CHS - Community Health Systems Inc.

06/01/2026 | Press release | Distributed by Public on 06/01/2026 14:33

COMMUNITY HEALTH SYSTEMS, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Form 8-K)

COMMUNITY HEALTH SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On March 5, 2026, CHS/Community Health Systems, Inc. ("CHS"), a wholly-owned subsidiary of Community Health Systems, Inc. (the "Company"), entered into an asset purchase agreement, (the "Purchase Agreement"), with Freeman-Oak Hill Health System, d/b/a Freeman Health System (the "Purchaser"), providing for the Purchaser's acquisition of substantially all of the assets and assumption of certain liabilities from certain subsidiaries of CHS related to (i) Northwest Medical Center - Bentonville in Bentonville, Arkansas, (ii) Northwest Medical Center - Springdale in Springdale, Arkansas, (iii) Northwest Medical Center - Willow Creek Women's Hospital in Johnson, Arkansas, and (iv) Siloam Springs Regional Hospital in Siloam Springs, Arkansas, and the associated outpatient centers and practices (collectively, the "Facilities") (the transactions contemplated by the Purchase Agreement, the "Transaction"). On June 1, 2026, the Transaction was completed pursuant to the terms of the Purchase Agreement. The purchase price paid to CHS in connection with the closing of the Transaction, after giving effect to estimated working capital, the assumption of finance leases by the Purchaser and before certain transaction expenses, was $110 million in cash (subject to a post-closing working capital adjustment).

The Company has determined that the operations of the Facilities that were divested in the Transaction do not meet the definition of discontinued operations pursuant to Financial Accounting 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 March 31, 2026. The estimated loss on sale in connection with the Transaction is reflected in the unaudited pro forma condensed consolidated balance sheet within accumulated deficit.

The accompanying unaudited pro forma condensed consolidated statement of loss for the three months ended March 31, 2026 and statement of income for the year ended December 31, 2025 (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, 2025. 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 three months ended March 31, 2026, included in the Company's Quarterly Report on Form 10-Q filed on April 22, 2026, and the Company's financial

statements for the year ended December 31, 2025, included in the Company's Annual Report on Form 10-K filed on February 19, 2026.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

(In millions)

March 31, 2026

Pro Forma

As Reported

Adjustments

Pro Forma

ASSETS

Current assets

Cash and cash equivalents

$

712

$

107

a

$

819

Patient accounts receivable

2,139

-

2,139

Supplies

275

-

275

Prepaid income taxes

-

-

-

Prepaid expenses and taxes

226

-

226

Other current assets

421

(24

)

b

397

Total current assets

3,773

83

3,856

Property and equipment

8,088

-

8,088

Less accumulated depreciation and amortization

(3,887

)

-

(3,887

)

Property and equipment, net

4,201

-

4,201

Goodwill

3,130

-

3,130

Deferred income taxes

29

-

29

Other assets, net

2,047

(198

)

b

1,849

Total assets

$

13,180

$

(115

)

$

13,065

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities

Current maturities of long-term debt

$

29

$

-

$

29

Current operating lease liabilities

97

-

97

Accounts payable

790

-

790

Income tax payable

53

(7

)

c

46

Accrued liabilities:

Employee compensation

465

-

465

Accrued interest

178

-

178

Other

955

(60

)

b

895

Total current liabilities

2,567

(67

)

2,500

Long-term debt

10,127

-

10,127

Deferred income taxes

25

-

25

Long-term operating lease liabilities

504

-

504

Other long-term liabilities

922

-

922

Total liabilities

14,145

(67

)

14,078

Redeemable noncontrolling interests in equity of consolidated subsidiaries

260

-

260

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

(10

)

-

(10

)

Accumulated deficit

(3,628

)

(48

)

d

(3,676

)

Total Community Health Systems, Inc. stockholders' deficit

(1,454

)

(48

)

(1,502

)

Noncontrolling interests in equity of consolidated subsidiaries

229

-

229

Total stockholders' deficit

(1,225

)

(48

)

