interpretation of fraud and abuse laws.
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.
Other recent health reform initiatives and proposals at the federal and state levels include those focused on price transparency and out-of-network charges, which may impact prices, our competitive position, patient volumes and the relationships between hospitals, patients, payors, and ancillary providers (such as anesthesiologists, radiologists, and pathologists).
Other recent health reform initiatives and proposals at the federal and state levels include those focused on price transparency and out-of-network charges, which may impact prices, our competitive position, patient volumes and the relationships between hospitals, patients, payors, and ancillary providers (such as anesthesiologists, radiologists, and pathologists), and site-neutral payment policies, which may reduce the reimbursement we receive.
In addition, any borrowings under the ABL Facility are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on such variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease.
In addition, any borrowings under the ABL Facility are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on such variable rate indebtedness would increase even though the amount borrowed remained the same, and our profitability would be negatively impacted.
If we are unable to negotiate increased reimbursement rates, maintain existing rates or other favorable contract terms, effectively respond to payor cost controls and reimbursement policies or comply with the terms of our payor contracts, the payments we receive for our services may be reduced, which may cause our net operating revenues to decline and could adversely affect our business.
If we are unable to negotiate increased reimbursement rates, maintain existing rates or other favorable contract terms, effectively respond to payor cost controls and reimbursement policies or comply with the terms of our payor contracts, or if we experience reductions in the number of patients with private health insurance coverage, the payments we receive for our services may be reduced, which may cause our net operating revenues to decline and could adversely affect our business.
During the year ended December 31, 2024, 32.9% of our net operating revenues came from the Medicare and Medicaid programs. However, as healthcare expenditures continue to increase, federal and state governments have made, and may continue to make, significant changes in the Medicare and Medicaid programs.
During the year ended December 31, 2025, 33.4% of our net operating revenues came from the Medicare and Medicaid programs. However, as healthcare expenditures continue to increase, federal and state governments have made, and continue to make, significant changes in the Medicare and Medicaid programs.
At December 31, 2024, we had outstanding borrowings of $341 million and approximately $491 million of additional borrowing capacity (after taking into consideration $66 million of outstanding letters of credit) under the ABL Facility. 26 Our substantial leverage could have important consequences, including the following: • it may limit our ability to refinance existing indebtedness or obtain additional debt or equity financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; • a substantial portion of our cash flows from operations will be dedicated to the payment of principal and interest on our indebtedness and will not be available for other purposes, including to fund our operations, capital expenditures, financial obligations and future business opportunities; • some of our borrowings, including any borrowings under the ABL Facility, accrue interest at variable rates, exposing us to the risk of increased interest rates, which risk is heightened by the current high interest rate environment; • it may limit our ability to make strategic acquisitions or cause us to make non-strategic divestitures; • it may limit our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our competitors that are less highly leveraged; and • it may increase our vulnerability in connection with adverse changes in general economic, industry or competitive conditions, or government regulations or other adverse developments.
Our substantial leverage could have important consequences, including the following: • it may limit our ability to refinance existing indebtedness or obtain additional debt or equity financing on favorable terms, or at all, for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; • a substantial portion of our cash flows from operations will be dedicated to the payment of principal and interest on our indebtedness and will not be available for other purposes, including to fund our operations, capital expenditures, financial obligations and future business opportunities; • some of our borrowings, including any borrowings under the ABL Facility, accrue interest at variable rates, exposing us to the risk of increased interest rates, which risk is heightened by the current high interest rate environment; • it may limit our ability to make strategic acquisitions or cause us to make non-strategic divestitures; 28 • it may limit our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our competitors that are less highly leveraged; and • it may increase our vulnerability in connection with adverse changes in general economic, industry or competitive conditions, or government regulations or other adverse developments.
If the uninsured or self-pay patient receives a bill that is substantially greater than the expected charges in the good faith estimate or the provider furnishes an item or service that was not included in the good faith estimate, they may initiate a patient-provider dispute resolution process established by regulation.
If the uninsured or self-pay patient receives a bill that is substantially greater than the expected charges in the good faith estimate, they may initiate a patient-provider dispute resolution process established by regulation.
The maximum aggregate principal amount under the ABL Facility is $1.0 billion, subject to borrowing base capacity. At December 31, 2024, we had outstanding borrowings of $341 million and approximately $491 million of additional borrowing capacity (after taking into consideration $66 million of outstanding letters of credit) under the ABL Facility.
The maximum aggregate principal 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.
Taking into account these factors, we have incurred in certain recent periods, and may continue to incur, increased expenses arising from factors such as wage inflation for permanent employees, increased rates for and utilization of temporary contract labor (including contract nursing personnel) and increased rates for outsourced medical specialists.
Taking into account these factors, we have incurred in certain recent periods, and may continue to incur, increased expenses arising from factors such as wage inflation for permanent employees, and increased rates for outsourced medical specialists.
In December 2023, HHS finalized transparency requirements for AI and other predictive algorithms used in certified health information technology, such as decision support interventions.
For example, HHS imposes transparency requirements for AI and other predictive algorithms used in certified health information technology, such as decision support interventions.
Legislative and regulatory initiatives, such as changes in Texas law that eliminated restrictions on tiered networks and steering patients to particular providers, may accelerate or otherwise impact these trends.
Legislative and regulatory initiatives, such as changes in Texas law that eliminated restrictions on tiered networks and permit insurers to use financial incentives to steer patients to particular providers, may accelerate or otherwise impact these trends.
Many of these actions involve large claims and significant defense costs. To protect us from the cost of these claims, we maintain claims-made professional liability insurance and general liability insurance coverage in excess of those amounts for which we are self-insured.
To protect us from the cost of these claims, we maintain claims-made professional liability insurance and general liability insurance coverage in excess of those amounts for which we are self-insured.
Economic conditions in the United States continue to be challenging in certain respects, and the United States economy has experienced significant inflationary pressures in recent periods, elevated interest rates, challenging labor market conditions, and uncertainty and possible adverse effects associated with current geopolitical instability.
Economic conditions in the United States continue to be challenging in certain respects, and the United States economy has experienced significant inflationary pressures in recent periods, elevated interest rates, challenging labor market conditions, impacts from the imposition of, or changes in, tariffs, and uncertainty and possible adverse effects associated with political and geopolitical instability.
Despite our efforts to minimize our exposure to cyber-attacks, there can be no assurance that our controls and procedures in place will be sufficient or timely.
Despite our efforts to minimize our exposure to cyber-attacks, there can be no assurance that our controls and procedures, and cyber risk management processes, will be sufficient or timely in protecting our processes and information.
We may also be affected by consolidation among other healthcare industry participants. For example, many providers are implementing physician alignment strategies, such as employing physicians, acquiring physician practice groups and participating in ACOs or other clinical integration models. Consolidation among other healthcare industry participants may intensify competitive pressure and affect the industry in ways that are difficult to predict.
We may also be affected by consolidation among other healthcare industry participants. For example, many providers are implementing physician alignment strategies, such as employing physicians, acquiring physician practice groups and participating in ACOs or other clinical integration models.
Efforts to impose more stringent cost controls are expected to continue and may be enhanced by the increasing consolidation of insurance and managed care companies, vertical integration of health insurers with healthcare providers and regulatory changes. These efforts may reduce our revenues and adversely affect our business and financial condition.
Efforts to impose more stringent cost controls are expected to continue and may be enhanced by the increasing consolidation of insurance and managed care companies, vertical integration of health insurers with healthcare providers and regulatory changes.
