Community Health Systems (CYH) investor relations material

Key business trends and macro environment

• Early year optimism gave way to Q2 disruption from declining consumer confidence and inflation concerns, but Q3 saw stabilization and some recovery in volumes.

• Surgery volumes, especially elective outpatient procedures among commercially insured patients, remain soft and are expected to stay that way through year-end, likely due to economic factors and deferred care.

• Exposure to ACA exchange subsidies is limited, representing less than 5% of net revenue, and the company is prepared to assist patients with insurance eligibility as policy changes evolve.

• No material impact from the recent government shutdown; supplemental payment programs in several states are pending approval, with potential recognition by year-end.

Expense management and operational initiatives

• Professional fees are up 7% for the year, with guidance of 8-10% growth, driven by anesthesia and radiology; insourcing and contract negotiations are ongoing but challenges remain.

• Nursing wage increases are around 4%, expected to remain stable, and contract labor utilization has returned to pre-COVID levels.

• Supply chain improvements include a new ERP system, shared services, and inventory management, targeting $20-40 million in savings this year and $30-50 million next year.

Capital allocation and financial strategy

• Recent and pending divestitures, including hospitals and lab services, are expected to generate nearly $1 billion in cash, with proceeds prioritized for debt reduction.

• Leverage has decreased from 7.4x to 6.7x, with a goal to reach mid-5x in the next few years.

• No major inpatient expansions planned; capital spending will focus on outpatient growth and maintaining positive free cash flow.