EX-99.1 3 cyh-ex99_1.htm EX-99.1 EX-99.1

Exhibit Number

99.1

COMMUNITY HEALTH SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On July 22, 2025, CHS/Community Health Systems, Inc. (“CHS”), a wholly-owned subsidiary of Community Health Systems, Inc. (the “Company”), entered into a definitive asset purchase agreement, as amended (the “Purchase Agreement”), with Laboratory Corporation of America Holdings (the “Purchaser”), providing for the sale of select assets and assume certain leases of CHS’s ambulatory outreach business (collectively, the “Ambulatory Outreach Business”) across 13 states, including certain patient service centers and in-office phlebotomy locations (the transactions contemplated by the Purchase Agreement, the “Transaction”). On December 1, 2025, the Transaction was completed pursuant to the terms of the Purchase Agreement. The purchase price paid to the Company was approximately $194 million cash, before certain transaction expenses.

 

The Company has determined that the operations of the Ambulatory Outreach Business that were divested in the Transaction do not meet the definition of discontinued operations pursuant to Financial Accountings Standards Board Accounting Standards Codification 205 (ASC 205), “Presentation of Financial Statements.”

 

The accompanying unaudited pro forma condensed consolidated balance sheet of the Company is presented as if the Transaction had occurred as of September 30, 2025. The estimated gain on sale in connection with the Transaction is reflected in the unaudited pro forma condensed balance sheet within accumulated deficit.

 

The accompanying unaudited pro forma condensed consolidated statement of income for the nine months ended September 30, 2025 and the statement of loss for the year ended December 31, 2024 (the “Pro Forma Periods”) includes certain pro forma adjustments to illustrate the estimated effect of the Company’s disposition, as if the Transaction had occurred on January 1, 2024. The amounts included in the historical columns represent the Company’s historical balance sheet and statement of income (loss) for the Pro Forma Periods presented.

 

The accompanying unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and do not include all of the information and note disclosures required by generally accepted accounting principles of the United States (“GAAP”). Pro forma financial information is intended to provide information about the continuing impact of a transaction by showing how a specific transaction might have affected historical financial statements. Pro forma financial information illustrates only the isolated and objectively measurable (based on historically determined amounts) effects of a particular transaction, and excludes effects based on judgmental estimates of how historical management practices and operating decisions may or may not have changed as a result of the transaction. Therefore, pro forma financial information does not include information about the possible or expected impact of current actions taken by management in response to the Transaction, as if management’s actions were carried out in previous reporting periods.

 

The unaudited pro forma condensed consolidated financial information is subject to the assumptions and adjustments described in the accompanying notes. These assumptions and adjustments are based on information presently available. Actual adjustments may differ materially from the information presented. The unaudited pro forma condensed consolidated financial statements are based on the historical financial statements of the Company for each period presented and in the opinion of the Company’s management, all adjustments and disclosures necessary for a fair presentation of the pro forma data have been made. These unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the results of operations or financial condition that would have been achieved had events reflected been completed as of the dates indicated, and may not be useful in predicting the impact of the Transaction on the future financial condition and results of operations of the Company due to a variety of factors. These unaudited pro forma condensed consolidated financial statements and the notes thereto should be read in conjunction with the Company’s financial statements for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed on February 19, 2025.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

 

(In millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2025

 

 

 

 

 

 

Pro Forma

 

 

 

 

 

 

As Reported

 

 

Adjustments

 

 

Pro Forma

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

123

 

 

$

 

152

 

a

$

 

275

 

Patient accounts receivable

 

 

 

2,159

 

 

 

 

-

 

 

 

 

2,159

 

Supplies

 

 

 

325

 

 

 

 

-

 

 

 

 

325

 

Prepaid expenses and taxes

 

 

 

266

 

 

 

 

-

 

 

 

 

266

 

Other current assets

 

 

 

325

 

 

 

 

19

 

a

 

 

344

 

Total current assets

 

 

 

3,198

 

 

 

 

171

 

 

 

 

3,369

 

Property and equipment

 

 

 

9,064

 

 

 

 

-

 

 

 

 

9,064

 

Less accumulated depreciation and amortization

 

 

 

(4,444

)

 

 

 

-

 

 

 

 

(4,444

)

Property and equipment, net

 

 

 

4,620

 

 

 

 

-

 

 

 

 

4,620

 

Goodwill

 

 

 

3,540

 

 

 

 

-

 

 

 

 

3,540

 

Deferred income taxes

 

 

 

75

 

 

 

 

-

 

 

 

 

75

 

Other assets, net

 

 

 

1,806

 

 

 

 

(64

)

b

 

 

1,742

 

Total assets

 

$

 

13,239

 

 

$

 

107

 

 

$

 

