CYH Announces Second Quarter 2020 Results

COMMUNITY HEALTH SYSTEMS, INC. ANNOUNCES

SECOND QUARTER 2020 RESULTS

FRANKLIN, Tenn. (July

28, 2020) Community Health Systems, Inc. (NYSE: CYH) (the Company ) today announced financial and operating results for the three and six months ended June 30, 2020.

The following highlights the financial and operating results for the three months ended June 30, 2020.

Net operating revenues for the three months ended June 30, 2020, totaled $2.519 billion, a 23.7 percent decrease,

compared with $3.302 billion for the same period in 2019.

Net income attributable to Community Health Systems, Inc. common

stockholders was $70 million, or $0.61 per share (diluted), for the three months ended June 30, 2020, compared with net loss of $(167) million, or $(1.47) per share (diluted), for the same period in 2019. Excluding the adjusting items as

presented in the table in footnote (e) on page 16, net income attributable to Community Health Systems, Inc. common stockholders was $0.85 per share (diluted), for the three months ended June 30, 2020, compared to net loss of $(0.47) per

share (diluted) for the same period in 2019. Payments received by the Company through the Public Health and Social Services Emergency Fund (the PHSSEF ), as more specifically described below, had a positive impact on net income

attributable to Community Health Systems, Inc. common stockholders (both on a consolidated and adjusted basis) of approximately $333 million, or $2.89 on a per share (diluted) basis, for the three months ended June 30, 2020.

Weighted-average shares outstanding (diluted) were 115 million and 114 million for the three months ended June 30, 2020 and 2019, respectively.

Adjusted EBITDA for the three months ended June 30, 2020, was $454 million compared with $402 million for the same period in

2019. Payments received through the PHSSEF had a positive impact on Adjusted EBITDA for the three months ended June 30, 2020 in the amount of $448 million.

CYH Announces Second Quarter 2020 Results

The consolidated operating results for the three months ended June 30, 2020, reflect a

23.6 percent decrease in admissions and a 29.2 percent decrease in adjusted admissions, compared with the same period in 2019. On a same-store basis, admissions decreased 18.1 percent and adjusted admissions decreased

24.2 percent for the three months ended June 30, 2020, compared with the same period in 2019. Volume declines were most pronounced in the month of April 2020 and declined to a lesser degree in the months of May and June 2020. On a

same-store basis, net operating revenues decreased 18.4 percent for the three months ended June 30, 2020, compared with the same period in 2019.

Net operating revenues for the six months ended June 30, 2020, totaled $5.544 billion, a 17.0 percent decrease, compared

with $6.679 billion for the same period in 2019.

Net income attributable to Community Health Systems, Inc. common stockholders was

$87 million, or $0.76 per share (diluted), for the six months ended June 30, 2020, compared with net loss of $(285) million, or $(2.51) per share (diluted), for the same period in 2019. Excluding the adjusting items as presented in the

table in footnote (e) on page 16, net loss attributable to Community Health Systems, Inc. common stockholders was $(0.73) per share (diluted), for the six months ended June 30, 2020, compared to $(1.00) per share (diluted) for the same

period in 2019. The change in tax valuation allowance (which was one of the aforementioned adjusting items) had a positive impact of $240 million, or $2.09 per share (diluted), on net income attributable to Community Health Systems, Inc. common

stockholders, and arose from discrete tax benefits related to the release of federal and state valuation allowances on IRC Section 163(j) interest carryforwards as a result of an increase to the deductible interest expense allowed for 2019 and

2020 under the Coronavirus Aid, Relief and Economic Security Act (the CARES Act ) that was enacted during the six months ended June 30, 2020. In addition, payments received by the Company through the PHSSEF, as more specifically

described below, had a positive impact on net income attributable to Community Health Systems, Inc. common stockholders (both on a consolidated and adjusted basis) of approximately $333 million, or $2.90 on a per share (diluted) basis, for the

six months ended June 30, 2020. Weighted-average shares outstanding (diluted) were 115 million and 114 million for the six months ended June 30, 2020 and 2019, respectively.

Adjusted EBITDA for the six months ended June 30, 2020, was $763 million compared with $793 million for the same period in

2019. Payments received through the PHSSEF had a positive impact on Adjusted EBITDA for the six months ended June 30, 2020 in the amount of $448 million.