We rely on these third-party providers to have appropriate controls to protect confidential information and other sensitive or regulated data. While we take steps to require third-party providers to protect confidential information and sensitive data, we do not control the information systems of third-party providers, and in some cases, we may have difficulty accessing information archived on third-party systems.
While we take steps to require third-party providers to protect confidential information and sensitive data, we do not control the information systems of third-party providers, and in some cases, we may have difficulty accessing information archived on or otherwise processed by third-party systems.
If a future pandemic, epidemic, outbreak of an infectious disease or other public health crisis were to occur in a market in which we operate or otherwise affects our markets, our business and operations could be adversely affected.
For example, we were significantly impacted by the public health and economic effects of the COVID-19 pandemic. If a future pandemic, epidemic, outbreak of an infectious disease or other public health crisis were to occur in a market in which we operate or otherwise affects our markets, our business and operations could be adversely affected.
We may find it necessary or prudent to refinance certain of our outstanding indebtedness, the terms of which may not be favorable to us. 27 We cannot assure you that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of our existing or future debt agreements, including the ABL Facility and the indentures governing our outstanding notes.
We cannot assure you that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of our existing or future debt agreements, including the ABL Facility and the indentures governing our outstanding notes.
In some markets, physician recruitment and retention may be affected by a shortage of physicians in certain specialties, difficulties in obtaining professional liability insurance and state law restrictions on the provision of medical care, including reproductive health services.
Moreover, changes in immigration or visa policies could reduce the availability of international medical graduates. In some markets, physician recruitment and retention may be affected by a shortage of physicians in certain specialties, difficulties in obtaining professional liability insurance and state law restrictions on the provision of medical care, including reproductive health services.
Legislation and administrative actions at the federal level may also impact funding for, or the structure of, the Medicaid program and may shape administration of the Medicaid program at the state level.
Further, legislation and administrative actions at the federal level may also impact the funding for, or structure of, the Medicaid program, and may shape administration of the Medicaid program at the state level, including in ways that reduce reimbursement.
If holders of any of our indebtedness accelerate the maturity date of any of our indebtedness, we cannot assure you that we will have sufficient assets to repay the indebtedness that has been accelerated (and all other indebtedness that is also accelerated by virtue of applicable cross-acceleration provisions in the agreements governing our indebtedness). 28 Higher interest rates could increase the cost of refinancing our indebtedness and could cause our debt service obligations to increase significantly.
If holders of any of our indebtedness accelerate the maturity date of any of our indebtedness, we cannot assure you that we will have sufficient assets to repay the indebtedness that has been accelerated (and all other indebtedness that is also accelerated by virtue of applicable cross-acceleration provisions in the agreements governing our indebtedness).
Supreme Court in June 2024 that affect review of federal agency actions. These decisions increase judicial scrutiny of agency authority, shift greater responsibility for statutory interpretation to courts, expand the time period during which a plaintiff can sue regulators and may result in inconsistent judicial interpretations and delays in agency rulemaking processes. In Loper Bright Enterprises v.
These decisions increase judicial scrutiny of agency authority, shift greater responsibility for statutory interpretation to courts, expand the time period during which a plaintiff can sue regulators and may result in inconsistent judicial interpretations and delays in agency rulemaking processes.
The types, amount and duration of compensation and assistance we can provide when recruiting physicians are limited by the federal Physician Self-Referral Law (commonly known as the Stark Law), the federal Anti-Kickback Statute and similar state restrictions.
Shortages of physicians, particularly within emergency medicine, radiology, and anesthesiology, may adversely affect hospital operations. The types, amount and duration of compensation and assistance we can provide when recruiting physicians are limited by the federal Physician Self-Referral Law (commonly known as the Stark Law), the federal Anti-Kickback Statute and similar state restrictions.
Risks Related to Government Regulation Our business may be adversely impacted by changes and uncertainty in the healthcare industry, including healthcare public policy developments and other changes to laws and regulations. The healthcare industry is subject to changing political, regulatory and other influences. Regulatory uncertainty has increased as a result of decisions issued by the U.S.
Risks Related to Government Regulation Our business may be adversely impacted by changes and uncertainty in the healthcare industry, including healthcare public policy developments and other changes to laws and regulations. The healthcare industry is subject to changing political, regulatory and other influences and is heavily regulated.
A cyber-attack or security breach could result in the compromise of our facilities, confidential data or critical data systems and give rise to potential harm to patients, remediation and other expenses, expose us to liability under HIPAA, privacy and data protection laws and regulations, consumer protection laws, common law or other theories, subject us to litigation and federal and state governmental inquiries or actions, damage our reputation, adversely impact our financial results and otherwise be disruptive to our business.
A cyber-attack or security breach could result in the compromise of our facilities, confidential data or critical data systems and give rise to potential harm to patients, remediation and other expenses, expose us to liability under HIPAA, privacy and data protection laws and regulations, consumer protection laws, common law or other theories, subject us to litigation and federal and state governmental inquiries or actions, damage our reputation, adversely impact our financial results and otherwise be disruptive to our business. 45 We rely extensively on information technology systems to manage clinical and financial data, to communicate with our patients, payors, vendors and other third parties, to summarize and analyze operating results, and for a number of other critical operational functions.
For example, federal legislation temporarily enhanced subsidies available for purchasing coverage through Affordable Care Act marketplaces by lowering premiums and raising income eligibility thresholds. Subsequent legislation extended these enhanced subsidies through 2025, but further extension is uncertain, and their expiration may significantly raise the uninsured rate.
For example, federal legislation temporarily enhanced subsidies available for purchasing coverage through Affordable Care Act marketplaces by lowering premiums and raising income eligibility thresholds, but these enhanced subsidies expired at the end of 2025. Their expiration may adversely impact enrollment through the Affordable Care Act marketplaces and significantly raise the uninsured rate.
At December 31, 2024, certain employees at three of our hospitals were represented by various labor unions. While we have not experienced work stoppages to date that have material and adversely affected our business or results of operations, increased or ongoing labor union activity could adversely affect our labor costs or otherwise adversely impact us.
While we have not experienced work stoppages to date that have material and adversely affected our business or results of operations, increased or ongoing labor union activity could adversely affect our labor costs or otherwise adversely impact us.
Our hospitals, our competitors, and other healthcare industry participants are increasingly implementing physician alignment strategies, such as acquiring physician practice groups, employing physicians and participating in ACOs or other clinical integration models.
Our hospitals, our competitors, and other healthcare industry participants are increasingly implementing physician alignment strategies, such as acquiring physician practice groups, employing physicians and participating in ACOs or other clinical integration models, which may negatively affect our competitive position, including by impacting our recruiting and retention efforts.
For example, some states have trigger laws that would end their Medicaid expansion or require other changes if federal funding for expansion populations is reduced.
Some states have trigger laws that would end their Medicaid expansion or require other changes if the federal funding match rate is reduced or similar funding restrictions are imposed for Medicaid expansion.
Any of these measures could significantly affect labor costs and could have an adverse impact on revenues if we are required to limit admissions, hire additional personnel or incur other costs in order to comply with such requirements. We may be unable to attract, hire, and retain a highly qualified and diverse workforce, including key management.
Any of these measures could significantly affect labor costs and could have an adverse impact on our net operating revenues if we are required to limit admissions, hire additional personnel or incur other costs in order to comply with such requirements.
Reductions in the number of insured individuals or the scope of insurance coverage, or an increase in patients covered under governmental health programs or other health plans with lower reimbursement levels, may have an adverse effect on our business.
