Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of ~~July 23, 2021,~~April 21, 2022, there were outstanding ~~132,078,106~~134,694,299 shares of the Registrant’s Common Stock, $0.01 par value.

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2021			2020			2021			2020			2022			2021
Net operating revenues	$	3,007		$	2,519		$	6,020		$	5,544		$	3,111		$	3,013
Operating costs and expenses:
Salaries and benefits		1,266			1,282			2,569			2,690			1,325			1,303
Supplies		500			418			992			916			499			491
Other operating expenses		715			736			1,453			1,472			853			738
Government and other legal settlements and related costs		—			2			—			4
Lease cost and rent		78			82			156			163			77			78
Pandemic relief funds		(1	)		(448	)		(83	)		(448	)		(47	)		(82	)
Depreciation and amortization		133			141			272			285			128			138
Impairment and (gain) loss on sale of businesses, net		2			10			23			56			6			21
Total operating costs and expenses		2,693			2,223			5,382			5,138			2,841			2,687
Income from operations		314			296			638			406			270			326
Interest expense, net		219			260			449			523			217			231
Loss from early extinguishment of debt		8			—			79			4			5			71
Equity in earnings of unconsolidated affiliates		(4	)		1			(15	)		(6	)		(5	)		(10	)
Income (loss) before income taxes		91			35			125			(115	)
Provision for (benefit from) income taxes		54			(58	)		123			(241	)
Net income		37			93			2			126
Income before income taxes														53			34
Provision for income taxes														23			69
Net income (loss)														30			(35	)
Less: Net income attributable to noncontrolling interests		31			23			60			39			31			29
Net income (loss) attributable to Community Health Systems, Inc. stockholders	$	6		$	70		$	(58	)	$	87
Earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders:
Net loss attributable to Community Health Systems, Inc. stockholders													$	(1	)	$	(64	)
Loss per share attributable to Community Health Systems, Inc. common stockholders:
Basic	$	0.04		$	0.61		$	(0.46	)	$	0.76		$	(0.01	)	$	(0.51	)
Diluted	$	0.04		$	0.61		$	(0.46	)	$	0.76		$	(0.01	)	$	(0.51	)
Weighted-average number of shares outstanding:
Basic		127,069,252			114,972,408			126,414,901			114,636,963			127,818,209			125,753,278
Diluted		130,737,124			115,013,661			126,414,901			114,696,496			127,818,209			125,753,278

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Net income

$
37

$
93

$
2

$
126

Other comprehensive income (loss), net of income taxes:

Net change in fair value of available-for-sale debt securities,
   net of tax

1

2

(3
)

4

Amortization and recognition of unrecognized pension cost components, net of tax

—

—

1

—

Other comprehensive income (loss)

1

2

(2
)

4

Comprehensive income

38

95

—

130

Less: Comprehensive income attributable to noncontrolling
   interests

31

23

60

39

Comprehensive income (loss) attributable to Community Health
   Systems, Inc. stockholders

$
7

$
72

$
(60
)

$
91

	Three Months Ended
	March 31,
	2022			2021
Net income (loss)	$	30		$	(35	)
Other comprehensive loss, net of income taxes:
Net change in fair value of available-for-sale debt securities, net of tax		(8	)		(3	)
Other comprehensive loss		(8	)		(3	)
Comprehensive income (loss)		22			(38	)
Less: Comprehensive income attributable to noncontrolling interests		31			29
Comprehensive loss attributable to Community Health Systems, Inc. stockholders	$	(9	)	$	(67	)

