CYH Announces Fourth Quarter and Year-End 2017 Results

COMMUNITY HEALTH SYSTEMS, INC. ANNOUNCES

FOURTH QUARTER AND YEAR-END 2017 RESULTS AND 2018 GUIDANCE

FRANKLIN, Tenn. (February 27,

2018) Community Health Systems, Inc. (NYSE: CYH) (the Company ) today announced financial and operating results for the three months and year ended December 31, 2017.

The following highlights the financial and operating results for the three months ended December 31, 2017. Certain items have been

adjusted for items that management considers not reflective of ongoing operations as discussed further on pages 4 and 5 of this press release:

Net operating revenues for the three months ended December 31, 2017, totaled $3.059 billion, a 31.6 percent decrease, compared with

$4.469 billion for the same period in 2016. As further discussed below, the financial results include a change in estimate recorded by the Company during the three months ended December 31, 2017 to increase contractual allowances and the

provision for bad debts by a total of approximately $591 million as a result of information obtained from new accounting processes and methodologies implemented in preparation for the adoption of the new revenue recognition accounting guidance.

Loss from continuing operations attributable to Community Health Systems, Inc. common stockholders was $(2.010) billion, or $(17.95) per share

(diluted), for the three months ended December 31, 2017, compared with $(211) million, or $(1.91) per share (diluted), for the same period in 2016. Excluding the adjusting items as presented in the table in footnote (h) on page 17, loss

from continuing operations was $(0.25) per share (diluted).

Net loss attributable to Community Health Systems, Inc. common stockholders

was $(2.013) billion, or $(17.98) per share (diluted), for the three months ended December 31, 2017, compared with $(220) million, or $(1.99) per share (diluted), for the same period in 2016. Excluding the adjusting items as presented in the

table in footnote (h) on page 17, net loss attributable to Community Health Systems, Inc. common stockholders was $(0.28) per share (diluted), for the

CYH Announces Fourth Quarter and Year-End 2017 Results

three months ended December 31, 2017. For the three months ended December 31, 2017, loss from discontinued operations, net of tax, was approximately $(3) million, or $(0.03) per share

(diluted). Weighted-average shares outstanding (diluted) were 112 million for the three months ended December 31, 2017, and 111 million for the three months ended December 31, 2016.

Adjusted EBITDA for the three months ended December 31, 2017, was $409 million compared with $564 million for the same period in 2016,

representing a 27.5 percent decrease. Adjusted EBITDA for the three months ended December 31, 2017, includes an adjustment for the $591 million adverse impact of the change in estimate recorded during the three-month period to increase

contractual allowances and the provision for bad debts as noted above.

The consolidated operating results for the three months ended

December 31, 2017, reflect a 19.2 percent decrease in total admissions, and a 19.3 percent decrease in total adjusted admissions, compared with the same period in 2016. On a same-store basis, admissions decreased 1.7 percent and adjusted

admissions decreased 0.9 percent during the three months ended December 31, 2017, compared with the same period in 2016. On a same-store basis (as further defined in footnote (a) on page 14), net operating revenues increased 1.8 percent

during the three months ended December 31, 2017, compared with the same period in 2016.

Net operating revenues for the year ended

December 31, 2017, totaled $15.353 billion, a 16.7 percent decrease, compared with $18.438 billion for the same period in 2016.

from continuing operations attributable to Community Health Systems, Inc. common stockholders was $(2.447) billion, or $(21.89) per share (diluted), for the year ended December 31, 2017, compared with $(1.706) billion, or $(15.41) per share

(diluted), for the same period in 2016. Excluding the adjusting items as presented in the table in footnote (h) on page 17, loss from continuing operations was $(1.20) per share (diluted).

Net loss attributable to Community Health Systems, Inc. common stockholders was $(2.459) billion, or $(22.00) per share (diluted), for the

year ended December 31, 2017, compared with $(1.721) billion, or $(15.54) per share (diluted), for the same period in 2016. Excluding the adjusting items as presented in the table in footnote (h) on page 17, net loss attributable to

Community Health Systems, Inc. common stockholders was $(1.26) per share (diluted), for the year ended December 31, 2017. Loss from discontinued operations, net of tax, for the year ended December 31, 2017, was approximately $(12) million,

or $(0.11) per share (diluted). Weighted-average shares outstanding (diluted) were 112 million for the year ended December 31, 2017, and 111 million for the year ended December 31, 2016.