The consolidated operating results for the six months ended June 30, 2020, reflect an 18.3 percent decrease in admissions and a

21.0 percent decrease in adjusted admissions, compared with the same period in 2019. On a same-store basis, admissions decreased 11.5 percent and adjusted admissions decreased 14.5 percent for the six months ended June 30, 2020,

compared with the same period in 2019. Volume declines were most pronounced in the month of April 2020 and declined to a lesser degree in the months of May and June 2020. On a same-store basis, net operating revenues decreased 10.9 percent for

the six months ended June 30, 2020, compared with the same period in 2019.

Commenting on the results, Wayne T. Smith, chairman and

chief executive officer of Community Health Systems, Inc., said, The COVID-19 pandemic continues to be an unprecedented public health crisis that has forever changed our country and the healthcare

industry. Our response to this crisis is guided by our most important priority - to provide safe, quality healthcare for the patients who put their trust in us. We are forever grateful to our incredible physicians, nurses and other caregivers who

bravely step up and step forward every day to care for their patients, communities and each other. And, we thank all of America s healthcare workers for their compassionate, professional, and truly heroic actions in this pandemic.

I am proud of our hospital leadership teams and the corporate support teams that have demonstrated agility and resilience under pressure

and leveraged all of the resources of our organization to support their community response as well as one another. We will continue to adapt to this evolving situation with a steadfast commitment to provide the best possible response to this public

health crisis, while at the same time focusing on long-term growth for all of the Company s stakeholders.

CYH Announces Second Quarter 2020 Results

The COVID-19 pandemic had an adverse impact on the Company s operations and financial results for

the three and six months ended June 30, 2020 beginning in the second half of March 2020 as the result of decreases in net operating revenues driven by a decline in patient volumes and increases in expenses related to supply chain and other

The Company previously announced in the Current Report on Form 8-K filed by the

Company on April 6, 2020 (the April 6 Form 8-K ), that it was withdrawing its 2020 financial guidance issued in its earnings release dated February 19, 2020. Consistent with disclosures

made by the Company in the April 6 Form 8-K and in the Company s earnings release for the first quarter filed on April 28, 2020, the Company is not able to fully quantify the impact that the COVID-19 pandemic will have on its financial results during 2020, but expects developments related to the COVID-19 pandemic, including the CARES Act and PPPHCE Act as further

discussed below, to materially affect the Company s financial performance in 2020. Moreover, as a result of the continuously changing and unpredictable environment related to the COVID-19 pandemic, the

Company is not providing guidance in this earnings release.

As a result of the COVID-19 pandemic,

federal and state governments have passed legislation, promulgated regulations, and taken other administrative actions intended to assist healthcare providers in providing care to COVID-19 and other patients

during the public health emergency. Sources of relief include the CARES Act, which was enacted on March 27, 2020, and the Paycheck Protection Program and Health Care Enhancement Act (the PPPHCE Act ), which was enacted on

April 24, 2020. Together, the CARES Act and the PPPHCE Act include $175 billion in funding to be distributed to eligible providers through the PHSSEF. In addition, the CARES Act provided for an expansion of the Medicare Accelerated and

Advance Payment Program.

During the three months ended June 30, 2020, the Company received approximately $564 million in

payments through the PHSSEF in both general and targeted distributions, net of amounts received for previously divested entities that are required to be repaid to the U.S. Department of Health and Human Services ( HHS ). PHSSEF payments

are intended to compensate healthcare providers for lost revenues and incremental expenses incurred in response to the COVID-19 pandemic and are not required to be repaid provided that recipients attest to and

comply with certain terms and conditions, including limitations on balance billing and not using funds received from the PHSSEF to reimburse expenses or losses that other sources are obligated to reimburse. Approximately $448 million of the

PHSSEF payments qualified as income for reimbursement of lost revenues and incremental expenses and was recognized as a reduction in operating costs and expenses during the three and six months ended June 30, 2020. Amounts not recognized as a

reduction to operating costs and expenses or that have not been refunded to HHS as of June 30, 2020, are reflected within accrued liabilities-other in the condensed consolidated balance sheet, and such unrecognized amounts may be recognized as

a reduction in operating costs and expenses in future periods if the underlying conditions for recognition are met. Additionally, approximately $109 million in payments through the PHSSEF have been received in July 2020 which did not qualify

for recognition during the three months ended June 30, 2020.