Reductions in the number of insured individuals or the scope of insurance coverage, or an increase in patients covered under governmental health programs or other health plans with lower reimbursement levels, may have an adverse effect on our business. In addition, the Medicare and Medicaid programs are subject to change, including as a result of legislation and administrative actions.
Significant changes in payor mix, business office operations, economic conditions or trends in federal and state governmental healthcare coverage may affect our collection of accounts receivable and are considered in our estimates of accounts receivable collectability. In recent years, federal and state legislatures have considered or passed various proposals impacting or potentially impacting the size of the uninsured population.
Significant changes in payor mix, business office operations, economic conditions or trends in federal and state governmental healthcare coverage may affect our collection of patient accounts receivable and are considered in our estimates of patient accounts receivable collectability.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, the Audit and Compliance Committee has primary oversight responsibility regarding our information security, data security, data privacy, and other cybersecurity programs, procedures and risks.
Biggest changeIn addition, the Audit and Compliance Committee has primary oversight responsibility regarding our information security, data security, data privacy, and other cybersecurity programs, procedures and risks , including disaster recovery and business continuity .
For additional information regarding the risks to us associated with cybersecurity incidents, see “ A cyber-attack or security breach could result in the compromise of our facilities, confidential data or critical data systems and give rise to potential harm to patients, remediation and other expenses, expose us to liability under HIPAA, privacy and data protection laws and regulations, consumer protection laws, 46 common law or other theories, subject us to litigation and federal and state governmental inquiries and actions, damage our reputation, adversely impact our financial results and otherwise be disruptive to our business. ” included in Part I, Item 1A of this Form 10-K.
For additional information regarding the risks to us associated with cybersecurity incidents, see “ A cyber-attack or security breach could result in the compromise of our facilities, confidential data or critical data systems and give rise to potential harm to patients, remediation and other expenses, expose us to liability under HIPAA, privacy and data protection laws and regulations, 48 consumer protection laws, common law or other theories, subject us to litigation and federal and state governmental inquiries and actions, damage our reputation, adversely impact our financial results and otherwise be disruptive to our business. ” included in Part I, Item 1A of this Form 10-K.
Under this plan, we have established a cybersecurity incident command, a multi-disciplinary management-level team led by the CISO. The plan provides that the incident response team will conduct an initial assessment in the event of a cybersecurity incident meeting certain criteria elevated for the review of senior members of the cybersecurity team.
Under this plan, we have a cybersecurity incident command, a multi-disciplinary management-level team led by the CISO. The plan provides that the incident response team will conduct an initial assessment in the event of a cybersecurity incident meeting certain criteria elevated for the review of senior members of the cybersecurity team.
In such event, the plan provides that the incident response team will assess whether a cybersecurity incident has the potential to materially impact the organization and whether public disclosure is required or advisable in connection therewith, and further provides that, if appropriate, any such cybersecurity incident may be further elevated for the review of senior management, the Audit and Compliance Committee and/or the Board of Directors. 47
In such event, the plan provides that the incident response team will assess whether a cybersecurity incident has the potential to materially impact the organization and whether public disclosure is required or advisable in connection therewith, and further provides that, if appropriate, any such cybersecurity incident may be further elevated for the review of senior management, the Audit and Compliance Committee and/or the Board of Directors. 49
In addition, we have established a Cyber Risk Executive Steering Committee, a multi-disciplinary management-level team chaired by our CDIO which is responsible for assessing and overseeing our information security and cybersecurity risk management policies, practices and priorities and for assessing and monitoring key cybersecurity risks with respect to reporting such risks within the organization.
In addition, we have a Technology Risk Executive Steering Committee, a multi-disciplinary management-level team chaired by our CDIO which is responsible for assessing and overseeing our information security and cybersecurity risk management policies, practices and priorities and for assessing and monitoring key cybersecurity risks with respect to reporting such risks within the organization.
However, despite our security measures, there is no assurance that we, or the third parties with which we interact, will not experience a cybersecurity incident in the future that materially affects us.
However, despite our security measures and cyber risk management processes, there is no assurance that we, or the third parties with which we interact, will not experience a cybersecurity incident in the future that materially affects us.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe operating results of hospitals in the following table are consolidated for financial reporting purposes. 48 Hospital City Licensed Beds(1) Date of Acquisition/ Lease Inception Ownership Type Alabama South Baldwin Regional Medical Center Foley 142 June, 2000 Leased Grandview Medical Center Birmingham 434 July, 2007 Owned Flowers Hospital Dothan 235 July, 2007 Owned Medical Center Enterprise Enterprise 131 July, 2007 Owned Gadsden Regional Medical Center Gadsden 346 July, 2007 Owned Crestwood Medical Center Huntsville 180 July, 2007 Owned Alaska Mat-Su Regional Medical Center Palmer 125 July, 2007 Owned Arizona Western Arizona Regional Medical Center Bullhead City 139 July, 2000 Owned Northwest Medical Center Tucson 242 July, 2007 Owned Tucson Women’s Hospital Tucson 45 July, 2007 Owned Oro Valley Hospital Oro Valley 146 July, 2007 Owned Tucson Northwest Transitions Inpatient Rehabilitation Oro Valley 30 July, 2007 Owned Northwest Medical Center Sahuarita Sahuarita 18 November, 2020 Owned Northwest Medical Center Houghton Houghton 44 June, 2022 Owned Arkansas Northwest Health System Northwest Medical Center - Bentonville Bentonville 128 July, 2007 Owned Northwest Medical Center - Springdale Springdale 222 July, 2007 Owned Willow Creek Women’s Hospital Johnson 64 July, 2007 Owned Northwest Health Physician’s Specialty Hospital Fayetteville 20 April, 2016 Leased Siloam Springs Regional Hospital Siloam Springs 73 February, 2009 Owned Florida North Okaloosa Medical Center Crestview 110 March, 1996 Owned Shorepoint Health Port Charlotte Port Charlotte 254 January, 2014 Owned Shorepoint Health Punta Gorda Punta Gorda 208 January, 2014 Owned Lower Keys Medical Center Key West 118 January, 2014 Leased Key West Depoo Medical Key West 49 January, 2014 Leased Physicians Regional Healthcare System - Collier Naples 130 January, 2014 Owned Physicians Regional Healthcare System - Pine Ridge Naples 177 January, 2014 Owned Physicians Regional Healthcare System - North Naples 50 January, 2014 Owned Santa Rosa Medical Center Milton 129 January, 2014 Leased Georgia East Georgia Regional Medical Center Statesboro 149 January, 2014 Owned Indiana Lutheran Health Network Bluffton Regional Medical Center Bluffton 40 July, 2007 Owned Dupont Hospital Fort Wayne 131 July, 2007 Owned Lutheran Hospital Fort Wayne 396 July, 2007 Owned Lutheran