	June 30, 2021			December 31, 2020			March 31, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	1,250		$	1,676		$	460		$	507
Patient accounts receivable		1,958			1,927			2,079			2,062
Supplies		337			335			353			355
Prepaid income taxes		46			50			95			94
Prepaid expenses and taxes		178			184			229			192
Other current assets		284			338			272			269
Total current assets		4,053			4,510			3,488			3,479
Property and equipment		9,410			9,352			9,779			9,757
Less accumulated depreciation and amortization		(4,085	)		(4,030	)		(4,223	)		(4,204	)
Property and equipment, net		5,325			5,322			5,556			5,553
Goodwill		4,219			4,219			4,219			4,219
Deferred income taxes		59			59			53			53
Other assets, net		1,872			1,896			1,947			1,913
Total assets	$	15,528		$	16,006		$	15,263		$	15,217
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current maturities of long-term debt	$	27		$	123		$	43		$	31
Current operating lease liabilities		134			142			149			147
Accounts payable		681			783			825			830
Accrued liabilities:
Employee compensation		600			637			697			655
Accrued interest		264			150			186			225
Other		1,163			980			447			476
Total current liabilities		2,869			2,815			2,347			2,364
Long-term debt		11,926			12,093			12,154			12,109
Deferred income taxes		146			29			213			192
Long-term operating lease liabilities		515			524			578			535
Other long-term liabilities		1,190			1,599			790			827
Total liabilities		16,646			17,060			16,082			16,027
Redeemable noncontrolling interests in equity of consolidated subsidiaries		498			484			493			480
STOCKHOLDERS’ DEFICIT
Community Health Systems, Inc. stockholders’ deficit:
Preferred stock, $.01 par value per share, 100,000,000 shares authorized; NaN issued		—			—			—			—
Common stock, $.01 par value per share, 300,000,000 shares authorized; 132,125,107 shares issued and outstanding at June 30, 2021, and 129,612,117 shares issued and outstanding at December 31, 2020		1			1
Common stock, $.01 par value per share, 300,000,000 shares authorized; 134,686,087 shares issued and outstanding at March 31, 2022, and 132,146,282 shares issued and outstanding at December 31, 2021								1			1
Additional paid-in capital		2,084			2,094			2,107			2,118
Accumulated other comprehensive loss		(15	)		(13	)		(22	)		(14	)
Accumulated deficit		(3,765	)		(3,707	)		(3,478	)		(3,477	)
Total Community Health Systems, Inc. stockholders’ deficit		(1,695	)		(1,625	)		(1,392	)		(1,372	)
Noncontrolling interests in equity of consolidated subsidiaries		79			87			80			82
Total stockholders’ deficit		(1,616	)		(1,538	)		(1,312	)		(1,290	)
Total liabilities and stockholders’ deficit	$	15,528		$	16,006		$	15,263		$	15,217

