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 April 15, 2025, CHS/Community Health Systems, Inc. (“CHS”), a wholly-owned subsidiary of Community Health Systems, Inc. (the “Company”), and certain subsidiaries of CHS (the “CHS Selling Entities”), entered into a definitive purchase agreement, as amended (the “Purchase Agreement”), with subsidiaries of Ascension Health (the “Purchaser”), and Cedar Park Health System, L.P. (the “Joint Venture”), providing for the sale of the CHS Selling Entities’ 80% ownership interest in the Joint Venture, which owns and operates Cedar Park Regional Medical Center in Cedar Park, Texas, and related businesses (the “Facility”) (the transaction contemplated by the Purchase Agreement, the “Transaction”). On June 30, 2025, the Transaction was completed pursuant to the terms of the Purchase Agreement. The purchase price paid to the CHS Selling Entities in connection with the Transaction at closing on June 30, 2025, after giving effect to estimated working capital and other purchase price adjustments was $436 million in cash (subject to a post-closing working capital adjustment). In addition, contemporaneous with the closing of the Transaction, in connection with the balance of certain amounts due to the Joint Venture from CHS and in accordance with the terms of the Purchase Agreement, the CHS Selling Entities distributed approximately $23 million in cash (subject to a post-closing adjustment) to the Purchaser for their share of amounts owed to the Joint Venture by the CHS Selling Entities.

 

The Company has determined that the operations of the Facility that was 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 March 31, 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 loss for the three months ended March 31, 2025 and the year ended December 31, 2024 (collectively 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 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, 2025, included in the Company’s Quarterly Report on Form 10-Q filed on April 24, 2025, and 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2025

 

 

 

 

 

 

Pro Forma

 

 

 

 

 

 

As Reported

 

 

Adjustments

 

 

Pro Forma

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

431

 

 

$

 

413

 

a

$

 

844

 

Patient accounts receivable

 

 

 

2,326

 

 

 

 

(35

)

b

 

 

2,291

 

Supplies

 

 

 

328

 

 

 

 

(6

)

b

 

 

322

 

Prepaid expenses and taxes

 

 

 

261

 

 

 

 

(1

)

b

 

 

260

 

Other current assets

 

 

 

61

 

 

 

 

(2

)

b

 

 

59

 

Total current assets

 

 

 

3,407

 

 

 

 

369

 

 

 

 

3,776

 

Property and equipment

 

 

 

9,200

 

 

 

 

(197

)

b

 

 

9,003

 

Less accumulated depreciation and amortization

 

 

 

(4,458

)

 

 

 

95

 

b

 

 

(4,363

)

Property and equipment, net

 

 

 

4,742

 

 

 

 

(102

)

 

 

 

4,640

 

Goodwill

 

 

 

3,785

 

 

 

 

(181

)

b

 

 

3,604

 

Deferred income taxes

 

 

 

13

 

 

 

 

-

 

 

 

 

13

 

Other assets, net

 

 

 

1,943

 

 

 

 

(11

)

b

 

 

1,932

 

Total assets

 

$

 

13,890

 

 

$

 

75

 

 

$

 

13,965

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

 

29

 

 

$

 

-

 

 

$

 

29

 

Current operating lease liabilities

 

 

 

112

 

 

 

 

(1

)

b

 

 

111

 

Accounts payable

 

 

 

974

 

 

 

 

(8

)

b

 

 

966

 

Income tax payable

 

 

 

96

 

 

 

 

50

 

c

 

 

146

 

Accrued liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation

 

 

 

478

 

 

 

 

(4

)

b

 

 

474

 

Accrued interest

 

 

 

198

 

 

 

 

-

 

 

 

 

198

 

Other

 

 

 

483

 

 

 

 

(1

)

b

 

 

482

 

Total current liabilities

 

 

 

2,370

 

 

 

 

36

 

 

 

 

2,406

 

Long-term debt

 

 

 

11,303

 

 

 

 

-

 

 

 

 

11,303

 

Deferred income taxes

 

 

 

205

 

 

 

 

-

 

 

 

 

205

 

Long-term operating lease liabilities

 

 

 

535

 

 

 

 

(5

)

b

 

 

530

 

Other long-term liabilities

 

 

 

806

 

 

 

 

(1

)

b

 

 

805

 

Total liabilities

 

 

 

15,219

 

 

 

 

30

 

 

 

 

15,249

 

Redeemable noncontrolling interests in equity of consolidated subsidiaries

 

 

 

364

 

 

 

 

-

 

 

 

 

364

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

Community Health Systems, Inc. stockholders’ deficit:

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

Common stock

 

 

 

1

 

 

 

 

-

 

 

 

 

1

 

Additional paid-in capital

 

 

 

2,176

 

 

 

 

-

 

 

 

 

2,176

 

Accumulated other comprehensive loss

 

 

 

(7

)

 

 

 

-

 

 

 

 

(7

)

Accumulated deficit

 

 

 

(4,093

)

 

 

 

93

 

d

 

 

(4,000

)

Total Community Health Systems, Inc. stockholders’ deficit

 

 

 

(1,923

)

 

 

 

93

 

 

 

 

(1,830

)

Noncontrolling interests in equity of consolidated subsidiaries

 

 

 

230

 

 

 

 

(48

)

b

 

 

182

 

Total stockholders’ deficit

 

 

 

(1,693

)

 

 

 

45

 

 

 

 

(1,648

)

Total liabilities and stockholders’ deficit

 

$

 

13,890

 

 

$

 

75

 

 

$

 

13,965

 


 

 


 

 

Unaudited Pro Forma Condensed Consolidated Statement of Loss

 

(In millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2025

 

 

 

 

 