Musculoskeletal Center Fort Wayne 37 July, 2007 Owned Lutheran Downtown Hospital Fort Wayne 191 July, 2007 Owned Dukes Memorial Hospital Peru 25 July, 2007 Owned Kosciusko Community Hospital Warsaw 72 July, 2007 Owned Northwest Health - Porter Hospital Valparaiso 287 May, 2007 Owned Northwest Health - Portage Valparaiso 14 May, 2007 Owned Northwest Health - La Porte Hospital La Porte 227 March, 2016 Owned Northwest Health - Starke Hospital Knox 53 March, 2016 Leased 49 Mississippi Merit Health Wesley Hattiesburg 211 July, 2007 Owned Merit Health River Region Vicksburg 261 July, 2007 Owned Merit Health Biloxi Biloxi 153 January, 2014 Leased Merit Health Central Jackson 379 January, 2014 Leased Merit Health Rankin Brandon 134 January, 2014 Leased Merit Health Madison Canton 67 January, 2014 Owned Merit Health River Oaks Flowood 160 January, 2014 Owned Merit Health Woman’ s H ospital Flowood 109 January, 2014 Owned Merit Health Natchez Natchez 179 October, 2014 Owned Missouri Moberly Regional Medical Center Moberly 99 November, 1993 Owned Northeast Regional Medical Center Kirksville 93 December, 2000 Leased Poplar Bluff Regional Medical Center Poplar Bluff 240 January, 2014 Owned Poplar Bluff Regional Medical Center - Westwood Poplar Bluff 170 January, 2014 Owned New Mexico Eastern New Mexico Medical Center Roswell 162 April, 1998 Owned Carlsbad Medical Center Carlsbad 99 July, 2007 Owned Mountain View Regional Medical Center Las Cruces 168 July, 2007 Owned North Carolina Lake Norman Regional Medical Center Mooresville 123 January, 2014 Owned Oklahoma AllianceHealth Madill Madill 25 January, 2014 Leased AllianceHealth Durant Durant 138 January, 2014 Owned Pennsylvania Commonwealth Health Network Wilkes-Barre General Hospital Wilkes-Barre 369 April, 2009 Owned Regional Hospital of Scranton Scranton 186 May, 2011 Owned Moses Taylor Hospital Scranton 122 January, 2012 Owned Tennessee Tennova Healthcare - Clarksville Clarksville 270 July, 2007 Owned Tennova - Jefferson Memorial Hospital Jefferson City 58 January, 2014 Leased Tennova - LaFollette Medical Center LaFollette 66 January, 2014 Owned Tennova - Newport Medical Center Newport 130 January, 2014 Owned Tennova - North Knoxville Medical Center Powell 172 January, 2014 Owned Tennova - Turkey Creek Medical Center Knoxville 111 January, 2014 Owned Texas Lake Granbury Medical Center Granbury 73 January, 1997 Leased Laredo Medical Center Laredo 326 October, 2003 Owned Navarro Regional Hospital Corsicana 162 July, 2007 Owned Longview Regional Medical Center Longview 224 July, 2007 Owned Woodland Heights Medical Center Lufkin 149 July, 2007 Owned DeTar Healthcare System Victoria 163 July, 2007 Owned DeTar Healthcare System - North Victoria 115 July, 2007 Owned Cedar Park Regional Medical Center Cedar Park 126 December, 2007 Owned Total Licensed Beds at December 31, 2024 11,403 Total Hospitals at December 31, 2024 76 50 (1) Licensed beds are the number of beds for which the appropriate state agency licenses for a facility regardless of whether the beds are actually available for patient use.
Biggest changeThe operating results of hospitals in the following table are consolidated for financial reporting purposes. 50 Hospital City Licensed Beds(1) Date of Acquisition/ Lease Inception Ownership Type Alabama South Baldwin Regional Medical Center Foley 142 June, 2000 Leased Grandview Medical Center Birmingham 440 July, 2007 Owned Flowers Hospital Dothan 235 July, 2007 Owned Medical Center Enterprise Enterprise 131 July, 2007 Owned Gadsden Regional Medical Center Gadsden 346 July, 2007 Owned Crestwood Medical Center Huntsville 180 July, 2007 Owned Alaska Mat-Su Regional Medical Center Palmer 125 July, 2007 Owned Arizona Western Arizona Regional Medical Center Bullhead City 139 July, 2000 Owned Northwest Medical Center Tucson 242 July, 2007 Owned Tucson Women’s Hospital Tucson 45 July, 2007 Owned Oro Valley Hospital Oro Valley 146 July, 2007 Owned Tucson Northwest Transitions Inpatient Rehabilitation Oro Valley 30 July, 2007 Owned Northwest Medical Center Sahuarita Sahuarita 18 November, 2020 Owned Northwest Medical Center Houghton Houghton 44 June, 2022 Owned Arkansas Northwest Health System Northwest Medical Center - Bentonville Bentonville 128 July, 2007 Owned Northwest Medical Center - Springdale Springdale 222 July, 2007 Owned Willow Creek Women’s Hospital Johnson 64 July, 2007 Owned Siloam Springs Regional Hospital Siloam Springs 73 February, 2009 Owned Florida North Okaloosa Medical Center Crestview 110 March, 1996 Owned Lower Keys Medical Center Key West 118 January, 2014 Leased Key West Depoo Medical Key West 49 January, 2014 Leased Physicians Regional Healthcare System - Collier Naples 130 January, 2014 Owned Physicians Regional Healthcare System - Pine Ridge Naples 177 January, 2014 Owned Physicians Regional Healthcare System - North Naples 50 January, 2014 Owned Santa Rosa Medical Center Milton 129 January, 2014 Leased Georgia East Georgia Regional Medical Center Statesboro 149 January, 2014 Owned Indiana Lutheran Health Network Bluffton Regional Medical Center Bluffton 40 July, 2007 Owned Dupont Hospital Fort Wayne 131 July, 2007 Owned Lutheran Hospital Fort Wayne 396 July, 2007 Owned Lutheran Musculoskeletal Center Fort Wayne 37 July, 2007 Owned Lutheran Downtown Hospital Fort Wayne 191 July, 2007 Owned Dukes Memorial Hospital Peru 25 July, 2007 Owned Kosciusko Community Hospital Warsaw 72 July, 2007 Owned Northwest Health - Porter Hospital Valparaiso 287 May, 2007 Owned Northwest Health - Portage Valparaiso 14 May, 2007 Owned Northwest Health - La Porte Hospital La Porte 227 March, 2016 Owned Northwest Health - Starke Hospital Knox 53 March, 2016 Leased 51 Mississippi Merit Health Wesley Hattiesburg 211 July, 2007 Owned Merit Health River Region Vicksburg 261 July, 2007 Owned Merit Health Central Jackson 379 January, 2014 Leased Merit Health Rankin Brandon 134 January, 2014 Leased Merit Health River Oaks Flowood 160 January, 2014 Owned Merit Health Woman’ s H ospital Flowood 109 January, 2014 Owned Merit Health Natchez Natchez 179 October, 2014 Owned Missouri Moberly Regional Medical Center Moberly 99 November, 1993 Owned Northeast Regional Medical Center Kirksville 93 December, 2000 Leased Poplar Bluff Regional Medical Center Poplar Bluff 240 January, 2014 Owned Poplar Bluff Regional Medical Center - Westwood Poplar Bluff 170 January, 2014 Owned New Mexico Eastern New Mexico Medical Center Roswell 162 April, 1998 Owned Carlsbad Medical Center Carlsbad 99 July, 2007 Owned Mountain View Regional Medical Center Las Cruces 168 July, 2007 Owned Oklahoma AllianceHealth Madill Madill 25 January, 2014 Leased AllianceHealth Durant Durant 138 January, 2014 Owned Pennsylvania Commonwealth Health Network Wilkes-Barre General Hospital Wilkes-Barre 369 April, 2009 Owned Regional Hospital of Scranton Scranton 186 May, 2011 Owned Moses Taylor Hospital Scranton 122 January, 2012 Owned Tennessee Tennova Healthcare - Clarksville Clarksville 270 July, 2007 Owned Tennova - Jefferson Memorial Hospital Jefferson City 58 January, 2014 Leased Tennova - LaFollette Medical Center LaFollette 66 January, 2014 Owned Tennova - Newport Medical Center Newport 130 January, 2014 Owned Tennova - North Knoxville Medical Center Powell 172 January, 2014 Owned Tennova - Turkey Creek Medical Center Knoxville 111 January, 2014 Owned Texas Lake Granbury Medical Center Granbury 73 January, 1997 Leased Laredo Medical Center Laredo 326 October, 2003 Owned Navarro Regional Hospital Corsicana 162 July, 2007 Owned Longview Regional Medical Center Longview 224 July, 2007 Owned Woodland Heights Medical Center Lufkin 149 July, 2007 Owned DeTar Healthcare System Victoria 163 July, 2007 Owned DeTar Healthcare System - North Victoria 115 July, 2007 Owned Total Licensed Beds at December 31, 2025 10,458 Total Hospitals at December 31, 2025 69 (1) Licensed beds are the number of beds for which the appropriate state agency licenses for a facility regardless of whether the beds are actually available for patient use. 52 The real property of substantially all of our wholly-owned hospitals is also encumbered by mortgages to support obligations under the ABL Facility and outstanding senior secured notes.