	Six Months Ended						Three Months Ended
	June 30,						March 31,
	2021			2020			2022			2021
Cash flows from operating activities:
Net income	$	2		$	126
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	30		$	(35	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		272			285			128			138
Deferred income taxes		118			(242	)		22			68
Government and other legal settlements and related costs		—			4
Stock-based compensation expense		13			5			5			8
Impairment and (gain) loss on sale of businesses, net		23			56			6			21
Loss from early extinguishment of debt		79			4			5			71
Other non-cash expenses, net		(3	)		73			45			(40	)
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
Patient accounts receivable		(32	)		313			(17	)		(34	)
Supplies, prepaid expenses and other current assets		31			21			(40	)		(2	)
Medicare accelerated payments		—			1,158
Repayment/derecognition of Medicare accelerated payments		(134	)		—			0			(18	)
Pandemic relief funds		—			116
Accounts payable, accrued liabilities and income taxes		(2	)		(160	)		(23	)		(23	)
Other		(87	)		(49	)		(60	)		(53	)
Net cash provided by operating activities		280			1,710			101			101
Cash flows from investing activities:
Acquisitions of facilities and other related businesses		(4	)		—			(1	)		(4	)
Purchases of property and equipment		(212	)		(192	)		(97	)		(105	)
Proceeds from disposition of hospitals and other ancillary operations		7			152			2			6
Proceeds from sale of property and equipment		3			2			0			2
Purchases of available-for-sale debt securities and equity securities		(63	)		(39	)		(31	)		(22	)
Proceeds from sales of available-for-sale debt securities and equity securities		48			43			24			26
Purchases of investments in unconsolidated affiliates								(4	)		0
Increase in other investments		(34	)		(19	)		(14	)		(23	)
Net cash used in investing activities		(255	)		(53	)		(121	)		(120	)
Cash flows from financing activities:
Repurchase of restricted stock shares for payroll tax withholding requirements		(5	)		(1	)		(8	)		(5	)
Deferred financing costs and other debt-related costs		(310	)		(32	)		(73	)		(220	)
Redemption of noncontrolling investments in joint ventures		(3	)		(2	)
Proceeds from noncontrolling investors in joint ventures								1			0
Distributions to noncontrolling investors in joint ventures		(66	)		(57	)		(29	)		(21	)
Proceeds from sale-lease back		—			2
Other borrowings		19			31			27			3
Issuance of long-term debt		4,310			1,462			1,535			2,870
Proceeds from ABL Facility		—			540
Repayments of long-term indebtedness		(4,396	)		(2,264	)		(1,480	)		(3,033	)
Net cash used in financing activities		(451	)		(321	)		(27	)		(406	)
Net change in cash and cash equivalents		(426	)		1,336			(47	)		(425	)
Cash and cash equivalents at beginning of period		1,676			216			507			1,676
Cash and cash equivalents at end of period	$	1,250		$	1,552		$	460		$	1,251
Supplemental disclosure of cash flow information:
Interest payments	$	(304	)	$	(486	)	$	(242	)	$	(203	)
Income tax (payments) refunds, net	$	(1	)	$	2
Income tax payments, net							$	(2	)	$	0

The unaudited condensed consolidated financial statements of Community Health Systems, Inc. (the “Parent” or “Parent Company”) and its subsidiaries (the “Company”) as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 and for the three-month ~~and six-month~~ periods ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ have been prepared in accordance with accounting principles generally accepted in the United States of America (“~~U.S.~~ GAAP”). In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for such periods. All intercompany transactions and balances have been eliminated. The results of operations for the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, ~~2021.~~2022. The preparation of financial statements in conformity with ~~U.S.~~ GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements. Actual results could differ from these estimates under different assumptions or conditions.

Certain information and disclosures normally included in the notes to the consolidated financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company believes the disclosures are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, ~~2020,~~2021, contained in the Company’s Annual Report on Form 10-K filed with the SEC on February ~~18,~~ 17, 2022 (“2021 ~~(“2020~~ Form 10-K”).

Noncontrolling interests in less-than-wholly-owned consolidated subsidiaries of the Parent are presented as a component of total equity on the condensed consolidated balance sheets to distinguish between the interests of the Parent Company and the interests of the noncontrolling owners. Noncontrolling interests that are redeemable or may become redeemable at a fixed or determinable price at the option of the holder or upon the occurrence of an event outside of the control of the Company are presented in mezzanine equity on the condensed consolidated balance sheets.

Substantially all of the Company’s operating costs and expenses are “cost of revenue” items. Operating costs that could be classified as general and administrative by the Company include the Company’s corporate office costs at its Franklin, Tennessee office, which were ~~$52~~$63 million and ~~$57~~$60 million for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $112 million and $95 million for the six months ended June 30, 2021 and 2020,~~ respectively. ~~Operating costs during the six months ended June 30, 2021 reflect increased stock compensation and annual cash incentive compensation compared to the six months ended June 30, 2020.~~

Throughout these notes to the unaudited condensed consolidated financial statements, Community Health Systems, Inc., and its consolidated subsidiaries are referred to on a collective basis as the “Company.” This drafting style is not meant to indicate that the publicly traded Parent or any particular subsidiary of the Parent owns or operates any asset, business, or property. The hospitals, operations and businesses described in this filing are owned and operated by distinct and indirect subsidiaries of Community Health Systems, Inc.