Pro Forma

 

 

 

 

 

 

 

As Reported

 

 

Adjustments

 

 

 

Pro Forma

 

Net operating revenues

$

 

3,159

 

 

$

 

(45

)

 e

 

$

 

3,114

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

1,372

 

 

 

 

(18

)

 e

 

 

 

1,354

 

Supplies

 

 

489

 

 

 

 

(6

)

 e

 

 

 

483

 

Other operating expenses

 

 

865

 

 

 

 

(13

)

 e

 

 

 

852

 

Lease cost and rent

 

 

68

 

 

 

 

(1

)

 e

 

 

 

67

 

Depreciation and amortization

 

 

105

 

 

 

 

(2

)

 e

 

 

 

103

 

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

 

 

(24

)

 

 

 

-

 

 

 

 

 

(24

)

Total operating costs and expenses

 

 

2,875

 

 

 

 

(40

)

 e

 

 

 

2,835

 

Income from operations

 

 

284

 

 

 

 

(5

)

 

 

 

 

279

 

Interest expense, net

 

 

219

 

 

 

 

-

 

 

 

 

 

219

 

Gain from early extinguishment of debt

 

 

-

 

 

 

 

-

 

 

 

 

 

-

 

Equity in earnings of unconsolidated affiliates

 

 

(2

)

 

 

 

-

 

 

 

 

 

(2

)

Income before income taxes

 

 

67

 

 

 

 

(5

)

 

 

 

 

62

 

Provision for income taxes

 

 

42

 

 

 

 

(1

)

 c

 

 

 

41

 

Net income

 

 

25

 

 

 

 

(4

)

 

 

 

 

21

 

Less: Net income attributable to noncontrolling interests

 

 

38

 

 

 

 

(1

)

 e

 

 

 

37

 

Net loss attributable to Community Health Systems,

 

 

 

 

 

 

 

 

 

 

 

 

Inc. stockholders

$

 

(13

)

 

$

 

(3

)

 

 

$

 

(16

)

Loss per share attributable to Community

 

 

 

 

 

 

 

 

 

 

 

 

Health Systems, Inc. stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

 

(0.10

)

 

 

 

 

 

 

$

 

(0.12

)

Diluted

$

 

(0.10

)

 

 

 

 

 

 

$

 

(0.12

)

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

133

 

 

 

 

 

 

 

 

 

133

 

Diluted

 

 

133

 

 

 

 

 

 

 

 

 

133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

$

 

(196

)

 e

 

$

 

12,438

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

5,418

 

 

 

 

(75

)

 e

 

 

 

5,343

 

Supplies

 

 

1,946

 

 

 

 

(25

)

 e

 

 

 

1,921

 

Other operating expenses

 

 

3,642

 

 

 

 

(49

)

 e

 

 

 

3,593

 

Lease cost and rent

 

 

299

 

 

 

 

(5

)

 e

 

 

 

294

 

Depreciation and amortization

 

 

486

 

 

 

 

(7

)

 e

 

 

 

479

 

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

 

 

301

 

 

 

 

(143

)

 d

 

 

 

158

 

Total operating costs and expenses

 

 

12,092

 

 

 

 

(304

)

 

 

 

 

11,788

 

Income from operations

 

 

542

 

 

 

 

108

 

 

 

 

 

650

 

Interest expense, net

 

 

860

 

 

 

 

-

 

 

 

 

 

860

 

Gain from early extinguishment of debt

 

 

(25

)

 

 

 

-

 

 

 

 

 

(25

)

Equity in earnings of unconsolidated affiliates

 

 

(10

)

 

 

 

1

 

 e

 

 

 

(9

)

Loss before income taxes

 

 

(283

)

 

 

 

107

 

 

 

 

 

(176

)

Provision for income taxes

 

 

79

 

 

 

 

44

 

 c, d

 

 

 

123

 

Net loss attributable to Community Health Systems,

 

 

(362

)

 

 

 

63

 

 

 

 

 

(299

)

Less: Net income attributable to noncontrolling interests

 

 

154

 

 

 

 

(10

)

 e

 

 

 

144

 

Net loss attributable to Community Health Systems,

 

 

 

 

 

 

 

 

 

 

 

 

Inc. stockholders

$

 

(516

)

 

$

 

73

 

 

 

$

 

(443

)

Loss per share attributable to Community

 

 

 

 

 

 

 

 

 

 

 

 

Health Systems, Inc. stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

 

(3.90

)

 

 

 

 

 

 

$

 

(3.36

)

Diluted

$

 

(3.90

)

 

 

 

 

 

 

$

 

(3.36

)

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 cash consideration received from the sale of the Facility of approximately $436 million, net of the distribution of amounts due to the Joint Venture from CHS of approximately $23 million.
b)
Adjustments represent the elimination of assets and liabilities held for sale attributable to the Facility.
c)
Adjustments represent the impact to income taxes associated with the sale of the Facility. The benefit for the three months ended March 31, 2025, relates to the elimination of revenues, costs and expenses set forth in Note (e). For the twelve months ended December 31, 2024, a benefit of approximately $6 million related to the elimination of revenues, costs and expenses set forth in Note (e) is offset by income tax expense of approximately $50 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 $143 million pre-tax gain ($93 million after tax) on sale of the Facility calculated as follows:

Cash received

 $

 

436

 

Less: Cash paid for distribution to noncontrolling investor in joint venture

 

 

(23

)

Less: Carrying value of the Facility

 

 

(89

)

Less: Goodwill allocated to sale of the Facility

 

 

(181

)

Pro forma gain before income taxes

 

 

143

 

Provision for income taxes

 

 

(50

)

Pro forma net gain on sale of the Facility

 $

 

93

 

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