Adjusted EBITDA for the year ended December 31, 2017, was $1.703 billion compared with $2.225 billion for the same period in 2016,

representing a 23.5 percent decrease. Adjusted EBITDA for the year ended December 31, 2017, includes an adjustment for the $591 million adverse impact of the change in estimate recorded during the three months ended December 31, 2017 to

increase contractual allowances and the provision for bad debts as noted above.

The consolidated operating results for the year ended

December 31, 2017, reflect a 13.9 percent decrease in total admissions, and a 14.5 percent decrease in total adjusted admissions, compared with the same period in 2016. On a same-store basis, admissions decreased 1.9 percent and adjusted

admissions decreased 1.7 percent during the year ended December 31, 2017, compared with the same period in 2016. On a same-store basis (as further defined in footnote (a) on page 14), net operating revenues increased 0.2 percent

during the year ended December 31, 2017, compared with the same period in 2016.

Commenting on the results, Wayne T. Smith, chairman

and chief executive officer of Community Health Systems, Inc., said, We are pleased with our progress in the fourth quarter and expect to carry that momentum through 2018, as we execute strategies that we believe will strengthen our core

business and drive improved results. During the fourth quarter, we completed our 2017 announced divestiture plan and we intend to continue to optimize our portfolio in 2018 to help pay down debt and refine our portfolio to stronger markets. In 2018,

we remain committed to growth initiatives to advance our competitive position, including expanding our transfer and access program across our

CYH Announces Fourth Quarter and Year-End 2017 Results

networks, launching Accountable Care Organizations, and strategically expanding outpatient services. We are also committed to driving operational efficiencies, and, as always, are dedicated to

patient safety and clinical advancements that improve healthcare for the patients and communities we serve.

2018, the Company amended its Credit Facility, with requisite revolving lender approval, to remove the EBITDA to interest expense ratio financial covenant, to replace the senior secured net debt to EBITDA ratio financial covenant with a first lien

net debt to EBITDA ratio financial covenant, and to reduce the extended revolving credit commitments to $650 million (for a total of $840 million in revolving credit commitments when combined with the non-extended portion of the revolving credit

facility). In addition, the Company agreed pursuant to the amendment to modify its ability to retain asset sale proceeds, and instead apply them to prepayments of term loans based on pro forma first lien leverage.

Impact of Hurricanes Harvey and Irma on Operating Results

During August and September 2017, the Company s facilities in Victoria, Texas, experienced an interruption in business and incurred

additional costs as a direct result of the landfall of Hurricane Harvey. Also during September 2017, due to the broad regional impact of Hurricane Irma, many of the Company s hospital operations in the state of Florida and at one of its

hospitals in the state of Georgia experienced disruptions, with the most significant impact on hospital operations in Key West and Punta Gorda, Florida. The Company estimates that these hurricanes resulted in a loss of net operating revenues

together with incremental expenses directly related to hurricane response efforts of approximately $40 million in the aggregate during the year ended December 31, 2017 and the three months ended September 30, 2017. The impact on net

operating revenues was the direct result of the evacuations and population disruption prior to the hurricanes, as well as during the aftermath and recovery efforts in the communities affected by the hurricanes. This estimated impact is prior to any

insurance recoveries which the Company may receive.

Completion of 2017 Divestiture Plan and Expansion of Divestiture Plan in 2018

The Company completed its divestiture of six hospitals on October 1, 2017, and two hospitals on November 1, 2017, bringing its total

completed divestitures during 2017 to the previously announced 30 hospitals that had been subject to definitive agreements. In addition to the previously announced divestiture of these 30 hospitals, the Company continues to receive interest from

acquirers for certain of its hospitals. The Company is pursuing these interests for sale transactions involving hospitals with a combined total of approximately $2.0 billion in annual net operating revenues and combined mid-single digit Adjusted

To understand the impact of the recent divestiture activity, financial and statistical data for 2017 and 2016 presented

in this press release include the following in operating results through the effective date of each respective transaction:

CYH Announces Fourth Quarter and Year-End 2017 Results

Information About Non-GAAP Financial Measures

Adjusted EBITDA, a non-GAAP financial measure, is EBITDA adjusted to add back net income attributable to noncontrolling interests and to

exclude the effect of discontinued operations, loss from early extinguishment of debt, impairment and (gain) loss on sale of businesses, gain on sale of investments in unconsolidated affiliates, expense incurred related to the spin-off of QHC,

expense incurred related to the sale of a majority ownership interest in the Company s home care division, expense (income) related to government and other legal settlements and related costs, expense related to employee termination benefits

and other restructuring charges, (income) expense from fair value adjustments on the CVR agreement liability accounted for at fair value related to the HMA legal proceedings, and related legal expenses, and the overall impact of the change in

estimate related to net patient revenue recorded in the fourth quarter of 2017 resulting from the increase in contractual allowances and the provision for bad debts.