Net operating revenues are recorded at the transaction price estimated by the Company to reflect the total consideration due from patients and third-party payors in exchange for providing goods and services in patient care. These services are considered to be a single performance obligation and have a duration of less than one year. Revenues are recorded as these goods and services are provided. The transaction price, which involves significant estimates, is determined based on the Company’s standard charges for the goods and services provided, with a reduction recorded for price concessions related to third party contractual arrangements as well as patient discounts and other patient price concessions. During ~~each~~both of the ~~three and six month~~three-month periods ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the impact of changes to the inputs used to determine the transaction price was considered immaterial.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)~~

Currently, several states utilize supplemental reimbursement programs for the purpose of providing reimbursement to providers that is not specifically tied to an individual’s care, some of which offsets a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from the Centers for Medicare & Medicaid Services (“CMS”) and are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. Under these supplemental programs, the Company recognizes revenue and related expenses in the period in which amounts are estimable and ~~collection or~~ payment is reasonably assured. Reimbursement under these programs is reflected in net operating ~~revenues and fees, taxes~~revenues. Taxes or other program-related costs are reflected in other operating expenses.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

The Company’s net operating revenues during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ have been presented in the following table based on an allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage (in millions):

Patient accounts receivable are recorded at net realizable value based on certain assumptions determined by each payor. For third-party payors including Medicare, Medicaid, and Managed Care, the net realizable value is based on the estimated contractual reimbursement percentage, which is based on current contract prices or historical paid claims data by payor. For self-pay accounts receivable, which includes patients who are uninsured and the patient responsibility portion for patients with insurance, the net realizable value is determined using estimates of historical collection experience without regard to aging category. These estimates are adjusted for estimated conversions of patient responsibility portions, expected recoveries and any anticipated changes in trends.

Patient accounts receivable can be impacted by the effectiveness of the Company’s collection efforts. Additionally, significant changes in payor mix, business office operations, economic conditions or trends in federal and state governmental healthcare coverage could affect the net realizable value of accounts receivable. The Company also continually reviews the net realizable value of accounts receivable by monitoring historical cash collections as a percentage of trailing net operating revenues, as well as by analyzing current period net revenue and admissions by payor classification, days revenue outstanding, the composition of self-pay receivables between pure self-pay patients and the patient responsibility portion of third-party insured receivables, the impact of recent acquisitions and dispositions and the impact of current economic and other events.

Final settlements for some payors and programs are subject to adjustment based on administrative review and audit by third parties. As a result of these final settlements, the Company has recorded amounts due to third-party payors of ~~$112~~$115 million and ~~$98~~$118 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, and these amounts are included in accrued liabilities-other in the accompanying condensed consolidated balance sheets. Amounts due from third-party payors were ~~$111~~$108 million and ~~$136~~$114 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, and are included in other current assets in the accompanying condensed consolidated balance sheets. Substantially all Medicare and Medicaid cost reports are final settled through ~~2016.~~2017.

In the ordinary course of business, the Company renders services to patients who are financially unable to pay for hospital care. The Company’s policy is to not pursue collections for such amounts; therefore, the related charges for those patients who are financially unable to pay and that otherwise do not qualify for reimbursement from a governmental program are not reported in net operating revenues, and are thus classified as charity care. The Company determines amounts that qualify for charity care based on the patient’s household income relative to the federal poverty level guidelines, as established by the federal government. The Company updated its policy during ~~2020~~the three months ended March 31, 2022 in a manner which increased the number of accounts qualifying for charity care. This ~~along with increased patient volumes compared to 2020,~~ resulted in an increase in charity care services during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 compared to the three ~~and six~~ months ended ~~June 30, 2020.~~March 31, 2021.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