The following tables shows the location, date of acquisition or lease inception and the number of licensed beds for the 76 hospitals owned or leased at December 31, 2024. Effective December 31, 2024, facilities operating other than on a main hospital campus that provide inpatient, acute-care services are presented separately.
The following table shows the location, date of acquisition or lease inception and the number of licensed beds for the 69 hospitals owned or leased at December 31, 2025.
Removed
The real property of substantially all of our wholly-owned hospitals is also encumbered by mortgages to support obligations under the ABL Facility and outstanding senior secured notes.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe avail ourselves of various mechanisms to address potential overpayments arising out of these issues, including repayment of claims, rebilling of claims, and participation in voluntary disclosure protocols offered by CMS and the Office of Inspector General. Participating in voluntary repayments and voluntary disclosure protocols can have the potential for significant settlement obligations or even enforcement action.
Biggest changeParticipating in voluntary repayments and voluntary disclosure protocols can have the potential for significant settlement obligations or even enforcement action.
Department of Justice announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened. The Criminal Division has also frequently stated an intention to pursue corporations in criminal prosecutions, including in its most recent Memorandum dated September 15, 2022.
In September 2014, the Criminal Division of the Department of Justice announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened. The Criminal Division has also frequently stated an intention to pursue corporations in criminal prosecutions, including in its most recent Memorandum dated September 15, 2022.
The District Court also awarded the Company its attorneys’ fees and costs. On October 4, 2022, Tower Health filed a Rule 59 motion to alter or amend the District Court’s judgment and a Rule 51 15 motion to amend its pleadings. The Company has filed oppositions to both motions and has separately moved for its attorney’s fees.
The District Court also awarded the Company its attorneys’ fees and costs. On October 4, 2022, Tower Health filed a Rule 59 motion to alter or amend the District Court’s judgment and a Rule 15 motion to amend its pleadings. The Company has filed oppositions to both motions and has separately moved for its attorney’s fees.
Efforts by management, through the voluntary compliance program, to identify and limit risk from these government audits have included significant policy and guidance revisions, training and education, and auditing. Item 4. Mine Saf ety Disclosures Not applicable. 52 PART II
Efforts by management, through the voluntary compliance program, to identify and limit risk from these government audits have included significant policy and guidance revisions, training and education, and auditing. Item 4. Mine Saf ety Disclosures Not applicable. 54 PART II
On August 11, 2023, the District Court denied Tower Health’s Rule 59 and Rule 15 motions. Tower Health appealed the District Courts judgment to the United States Court of Appeals for the Third Judicial District.
On August 11, 2023, the District Court denied Tower Health’s Rule 59 and Rule 15 motions. Tower Health appealed the District Court’s judgment to the United States Court of Appeals for the Third Judicial District.
Settlements of suits involving Medicare and Medicaid issues routinely require both monetary payments as well as corporate integrity agreements. Additionally, qui tam or “whistleblower” actions initiated under the FCA may be pending but placed under seal by the court to comply with the FCA’s requirements for filing such suits. In September 2014, the Criminal Division of the U.S.
Settlements of suits involving Medicare and Medicaid issues routinely require both monetary payments as well as corporate integrity agreements. Additionally, qui tam or “whistleblower” actions initiated under the FCA may be pending but placed under seal by the court to comply with the FCA’s requirements for filing such suits.
We filed a motion to dismiss on January 14, 2022, and oral argument on that motion was heard on July 21, 2022. On March 16, 2023, the District Court granted in part and denied in part our motion to dismiss. We continue to vigorously defend this case.
We filed a motion to dismiss on January 14, 2022, and oral argument on that motion was heard on July 21, 2022. On March 16, 2023, the District Court granted in part and denied in part our motion to dismiss. On August 25, 2025, we filed a motion for summary judgment, which is pending.
The Third Circuit Court of Appeals affirmed the District Court’s opinion, awarded our attorneys’ fees and costs on appeal, and ordered the case remanded to the District Court on October 2, 2024. The District Court will now hear our application for attorneys’ fees. Daniel H.
The Third Circuit Court of Appeals affirmed 53 the District Court’s opinion, awarded our attorneys’ fees and costs on appeal, and ordered the case remanded to the District Court on October 2, 2024. We have reached a settlement of the attorneys’ fees issue, and this matter has been fully resolved. Daniel H.
From time to time, we detect issues of non-compliance with Federal healthcare laws pertaining to claims submission and reimbursement practices and/or financial relationships with physicians.
From time to time, we detect issues of non-compliance with federal healthcare laws pertaining to claims submission and reimbursement practices and/or financial relationships with physicians. We avail ourselves of various mechanisms to address potential overpayments arising out of these issues, including repayment of claims, rebilling of claims, and participation in voluntary disclosure protocols offered by CMS and the OIG.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total Number of Shares Purchased (a) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(b) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs(b) October 1, 2024 - October 31, 2024 7,790 $ 5.92 — — November 1, 2024 - November 30, 2024 975 4.38 — — December 1, 2024 - December 31, 2024 650 3.42 — — Total 9,415 $ 5.59 — — (a) Includes 9,415 shares withheld by us to satisfy the payment of tax obligations related to the vesting of restricted stock awards.
Biggest changePeriod Total Number of Shares Purchased (a) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(b) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs(b) October 1, 2025 - October 31, 2025 4,364 $ 3.13 — — November 1, 2025 - November 30, 2025 — — — — December 1, 2025 - December 31, 2025 — — — — Total 4,364 $ 3.13 — — (a) Includes 4,364 shares withheld by us to satisfy the payment of tax obligations related to the vesting of restricted stock awards.
The ABL Facility and the indentures governing the senior and senior secured notes contain various covenants under which the assets of our subsidiaries are subject to certain restrictions relating to, among other matters, dividends and distributions, as referenced in the paragraph below. 53 The ABL Facility and the indentures governing each series of our outstanding notes restrict our subsidiaries from, among other matters, paying dividends and making distributions to us, which thereby limits our ability to pay dividends and/or repurchase stock.