13,346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

 

16

 

 

$

 

-

 

 

$

 

16

 

Current operating lease liabilities

 

 

 

110

 

 

 

 

-

 

 

 

 

110

 

Accounts payable

 

 

 

894

 

 

 

 

-

 

 

 

 

894

 

Income tax payable

 

 

 

3

 

 

 

 

27

 

b

 

 

30

 

Accrued liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation

 

 

 

468

 

 

 

 

-

 

 

 

 

468

 

Accrued interest

 

 

 

209

 

 

 

 

-

 

 

 

 

209

 

Other

 

 

 

478

 

 

 

 

-

 

 

 

 

478

 

Total current liabilities

 

 

 

2,178

 

 

 

 

27

 

 

 

 

2,205

 

Long-term debt

 

 

 

10,589

 

 

 

 

-

 

 

 

 

10,589

 

Deferred income taxes

 

 

 

30

 

 

 

 

-

 

 

 

 

30

 

Long-term operating lease liabilities

 

 

 

527

 

 

 

 

-

 

 

 

 

527

 

Other long-term liabilities

 

 

 

866

 

 

 

 

-

 

 

 

 

866

 

Total liabilities

 

 

 

14,190

 

 

 

 

27

 

 

 

 

14,217

 

Redeemable noncontrolling interests in equity of consolidated subsidiaries

 

 

 

323

 

 

 

 

-

 

 

 

 

323

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

Community Health Systems, Inc. stockholders’ deficit:

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

Common stock

 

 

 

1

 

 

 

 

-

 

 

 

 

1

 

Additional paid-in capital

 

 

 

2,183

 

 

 

 

-

 

 

 

 

2,183

 

Accumulated other comprehensive loss

 

 

 

(5

)

 

 

 

-

 

 

 

 

(5

)

Accumulated deficit

 

 

 

(3,681

)

 

 

 

80

 

d

 

 

(3,601

)

Total Community Health Systems, Inc. stockholders’ deficit

 

 

 

(1,502

)

 

 

 

80

 

 

 

 

(1,422

)

Noncontrolling interests in equity of consolidated subsidiaries

 

 

 

228

 

 

 

 

-

 

 

 

 

228

 

Total stockholders’ deficit

 

 

 

(1,274

)

 

 

 

80

 

 

 

 

(1,194

)

Total liabilities and stockholders’ deficit

 

$

 

13,239

 

 

$

 

107

 

 

$

 

13,346

 


 

Unaudited Pro Forma Condensed Consolidated Statement of Income

 

(In millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2025

 

 

 

 

 

Pro Forma

 

 

 

 

 

 

 

As Reported

 

 

Adjustments

 

 

 

Pro Forma

 

Net operating revenues

$

 

9,379

 

 

$

 

(68

)

 e

 

$

 

9,311

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

4,056

 

 

 

 

(21

)

 e

 

 

 

4,035

 

Supplies

 

 

1,418

 

 

 

 

(12

)

 e

 

 

 

1,406

 

Other operating expenses

 

 

2,583

 

 

 

 

(11

)

 e

 

 

 

2,572

 

Lease cost and rent

 

 

209

 

 

 

 

(1

)

 e

 

 

 

208

 

Depreciation and amortization

 

 

317

 

 

 

 

-

 

 

 

 

 

317

 

Impairment and (gain) loss on sale of businesses, net

 

 

(242

)

 

 

 

-

 

 

 

 

 

(242

)

Total operating costs and expenses

 

 

8,341

 

 

 

 

(45

)

 e

 

 

 

8,296

 

Income from operations

 

 

1,038

 

 

 

 

(23

)

 

 

 

 

1,015

 

Interest expense, net

 

 

649

 

 

 

 

-

 

 

 

 

 

649

 

Gain from early extinguishment of debt

 

 

(105

)

 

 

 

-

 

 

 

 

 

(105

)

Equity in earnings of unconsolidated affiliates

 

 

(9

)

 

 

 

-

 

 

 

 

 

(9

)

Income before income taxes

 

 

503

 

 

 

 

(23

)

 

 

 

 

480

 

(Benefit from) provision for income taxes

 

 

(13

)

 

 

 

5

 

 c

 

 

 

(8

)

Net income

 

 

516

 

 

 

 

(28

)

 

 

 

 

488

 

Less: Net income attributable to noncontrolling interests

 

 

117

 

 

 

 

-

 

 

 

 

 

117

 

Net income attributable to Community Health Systems,

 

 

 

 

 

 

 

 

 

 

 

 

Inc. stockholders

$

 

399

 

 

$

 

(28

)

 

 

$

 

371

 

Earnings per share attributable to Community

 

 

 

 

 

 

 

 

 

 

 

 