These charity care services are estimated to be $~~215~~363 million and ~~$138~~$229 million for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $444 million and $304 million for the six months ended June 30, 2021 and 2020,~~ respectively, representing the value (at the Company’s standard charges) of these charity care services that are excluded from net operating revenues. The estimated cost incurred by the Company to provide these charity care services to patients who are unable to pay was approximately ~~$26~~$41 million and ~~$17~~$26 million during the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $52 million and $36 million during the six months ended June 30, 2021 and 2020,~~ respectively. The estimated cost of these charity care services was determined using a ratio of cost to gross charges and applying that ratio to the gross charges associated with providing care to charity patients for the period.

Accounting for the Impairment or Disposal of Long-Lived Assets. During the ~~six~~three months ended ~~June 30,~~March 31, 2022, the Company recorded an impairment charge of approximately $6 million related to a hospital that has been classified as held for sale based on the difference between the carrying value of the hospital disposal group compared to the estimated fair value less costs to sell.

During the three months ended March 31, 2021, the Company recorded a total combined net impairment charge and loss on disposal of approximately ~~$23~~$21 million, of which (i) approximately $28$27 million was recorded to adjust the carrying value of long-lived assets at several hospitals that were sold at a sales price below carrying value, (ii) approximately $3$2 million was recorded related to divestiture related expenses, ~~and~~ (iii) approximately $8 million of gain was recorded related to the disposal of the Company’s majority interest in a surgery center that was sold on January 1, ~~2021. Approximately $7~~2021, and (iv) approximately $5 million of goodwill was allocated to facilities disposed of ~~during the six months ended June 30, 2021.~~

~~During the six months ended June 30, 2020, the Company recorded a net loss on disposal of approximately $56 million. An impairment charge of~~ approximately $64 million was recorded primarily to adjust the carrying value of long-lived assets at several hospitals where the Company was in discussions with potential buyers for divestiture at a sales price that indicated a fair value below carrying value. Approximately $13 million was recorded related to certain hospitals that were classified asor held for sale ~~based on~~during the ~~difference between the carrying value of the hospital disposal groups compared to their estimated fair value less costs to sell.~~ ~~The impairment charge was~~ ~~partially offset by a gain of approximately $21 million related to 3 hospitals sold on January 1, 2020 and 2 hospitals sold on May 1, 2020.~~three months ended March 31, 2021.

The Company will continue to evaluate the potential for impairment of the long-lived assets of ~~underperforming~~ hospitals and other held-and-used businesses as well as evaluate offers for potential sales, as applicable. Based on such analysis, additional impairment charges may be recorded in the future.

COVID-19, a disease caused by a novel strain of coronavirus, materially affected the Company’s results of operations during 2020 and continued to affect the Company’s results of operations during the six months ended June 30, 2021. 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 Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020, the Paycheck Protection Program and Health Care Enhancement Act (the “PPPHCE Act”), which was enacted on April 24, 2020, the Consolidated Appropriations Act, 2021 (the “CAA”), which was enacted on December 27, 2020, and the American Rescue Plan Act of 2021 (the “ARPA”), which was enacted on March 11, 2021. Together, these stimulus laws authorize over $178 billion in funding to be distributed to hospitals and other healthcare providers through the Public Health and Social Services Emergency Fund (the “PHSSEF”). In addition to the relief funding, the CARES Act provided for an expansion of the Medicare Accelerated and Advance Payment Program whereby inpatient acute care hospitals and other eligible providers were able to request accelerated payment of up to 100% of their Medicare payment amount for a ~~six-month~~ period to be repaid through withholding of future Medicare fee-for-service payments. Various state and local programs also exist to provide relief, either independently or through distribution of monies received via the CARES Act and other enacted federal legislation. The Company’s accounting policies for the recognition of these stimulus monies are as follows:

~~Through June 30,~~During the three months ended March 31, 2022 and 2021, the Company received approximately ~~$712~~$42 million and $3 million, respectively, in pandemic relief fund payments through ~~the PHSSEF and~~ various federal, state and local ~~programs on a cumulative basis since their enactment, of which approximately $705~~programs. Approximately $47 million ~~was received during the year ended December 31, 2020~~ and ~~the balance of which~~$82 million was received during the six months ended June 30, 2021. The recognition of amounts received is conditioned upon the provision of care for individuals with possible or actual cases of COVID-19 after January 31, 2020, certification that payment will be used to prevent, prepare for and respond to coronavirus and shall reimburse the recipient only for healthcare-related expenses or lost revenues, as defined by the ~~U.S. Department of Health and Human Services Agency (“HHS”), that are attributable to coronavirus, as well as receipt of the funds. Amounts are~~ recognized as a reduction to operating costs and expenses ~~only to the extent the Company is reasonably assured that underlying conditions have been met.~~

The Company’s assessment of whether the terms and conditions for amounts received are reasonably assured of having been met is updated each reporting period and considers, among other things, the requirements set forth in the CARES Act and CAA, all applicable frequently asked questions and other interpretive guidance issued by HHS, including the various Post-Payment Notices of

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)~~

~~Reporting Requirements and the Company’s expenses incurred attributable to the coronavirus and its results of operations~~ during such period as compared to the Company’s 2020 budget. The HHS guidance, specifically the various Post-Payment Notices of Reporting Requirements and frequently asked questions, set forth the allowable methods for quantifying eligible healthcare related expenses and lost revenues. Only healthcare related expenses attributable to coronavirus that another source has not reimbursed and is not obligated to reimburse are eligible to be claimed. The use of funds calculation takes into account expenses attributable to each respective entity, which for the Company primarily relate to incremental labor and supply costs, as well as lost revenues. The deadlines for using and required timelines for reporting on the use of funds depend on the dates of receipt of the funds. During the year ended December 31, 2020, pandemic relief funds of approximately $601 million were recognized as a reduction of operating costs and expenses up to the amount which the Company was reasonably assured that it could or would choose to comply with conditions underlying amounts received. This included the allocation of general fund distributions among subsidiaries according to total unreimbursed losses but not the allocation of targeted fund distributions due to significant uncertainties as to the meaning and interpretation of conditions specific to the allocation of such targeted distribution payments, as previously disclosed. During the three months ended March 31, 2022 and 2021, the Company’s assessment of uncertainties associated with the allocation of targeted distribution payments was updated for additional facts and circumstances in the period. On the basis of this updated assessment, the Company was reasonably assured that underlying conditions for the allocation of targeted distribution payments were metrespectively, as of March 31, 2021 (which conclusion has not changed). During the three and six months ended June 30, 2021, pandemic relief funds of approximately $1 million and $83 million, respectively, were recognized as a reduction of operating costs and expenses on the basis of expenses incurred in the periods attributable to the coronavirus, the Company’s results of operations during such periods as compared to the Company’s 2020 budget for the same period and the allocation of targeted distribution payments to various subsidiaries as noted above. During the three and six months ended June 30, 2020, pandemic relief funds of approximately $448 million were recognized as a reduction of operating costs and expenses on the basis of facts and circumstances at that time. Amounts recognized are denoted by the caption “pandemic relief funds” within the condensed consolidated statements of ~~income (loss).~~