Certain significant adjustments impacting reported amounts for the three months and year ended December 31, 2017, which were used in the

calculation of Adjusted EBITDA, non-GAAP adjusted loss from continuing operations attributable to Community Health Systems, Inc. common stockholders per share (diluted) and non-GAAP adjusted net loss attributable to Community Health Systems, Inc.

common stockholders per share (diluted) are further discussed below:

During the three months ended

December 31, 2017, the Company recorded non-cash impairment expense totaling $1.760 billion, resulting from an impairment charge of $1.419 billion on the value of goodwill for the Company s hospital reporting unit and impairment

charges of approximately $341 million to reduce the value of long-lived assets at hospitals that the Company has sold or identified for sale and at certain under-performing hospitals. The impairment charge recorded for goodwill resulted from a

determination that the carrying value of the Company s hospital operations reporting unit exceeded its fair value, primarily as the result of the decline in the Company s market capitalization and fair value of long-term debt during the

three months ended December 31, 2017, as well as a decrease in the estimated future earnings of the Company compared to previous estimates.

During the year ended December 31, 2017, the Company recorded non-cash impairment expense totaling $2.123 billion, resulting from the

fourth quarter impairment charge of $1.419 billion on the value of goodwill for the Company s hospital reporting unit noted above and impairment charges of approximately $704 million to reduce the value of long-lived assets at hospitals that

the Company has sold or identified for sale and at certain under-performing hospitals.

The impairment charges do not have an impact on

the calculation of the Company s financial covenants under the Company s Credit Facility.

generally accepted accounting principles, the Company adopted the new revenue recognition accounting standard on January 1, 2018. In connection with this adoption, during the fourth quarter of 2017, the Company completed an extensive analysis

of its patient revenues and patient accounts receivable and developed new accounting processes and methodologies. This analysis also included an evaluation of patient accounts receivable retained after the 2017 divestitures of 30 hospitals, and

certain other revenues. Based on the information obtained related to the aforementioned adoption, the financial results discussed below include a change in estimate recorded by the Company during the three months and year ended December 31,

2017 to increase contractual allowances and the provision for bad debts by approximately $591 million.

CYH Announces Fourth Quarter and Year-End 2017 Results

These changes in estimate are not expected to have a material impact on the recognition of

revenue on a prospective basis and do not have an impact on the calculation of the Company s financial covenants under the Company s Credit Facility. Additionally, the calculation of Adjusted EBITDA, as defined, excludes this change in

estimate in the amounts presented below.

The financial results for the three months and year ended

December 31, 2017 include the estimated impact of the Tax Cuts and Jobs Act of 2017 (the Tax Act ), which resulted in a recorded loss of $(0.29) per share (diluted) due to the net effect of changes to the corporate tax rate, changes

in the deductibility of certain items, and the impact on the Company s valuation allowances on existing deferred tax assets resulting from the enactment of the Tax Act in December 2017. The Company has accounted for the effects of the Tax Act

using reasonable estimates based on currently available information and the Company s interpretations thereof, and this estimated impact may be revised as a result of, among other things, changes in interpretations the Company has made and the

issuance of new tax or accounting guidance.

For information regarding why the Company believes Adjusted EBITDA presents useful

information to investors, and for a reconciliation of Adjusted EBITDA to net income attributable to Community Health Systems, Inc. stockholders, see footnote (e) to the Financial Highlights, Financial Statements and Selected Operating Data

Additionally, the Company has presented adjusted loss from continuing operations attributable to Community Health Systems, Inc.

common stockholders per share (diluted) and adjusted net loss attributable to Community Health Systems, Inc. common stockholders per share (diluted) to reflect the impact on earnings per share from the selected items used in the calculation of