The ABL Facility and the indentures governing the senior and senior secured notes contain various covenants under which the assets of our subsidiaries are subject to certain restrictions relating to, among other matters, dividends and distributions, as referenced in the paragraph below. 55 The ABL Facility and the indentures governing each series of our outstanding notes restrict our subsidiaries from, among other matters, paying dividends and making distributions to us, which thereby limits our ability to pay dividends and/or repurchase stock.
At December 31, 2024, under the most restrictive test in these agreements (and subject to certain exceptions), we have approximately $300 million of capacity to pay permitted dividends and/or repurchase shares of stock or make other restricted payments. The following table contains information about our purchases of common stock during the three months ended December 31, 2024.
At December 31, 2025, under the most restrictive test in these agreements (and subject to certain exceptions), we have approximately $300 million of capacity to pay permitted dividends and/or repurchase shares of stock or make other restricted payments. The following table contains information about our purchases of common stock during the three months ended December 31, 2025.
Stock Performance Graph The following graph sets forth the cumulative return of our common stock during the five year period ended December 31, 2024, as compared to the cumulative return of the Standard & Poor’s 500 Stock Index (S&P 500) and the cumulative return of the Dow Jones Healthcare Index.
Stock Performance Graph The following graph sets forth the cumulative return of our common stock during the five year period ended December 31, 2025, as compared to the cumulative return of the Standard & Poor’s 500 Stock Index (S&P 500) and the cumulative return of the Dow Jones Healthcare Index.
(b) We had no open market share repurchase programs for shares of our common stock during the three months ended December 31, 2024. Item 6. Reserved Reserved. 54
(b) We had no open market share repurchase programs for shares of our common stock during the three months ended December 31, 2025. Item 6. Reserved Reserved. 56
As of February 13, 2025, there were approximately 179 holders of record of our common stock.
As of February 13, 2026, there were approximately 160 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeNet 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, • an after-tax charge of $116 million for a change in estimate for professional liability claims accrual. 56 Net income for the year ended December 31, 2023 included the following: • an after-tax charge of $28 million for expense related to government and other legal matters and related costs, • an after-tax benefit of $61 million for gain from early extinguishment of debt, • an after-tax charge of $17 million for expense related to costs associated with our multi-year initiative to modernize and consolidate technology platforms and associated processes, • an after-tax benefit of $42 million resulting from gains on the sale of five hospitals and the sale of a majority interest in one hospital, offset by losses on the sale of three hospitals and impairment of long-lived assets that were idled, disposed or held-for-sale, and • an after-tax charge of $10 million for restructuring charges related to the closure of businesses as well as service line closures and consolidations at certain hospitals.
Biggest changeNet 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.
Collection of these 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.
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.
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 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.
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.
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. 67 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.
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.
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 72 the timing of such payments being different from this average.
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 divested locations.
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 73 increase in estimate related to divested locations.
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 70 increase to $10 million per claim for any subsequent claims in that policy year until our total aggregate coverage is met.
For certain policy years prior to June 1, 2014, if the first aggregate layer of excess coverage becomes fully utilized, then the self-insured retention will increase to $10 million per claim for any subsequent claims in that policy year until our total aggregate coverage is met.
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.
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 64 supplemental reimbursement programs, partially offset by lower acuity and increased patient claim denials.
(b) Admissions represents the number of patients admitted for inpatient treatment. (c) Adjusted admissions is a general measure of combined inpatient and outpatient volume. Adjusted admissions is computed by multiplying admissions by gross patient revenues and then dividing that number by gross inpatient revenues. (d) Average length of stay represents the average number of days inpatients stay in our hospitals.
(b) Admissions represents the number of patients admitted for inpatient treatment. (c) 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. (d) Average length of stay represents the average number of days inpatients stay in our hospitals.
Within these automated systems, payors’ historical paid claims data and 66 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.
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 estimate 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.
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 policy is to write-off gross 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.
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.
Such changes impacting the calculation of our fair value could result in a material impairment charge in the future. 68 Professional Liability Claims As part of our business of providing healthcare services, we are subject to legal actions alleging liability on our part.
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.
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. 61 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) 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.
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 future deficit reduction legislation; • increases in the amount and risk of collectability of patient accounts receivable, including decreases in collectability which may result from, among other things, self-pay growth and difficulties in recovering payments for which patients are responsible, including co-pays and deductibles; • the efforts of insurers, healthcare providers, large employer groups and others to contain healthcare costs, including the trend toward value-based purchasing 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.
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; 75 • 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.
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.
Historically, the strongest demand for hospital services generally occurs during the winter months, and the weakest demand generally occurs during the summer months. 62 The following tables summarize, for the periods indicated, selected operating data.
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 2024 using the October 31, 2024 measurement date, which indicated no impairment.
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.
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, 2024, 2023 and 2022. Patient Accounts Receivable Substantially all of our accounts receivable are related to providing healthcare services to patients at our hospitals and affiliated businesses.
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.
Patient accounts receivable can be impacted by the effectiveness of our collection efforts and, as described in our significant accounting policies included in Note 1 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K, numerous factors may affect the net realizable value of accounts receivable.
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.
Refer to Notes 6, 9 and 16 of the Notes to Consolidated Financial Statements for amounts outstanding at December 31, 2024 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.
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.
There were no other significant changes in our estimate of the reserve for professional liability claims during the years ended December 31, 2024, 2023 and 2022. 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.
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.
During the year 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.
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.
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, 2024 and 2023.
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.
Our ability to estimate the transaction price and any implicit price concessions is not impacted by not utilizing an aging of our net accounts receivable as we believe that substantially all of the risk exists at the point in time such accounts are identified as self-pay.
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 70 identified as self-pay.
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 Knox, Indiana.
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.
These events could adversely 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.
Any of these events could adversely impact our future financial results. We 69 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.
Impairment and (gain) loss on sale of businesses, net was expense of $301 million for the year ended December 31, 2024, compared to a gain of $87 million for the same period in 2023.
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.
We had approximately $1.6 billion and $1.7 billion at December 31, 2024 and 2023, 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 accounts receivable.
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.
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 satisfy current Affordable Care Act consumer protections, which could increase rates of uninsured and underinsured individuals and destabilize insurance markets.
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 satisfy current Affordable Care Act consumer protections. Any of these developments could increase rates of uninsured and underinsured individuals and destabilize insurance markets.
Goodwill At December 31, 2024, we had approximately $3.8 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 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.
(2) Total expense, including premiums for insured coverage, was $372 million in 2024, $208 million in 2023 and $132 million in 2022. 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.
(2) 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.
Since we believe that the amount and timing of our future claims payments are reliably determinable, we discount the amount we accrue for losses resulting from professional liability claims. The net present value of the projected payments was discounted using weighted-average risk free rates of 3.7% in both 2024 and 2023, and 3.8% in 2022.
Since we believe that the amount and timing of our future claims payments are reliably determinable, we discount the amount we accrue for losses resulting from professional liability claims. 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.
The following information should be read in conjunction with our significant accounting policies included in Note 1 of the Notes to the Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K.
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.
We expect legal challenges to healthcare regulations and agency guidance, including those related to Medicare and Medicaid payment policies, to increase as a result of recent U.S. Supreme Court decisions as noted above. The increased potential for legal challenges may result in delays in and other impacts to the agency rulemaking process.
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 challenges may result in delays in and other impacts to the agency rulemaking process.
These factors include, among other things: • general economic and business conditions, both nationally and in the regions in which we operate, including the impact in recent periods of challenging macroeconomic conditions and inflationary pressures, the current high interest rate environment, and current geopolitical instability, as well as the potential impact on us of political, financial, credit and capital conditions; • the impact of current and future healthcare public policy developments and possible changes to 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; • 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; 71 • 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.