(1,273

)

Total liabilities and stockholders' deficit

$

13,180

$

(115

)

$

13,065

Unaudited Pro Forma Condensed Consolidated Statement of Loss

(In millions, except per share amounts)

Three Months Ended March 31, 2026

Pro Forma

As Reported

Adjustments

Pro Forma

Net operating revenues

$

2,965

$

(111

)

e

$

2,854

Operating costs and expenses:

Salaries and benefits

1,322

(49

)

e

1,273

Supplies

441

(18

)

e

423

Other operating expenses

828

(36

)

e

792

Lease cost and rent

69

(4

)

e

65

Depreciation and amortization

114

(4

)

e

110

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

(90

)

-

(90

)

Total operating costs and expenses

2,684

(111

)

2,573

Income from operations

281

-

281

Interest expense, net

213

-

213

Gain from early extinguishment of debt

8

-

8

Equity in earnings of unconsolidated affiliates

(4

)

-

(4

)

Income before income taxes

64

-

64

Provision for income taxes

89

-

c

89

Net loss

(25

)

-

(25

)

Less: Net income attributable to noncontrolling interests

33

-

33

Net loss attributable to Community Health Systems,

Inc. stockholders

$

(58

)

$

-

$

(58

)

Loss per share attributable to Community

Health Systems, Inc. stockholders:

Basic

$

(0.43

)

$

(0.43

)

Diluted

$

(0.43

)

$

(0.43

)

Weighted-average number of shares outstanding:

Basic

134

134

Diluted

134

134

Unaudited Pro Forma Condensed Consolidated Statement of Income

(In millions, except per share amounts)

Year Ended December 31, 2025

Pro Forma

As Reported

Adjustments

Pro Forma

Net operating revenues

$

12,485

$

(415

)

e

$

12,070

Operating costs and expenses:

Salaries and benefits

5,412

(186

)

e

5,226

Supplies

1,864

(71

)

e

1,793

Other operating expenses

3,424

(140

)

e

3,284

Lease cost and rent

277

(11

)

e

266

Depreciation and amortization

426

(14

)

e

412

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

(406

)

55

d

(351

)

Total operating costs and expenses

10,997

(367

)

10,630

Income from operations

1,488

(48

)

1,440

Interest expense, net

870

(2

)

e

868

Gain from early extinguishment of debt

(97

)

-

(97

)

Equity in earnings of unconsolidated affiliates

(9

)

-

(9

)

Income before income taxes

724

(46

)

678

(Benefit from) provision for income taxes

48

(9

)

c, d

39

Net income attributable to Community Health Systems,

676

(37

)

639

Less: Net income attributable to noncontrolling interests

167

-

167

Net income attributable to Community Health Systems,

Inc. stockholders

$

509

$

(37

)

$

472

Earnings per share attributable to Community

Health Systems, Inc. stockholders:

Basic

$

3.81

$

3.53

Diluted

$

3.77

$

3.50

Weighted-average number of shares outstanding:

Basic

134

134

Diluted

135

135


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 Facilities of approximately $110 million, net of transaction expenses of $3 million.
b)
Adjustments represent the elimination of assets and liabilities held for sale attributable to the Facilities.
c)
Adjustments represent the impact to income taxes associated with the sale of the Facilities. The income tax impact rounds to zero for the three months ended March 31, 2026 as it relates to the elimination of revenues, costs and expenses set forth in Note (e). For the twelve months ended December 31, 2025, there was an income tax benefit of approximately $2 million related to the elimination of revenues, costs and expenses set forth in Note (e) as well as an income tax benefit of approximately $7 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 $55 million pre-tax loss ($48 million after tax) on sale of the Facilities calculated as follows:

Consideration received

$

110

Less: Transaction expenses

(3

)

Less: Carrying value of the Facilities

(119

)

Less: Goodwill allocated to sale of the Facilities

(43

)

Pro forma loss before income taxes

(55

)

Provision for income taxes

7

Pro forma net loss on sale of the Facilities

$

(48

)

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