Medicare accelerated payments of approximately $1.2 billion were

received during the three months ended June 30, 2020, via the Medicare Accelerated and Advance Payment Program. These are advances that providers must repay. The Medicare accelerated payments are interest free for up to 12 months and the

program currently requires that the Centers for Medicare and Medicaid Services ( CMS ) recoup the accelerated payments beginning 120 days after receipt by the provider, by withholding future Medicare fee-for-service payments for claims until such time as the full accelerated payment has been recouped. The program currently requires that any outstanding balance remaining after 12 months must be repaid by

the provider or be subjected to a 10.25% annual interest rate. Recoupment of accelerated Medicare payments received by the Company is currently expected to begin in August 2020. As of June 30, 2020, Medicare accelerated payments are reflected

within accrued liabilities-other in the condensed consolidated balance sheet. Effective April 26, 2020, CMS is reevaluating pending and new applications for accelerated payments in light of significant other relief provided by the CARES Act and

the PPPHCE Act. Accordingly, the Company does not expect to receive additional Medicare accelerated payments.

CYH Announces Second Quarter 2020 Results

The PHSSEF payments received to date as noted above and which the Company may receive in the

future under the CARES Act and the PPPHCE Act, have been and may continue to be beneficial in partially mitigating the impact of the COVID-19 pandemic on the Company s results of operations and financial

position. Additionally, the federal government may consider additional stimulus and relief efforts, but we are unable to predict whether additional stimulus measures will be enacted or their impact, if any. The Company is unable to assess the extent

to which anticipated ongoing negative impacts on the Company arising from the COVID-19 pandemic will be offset by amounts which the Company may recognize or receive in the future under the CARES Act, the

PPPHCE Act and any future stimulus measures.

The Company completed the divestiture of three hospitals on January 1, 2020 (in respect

of which the Company received proceeds at a preliminary closing on December 31, 2019), two hospitals on May 1, 2020, and two hospitals on July 1, 2020 (in respect of which the Company received proceeds at a preliminary closing on

June 30, 2020) for a total of seven hospitals. In addition, the Company has entered into definitive agreements to sell a total of five hospitals, for which the Company expects to receive aggregate proceeds of approximately $430 million.

These divestitures, subject to definitive agreements, which are expected to be completed at various times during the third and fourth quarters of 2020, will mark the end of the Company s formal portfolio rationalization strategy, which

commenced in 2017. There can be no assurance that these potential divestitures subject to definitive agreements will be completed, or if they are completed, the ultimate timing of the completion of these divestitures. The Company continues to

receive interest from potential acquirers for certain of its hospitals, and may, from time to time, consider selling additional hospitals following the completion of the Company s formal portfolio rationalization strategy.

Financial and statistical data for 2019 and 2020 presented in this press release includes the operating results of divested hospitals through

the effective closing date of each respective divestiture. Same-store operating results exclude the results of a hospital acquired in 2019 and the hospitals divested in 2019 and 2020.

Information About Non-GAAP Financial Measures

This earnings release presents Adjusted EBITDA, a non-GAAP financial measure, which is EBITDA adjusted

to add back net income attributable to noncontrolling interests and to exclude loss (gain) from early extinguishment of debt, impairment and loss on sale of businesses, expense related to government and other legal settlements and related costs,

expense related to employee termination benefits and other restructuring charges, expense from settlement and fair value adjustments on the CVR agreement liability related to the Health Management Associates, Inc. ( HMA ) legal proceedings

and related legal expenses, the impact of changes in estimate to increase the professional liability claims accrual recorded during the second quarter of 2019 (which estimate was further revised in the third quarter of 2019 based on updated

actuarial analysis) with respect to claims incurred in 2016 and prior years and expense related to the valuation allowance recorded in the second quarter of 2019 to reserve the outstanding balance of a promissory note received from the buyer in

connection with the sale of two of the Company s hospitals in 2017, as well as income from a reduction of the valuation allowance on the outstanding balance of a promissory note from the buyer of another hospital. For information regarding why

the Company believes Adjusted EBITDA provides useful information to investors, and for a reconciliation of Adjusted EBITDA to net income (loss) attributable to Community Health Systems, Inc. stockholders, see footnote (c) to the Financial

Highlights, Financial Statements and Selected Operating Data below.

Additionally, this earnings release presents adjusted net income

(loss) attributable to Community Health Systems, Inc. common stockholders per share (diluted), a non-GAAP financial measure, to reflect the impact on net income (loss) attributable to Community Health Systems,

Inc. common stockholders per share (diluted) from the selected items used in the calculation of Adjusted EBITDA. For information regarding why the Company believes this non-GAAP financial measure provides

useful information to investors, and for a reconciliation of this non-GAAP financial measure to net income (loss) attributable to Community Health Systems, Inc. common stockholders per share (diluted), see

footnote (e) to the Financial Highlights, Financial Statements and Selected Operating Data below.

CYH Announces Second Quarter 2020 Results

Community Health Systems, Inc. is one of the largest publicly traded hospital companies in