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.
Acquisition, Divestiture and Closure Activity During the year ended December 31, 2024, we paid approximately $25 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.
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.
Significant assumptions are made on the basis of the aforementioned information in estimating reserves for incurred but not reported claims. A 1% change in assumptions for either severity or frequency at December 31, 2024 would have increased or decreased the reserve by approximately $5 million to $10 million.
Significant assumptions are made on the basis of the aforementioned information in estimating reserves for incurred but not reported claims. A 1% change in assumptions for either severity or frequency as of December 31, 2025 would have increased or decreased the reserve by approximately $5 million to $10 million.
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 $66 million as well as approximately $9 million representing the maximum potential amount of future payments under physician recruiting guarantee commitments in excess of the liability recorded at December 31, 2024.
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.
Year Ended December 31, 2024 2023 2022 Medicare 18.1 % 19.9 % 20.9 % Medicare Managed Care 17.7 16.8 16.1 Medicaid 14.8 14.3 14.8 Managed Care and other third-party payors 48.1 47.9 47.5 Self-pay 1.3 1.1 0.7 Total 100.0 % 100.0 % 100.0 % As shown above, we receive a substantial portion of our revenues from the Medicare, Medicare Managed Care and Medicaid programs.
Year Ended December 31, 2025 2024 2023 Medicare 17.4 % 18.1 % 19.9 % Medicare Managed Care 18.0 17.7 16.8 Medicaid 16.0 14.8 14.3 Managed Care and other third-party payors 47.8 48.1 47.9 Self-pay 0.8 1.3 1.1 Total 100.0 % 100.0 % 100.0 % As shown above, we receive a substantial portion of our revenues from the Medicare, Medicare Managed Care and Medicaid programs.
Open purchase orders total $146 million at December 31, 2024 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.
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.
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 $42 million at December 31, 2024.
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.
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. 2023 Compared to 2022 Net cash provided by operating activities was approximately $210 million for the year ended December 31, 2023, compared to $300 million for the year ended December 31, 2022.
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.
A total of $5 million of interest and penalties is included in the amount of liability for uncertain tax positions at December 31, 2024. It is our policy to recognize interest and penalties related to unrecognized benefits in our consolidated statements of (loss) income as income tax expense.
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.
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.
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.
Hospitals that do not submit required patient quality data are subject to a reduction in payments. 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.
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.
Year Ended December 31, 2024 2023 2022 Operating results, as a percentage of net operating revenues: Net operating revenues 100.0 % 100.0 % 100.0 % Operating expenses (a) (89.5 ) (89.0 ) (88.3 ) Depreciation and amortization (3.8 ) (4.0 ) (4.4 ) Impairment and gain (loss) on sale of businesses, net (2.4 ) 0.7 (0.6 ) Income from operations 4.3 7.7 6.7 Interest expense, net (6.8 ) (6.7 ) (7.0 ) Gain from early extinguishment of debt 0.2 0.6 2.1 Gain from CoreTrust Transaction — — 1.0 Equity in earnings of unconsolidated affiliates 0.1 0.1 0.1 (Loss) income before income taxes (2.2 ) 1.7 2.9 Provision for income taxes (0.7 ) (1.6 ) (1.4 ) Net (loss) income (2.9 ) 0.1 1.5 Less: Net income attributable to noncontrolling interests (1.2 ) (1.2 ) (1.1 ) Net (loss) income attributable to Community Health Systems, Inc. stockholders (4.1 )% (1.1 )% 0.4 % Year Ended December 31, 2024 2023 Percentage increase (decrease) from prior year: Net operating revenues 1.2 % 2.3 % Admissions (b) (3.2 ) 0.3 Adjusted admissions (c) (3.4 ) 1.7 Average length of stay (d) (2.2 ) (4.3 ) Net (loss) income attributable to Community Health Systems, Inc. stockholders (288.0 ) (389.1 ) Same-store percentage increase from prior year (e): Net operating revenues 5.5 % 4.8 % Admissions (b) 3.2 3.5 Adjusted admissions (c) 2.7 5.3 (a) Operating expenses include salaries and benefits, supplies, other operating expenses, and lease cost and rent, net of the reduction in operating expenses resulting from the recognition of pandemic relief funds.
Year Ended December 31, 2025 2024 2023 Operating results, as a percentage of net operating revenues: Net operating revenues 100.0 % 100.0 % 100.0 % Operating expenses (a) (88.0 ) (89.5 ) (89.0 ) Depreciation and amortization (3.4 ) (3.8 ) (4.0 ) Impairment and gain (loss) on sale of businesses, net 3.3 (2.4 ) 0.7 Income from operations 11.9 4.3 7.7 Interest expense, net (7.0 ) (6.8 ) (6.7 ) Gain from early extinguishment of debt 0.8 0.2 0.6 Equity in earnings of unconsolidated affiliates 0.1 0.1 0.1 Income (loss) before income taxes 5.8 (2.2 ) 1.7 Provision for income taxes (0.4 ) (0.7 ) (1.6 ) Net income (loss) 5.4 (2.9 ) 0.1 Less: Net income attributable to noncontrolling interests (1.3 ) (1.2 ) (1.2 ) Net income (loss) attributable to Community Health Systems, Inc. stockholders 4.1 % (4.1 )% (1.1 )% Year Ended December 31, 2025 2024 Percentage (decrease) increase from prior year: Net operating revenues (1.2 )% 1.2 % Admissions (b) (5.4 ) (3.2 ) Adjusted admissions (c) (6.3 ) (3.4 ) Average length of stay (d) (2.3 ) (2.2 ) Net income (loss) attributable to Community Health Systems, Inc. stockholders 198.6 (288.0 ) Same-store percentage increase from prior year (e): Net operating revenues 4.6 % 5.5 % Admissions (b) 1.5 3.2 Adjusted admissions (c) 0.6 2.7 (a) Operating expenses include salaries and benefits, supplies, other operating expenses, and lease cost and rent.
The approximate percentage of total gross accounts receivable (prior to allowance for contractual adjustments and implicit price concessions) summarized by payor and aging categories is as follows: At December 31, 2024: % of Gross Receivables Payor 0 - 90 Days 90 - 180 Days 180 - 365 Days Over 365 Days Medicare 10 % — % — % — % Medicare Managed Care 16 % 3 % 3 % 2 % Medicaid 6 % 1 % 1 % 1 % Managed Care and other third-party payors 19 % 3 % 3 % 3 % Self-Pay 7 % 6 % 8 % 8 % At December 31, 2023: % of Gross Receivables Payor 0 - 90 Days 90 - 180 Days 180 - 365 Days Over 365 Days Medicare 10 % 1 % 1 % — % Medicare Managed Care 16 % 3 % 3 % 2 % Medicaid 6 % 1 % 1 % 1 % Managed Care and other third-party payors 18 % 3 % 3 % 3 % Self-Pay 7 % 6 % 7 % 8 % The approximate percentage of total gross accounts receivable (prior to allowances for contractual adjustments and implicit price concessions) summarized by payor type is as follows: December 31, 2024 2023 Insured receivables 72.4 % 72.1 % Self-pay receivables 27.6 27.9 Total 100.0 % 100.0 % The combined total at our hospitals and clinics for the estimated implicit price concessions for self-pay accounts receivable and allowances for other self-pay discounts and contractuals, as a percentage of gross self-pay receivables, was approximately 90% and 91% at December 31, 2024 and 2023, 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 10 % — % — % 1 % Medicare Managed Care 17 % 3 % 3 % 3 % Medicaid 5 % 1 % 1 % 1 % Managed Care and other third-party payors 18 % 3 % 3 % 4 % Self-Pay 7 % 5 % 7 % 8 % At December 31, 2024: % of Gross Receivables Payor 0 - 90 Days 90 - 180 Days 180 - 365 Days Over 365 Days Medicare 10 % — % — % — % Medicare Managed Care 16 % 3 % 3 % 2 % Medicaid 6 % 1 % 1 % 1 % Managed Care and other third-party payors 19 % 3 % 3 % 3 % Self-Pay 7 % 6 % 8 % 8 % 71 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, 2025 2024 Insured receivables 73.5 % 72.4 % Self-pay receivables 26.5 27.6 Total 100.0 % 100.0 % 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.