Health Systems, Inc. stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

 

2.99

 

 

 

 

 

 

 

$

 

2.79

 

Diluted

$

 

2.97

 

 

 

 

 

 

 

$

 

2.75

 

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

133

 

 

 

 

 

 

 

 

 

133

 

Diluted

 

 

135

 

 

 

 

 

 

 

 

 

135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited Pro Forma Condensed Consolidated Statement of Loss

 

(In millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2024

 

 

 

 

 

Pro Forma

 

 

 

 

 

 

 

As Reported

 

 

Adjustments

 

 

 

Pro Forma

 

Net operating revenues

$

 

12,634

 

 

$

 

(92

)

 e

 

$

 

12,542

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

5,418

 

 

 

 

(30

)

 e

 

 

 

5,388

 

Supplies

 

 

1,946

 

 

 

 

(17

)

 e

 

 

 

1,929

 

Other operating expenses

 

 

3,642

 

 

 

 

(13

)

 e

 

 

 

3,629

 

Lease cost and rent

 

 

299

 

 

 

 

(1

)

 e

 

 

 

298

 

Depreciation and amortization

 

 

486

 

 

 

 

-

 

 

 

 

 

486

 

Impairment and (gain) loss on sale of businesses, net

 

 

301

 

 

 

 

(107

)

 d

 

 

 

194

 

Total operating costs and expenses

 

 

12,092

 

 

 

 

(168

)

 

 

 

 

11,924

 

Income from operations

 

 

542

 

 

 

 

76

 

 

 

 

 

618

 

Interest expense, net

 

 

860

 

 

 

 

-

 

 

 

 

 

860

 

Gain from early extinguishment of debt

 

 

(25

)

 

 

 

-

 

 

 

 

 

(25

)

Equity in earnings of unconsolidated affiliates

 

 

(10

)

 

 

 

-

 

 

 

 

 

(10

)

Loss before income taxes

 

 

(283

)

 

 

 

76

 

 

 

 

 

(207

)

Provision for income taxes

 

 

79

 

 

 

 

34

 

 c, d

 

 

 

113

 

Net loss attributable to Community Health Systems,

 

 

(362

)

 

 

 

42

 

 

 

 

 

(320

)

Less: Net income attributable to noncontrolling interests

 

 

154

 

 

 

 

-

 

 

 

 

 

154

 

Net loss attributable to Community Health Systems,

 

 

 

 

 

 

 

 

 

 

 

 

Inc. stockholders

$

 

(516

)

 

$

 

42

 

 

 

$

 

(474

)

Loss per share attributable to Community

 

 

 

 

 

 

 

 

 

 

 

 

Health Systems, Inc. stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

 

(3.90

)

 

 

 

 

 

 

$

 

(3.59

)

Diluted

$

 

(3.90

)

 

 

 

 

 

 

$

 

(3.59

)

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

132

 

 

 

 

 

 

 

 

 

132

 

Diluted

 

 

132

 

 

 

 

 

 

 

 

 

132

 

 


NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following items resulted in adjustments in the unaudited pro forma condensed consolidated financial information:

a)
Adjustment represents consideration received from the sale of the Ambulatory Outreach Business of approximately $194 million, less transaction expenses. Approximately $19 million of consideration received is held in escrow and is reflected as a receivable within the condensed consolidated balance sheet.
b)
Adjustments represent the elimination of assets and liabilities held for sale attributable to the Ambulatory Outreach Business.
c)
Adjustments represent the impact to income taxes associated with the sale of the Ambulatory Outreach Business. The income tax expense for the nine months ended September 30, 2025 relates to the elimination of revenues, costs and expenses set forth in Note (e). For the twelve months ended December 31, 2024, income tax expense of approximately $7 million related to the elimination of revenues, costs and expenses set forth in Note (e) plus income tax expense of approximately $27 million related to the sale. The estimated tax effect of pro forma adjustments is calculated at the statutory rate for the respective period adjusted for discrete impacts including changes in valuation allowances.
d)
Adjustments reflect a $107 million pre-tax gain ($80 million after tax) on sale of the Ambulatory Outreach Business calculated as follows:

Consideration received

 $

 

194

 

Less: Carrying value of the Ambulatory Outreach Business

 

 

(64

)

Less: Transaction expenses

 

 

(23

)

Pro forma gain before income taxes

 

 

107

 

Provision for income taxes

 

 

(27

)

Pro forma net gain on sale of the Ambulatory Outreach Business

 $

 

80

 

e)
Adjustments reflect the elimination of revenues, costs and expenses directly attributable to the Ambulatory Outreach Business. Adjustments do not include certain general corporate overhead costs previously allocated to the Ambulatory Outreach Business that will have a continuing effect on the Company post-closing.