As of December 31, 2024, our subsidiaries own or lease 76 affiliated hospitals, with more than 11,000 beds, and operate more than 1,000 sites of care, including physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers.
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 cannot predict whether additional reimbursement reductions will be made or whether any such changes or other restructuring of the financing and delivery of healthcare would have a material adverse effect on our business, financial conditions, results of operations, cash flow, capital resources and liquidity.
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.
Generally, these hospitals and non-hospital businesses are not in one of our strategically beneficial services 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.
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.
Regulatory uncertainty has 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 , and the outcome of the 2024 federal elections. These U.S.
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 59 Loper Bright Enterprises v. Raimondo . These U.S.
Self-pay revenues represented approximately 1.3% and 1.1% of net operating revenues for the years ended December 31, 2024 and 2023, respectively. The amount of foregone revenue related to providing charity care services as a percentage of net operating revenues was approximately 9.5% and 10.4% for the years ended December 31, 2024 and 2023, respectively.
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.
Our affiliates are leading providers of healthcare services, developing and operating healthcare delivery systems in 39 distinct markets across 15 states.
Our affiliates are leading providers of healthcare services, developing and operating healthcare delivery systems in 36 distinct markets across 14 states.
We are unable to predict 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 59 and payment is reasonably assured.
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.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net operating revenues increased by 2.3% to approximately $12.5 billion for the year ended December 31, 2023, from approximately $12.2 billion for the year ended December 31, 2022.
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.
GAAP; • the availability and terms of capital to fund any additional acquisitions or replacement facilities or other capital expenditures; 72 • 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; • 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.
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. 76 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.
Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased $552 million, or 4.8%, during the year ended December 31, 2023, compared to the same period in 2022.
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.
If the actual contractual reimbursement percentage under government programs and managed care contracts differed by 1% at December 31, 2024 from our estimated reimbursement percentage, net loss for the year ended December 31, 2024 would have changed by approximately $100 million, and net accounts receivable at December 31, 2024 would have changed by $128 million.
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.
If the actual collection percentage differed by 1% at December 31, 2024 from our estimated collection percentage as a result of a change in expected recoveries, net loss for the year ended December 31, 2024 would have changed by $38 million, and net accounts receivable at December 31, 2024 would have changed by $49 million.
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.
Operating expenses, excluding depreciation and amortization and impairment and (gain) loss on sale of businesses, as a percentage of net operating revenues, increased from 88.3% for the year ended December 31, 2022 to 89.0% for the year ended December 31, 2023.
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.
Net income, as a percentage of net operating revenues, was 0.1% for the year ended December 31, 2023, compared to 1.5% for the same period in 2022. Net income attributable to noncontrolling interests, as a percentage of net operating revenues, was 1.2% for the year ended December 31, 2023, compared to 1.1% for the same period in 2022.
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.
The decrease is primarily due to decreases in prepaid expenses and taxes and prepaid income taxes and increases in accrued interest, accrued liabilities for employee compensation and other current liabilities during the year ended December 31, 2024, partially offset by increases in patient accounts receivable and other current assets and decreases in current operating lease liabilities.
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.
Consolidated inpatient admissions for the year ended December 31, 2024, decreased 3.2%, compared to the year ended December 31, 2023, and consolidated adjusted admissions for the year ended December 31, 2024, decreased 3.4%, compared to the year ended December 31, 2023.
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.
It is possible that future deficit reduction legislation will impose additional spending reductions. 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.
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.
CMS has published the final rule establishing payment rates for federal fiscal year 2025 (which began October 1, 2024) for hospital inpatient acute care services reimbursed under the prospective system, increasing payment rates by approximately 2.9%. This increase reflects a market basket increase of 3.4%, reduced by a 0.5 percentage point productivity adjustment.
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.
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.
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.
Impairment and (gain) loss on sale of businesses, net was a gain of $87 million for the year ended December 31, 2023, compared to expense of $71 million for the same period in 2022.
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.
On a same-store basis, net operating revenues per adjusted admission decreased 0.5%, while inpatient admissions increased by 3.5% and adjusted admissions increased by 5.3% for the year ended December 31, 2023, compared to the same period in 2022.
On a same-store 63 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.
The gain in 2023 and the expense in 2022 related primarily to divestiture activity during each respective period as discussed more specifically under “Acquisition, Divestiture and Closure Activity” herein. Interest expense, net, decreased by $28 million to $830 million for the year ended December 31, 2023 compared to $858 million for the same period in 2022.
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.
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, particularly those related to funding and expansion provisions of the Affordable Care Act.
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.
Moreover, in order to comply with budget neutrality requirements, HHS finalized a corresponding offset in future non-drug item and service payments for all outpatient PPS providers (except new providers) that will reduce the outpatient PPS conversion factor by 0.5% annually. This adjustment will start in calendar year 2026 and continue for approximately 16 years.
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.
As of December 31, 2024, approximately $20 million of our outstanding debt of approximately $11.5 billion is due within the next 12 months and approximately 97% of our outstanding debt has a fixed rate of interest. Our debt as a percentage of total capitalization was 117% at December 31, 2024, compared to 111% at December 31, 2023.
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.
Additional Liquidity Information For information regarding our amended and restated asset-based loan (ABL) credit agreement and our other outstanding indebtedness, see Note 6 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K.
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.
At this time, the other six states have opted out of Medicaid expansion, including Florida, Alabama, Tennessee, Mississippi and Texas, where we operated a significant number of hospitals at December 31, 57 2024.
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.
However, 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.
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.
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 of each year, commencing on August 15, 2024.
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.
Our expenditures for the years ended December 31, 2024, 2023 and 2022, were primarily related to physician practices, clinics, ambulatory surgery centers and other ancillary businesses. 65 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 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.
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, 2024, 2023 and 2022.
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.
On a period-over-period basis, the increase in net operating revenues was primarily attributable to higher inpatient and outpatient volumes, increased reimbursement rates, higher acuity and an increase in non-patient revenue, partially offset by unfavorable changes in payor mix.
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.
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.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe estimated fair value of our long-term debt, excluding finance leases, was approximately $9.9 billion at December 31, 2024. 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.
Biggest changeThe 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.
There was no comprehensive income or loss resulting from unrealized gains or losses on marketable securities during the year ended December 31, 2024. 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.
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.
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, 2024, we had outstanding borrowings of $341 million under the ABL Facility.
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.
Based on a hypothetical 1% increase in interest rates, the potential annualized reduction to future pre-tax earnings would be approximately $117 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. 73
To mitigate the impact of fluctuations in interest rates, we generally target a majority of our debt portfolio to be maintained at fixed rates. 77

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