~~Amounts~~loss. Approximately $9 million of unrecognized pandemic relief funds received through the PHSSEF or state and local programs that have not yet been recognized as a reduction to operating costs and expenses or otherwise have not been refunded to HHS or the various state and local agencies as of June 30, 2021, primarily relate to previously divested entities and certain targeted distribution payments for which satisfaction of the underlying terms and conditions is not reasonably assured of being met as of June 30, 2021. Such amounts are reflected within accrued liabilities-other in the condensed consolidated balance ~~sheet.~~sheet as of March 31, 2022. Such unrecognized amounts may either be returned ~~to HHS~~ or may be recognized ~~as a reduction in operating costs and expenses~~ in future periods if the underlying conditions for recognition are reasonably assured of having been met. ~~HHS’ interpretation~~The Company’s accounting policies for the recognition of pandemic relief funds is unchanged from the ~~underlying terms and conditions of such PHSSEF payments, including auditing and reporting requirements, continues~~policies described in Note 1 to ~~evolve. Additional guidance or new and amended interpretations of existing guidance on~~ the ~~terms and conditions of such PHSSEF payments may result in changes~~Company’s consolidated financial statements included in the Company’s estimate of amounts for which the terms and conditions are reasonably assured of being met, and any such changes may be material. Additionally, any such changes may result in the Company’s inability to recognize additional PHSSEF payments or may result in the derecognition of amounts previously recognized, which (in any such case) may be material.

Medicare accelerated payments of approximately $1.2 billion were received by the Company in April 2020. NaN additional Medicare accelerated payments have been received by the Company since such time, including during the three and six months ended June 30, 2021. Payments under the Medicare Accelerated and Advance Payment Program are advances that must be repaid. Effective October 1, 2020, the program was amended such that providers are required to repay accelerated payments beginning one year after the payment was issued. After such one-year period, Medicare payments owed to providers will be recouped according to the repayment terms. The repayment terms specify that for the first 11 months after repayment begins, repayment will occur through an automatic recoupment of 25% of Medicare payments otherwise owed to the provider. At the end of the eleven-month period, recoupment will increase to 50% for six months. At the end of the six months (or 29 months from the receipt of the initial accelerated payment), Medicare will issue a letter for full repayment of any remaining balance, as applicable. In such event, if payment is not received within 30 days, interest will accrue at the annual percentage rate of four percent (4%) from the date the letter was issued, and will be assessed for each full 30-day period that the balance remains unpaid.

~~In April~~ 2021 CMS began recouping Medicare accelerated payments previously received by the Company. As of June 30, 2021, approximately $116 million has been recouped from the Company by CMS subject to the aforementioned repayment terms. Additionally, approximately $18 million and $77 million of amounts previously received were repaid by the Company to CMS or assumed by buyers related to hospitals the Company divested during the six months ended June 30, 2021 and the year ended December 31, 2020, respectively. As of June 30, 2021, approximately $680 million of Medicare accelerated payments are reflected within accrued liabilities-other in the condensed consolidated balance sheet while the remaining approximately $267 million is

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)~~

~~included within other long-term liabilities. The Company’s estimate of the current liability is a function of historical cash receipts from Medicare and the repayment terms set forth above.~~Form 10-K.

Stock-based compensation awards have been granted under the Community Health Systems, Inc. Amended and Restated 2009 Stock Option and Award Plan, which was amended and restated as of March 17, 2021 and approved by the Company’s stockholders at the annual meeting of stockholders held on May 11, 2021 (the “2009 Plan”).

The 2009 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the ~~IRC~~Internal Revenue Code (“IRC”) and for the grant of stock options which do not so qualify, stock appreciation rights, restricted stock, restricted stock units, performance-based shares or units and other share awards. Persons eligible to receive grants under the 2009 Plan include the Company’s directors, officers, employees and consultants. As of March 31, 2022, 6,884,914 shares of unissued common stock were reserved for future grants under the 2009 Plan.

The following table reflects the impact of total compensation expense related to stock-based equity plans on the reported operating results for the respective periods (in millions):

At March 31, 2022, $52 million of unrecognized stock-based compensation expense related to outstanding unvested stock options, restricted stock and restricted stock units (the terms of which are summarized below) was expected to be recognized over a weighted-

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

average period of 29 months. Of that amount, $8 million relates to outstanding unvested stock options expected to be recognized over a weighted-average period of 29 months and $44 million relates to outstanding unvested restricted stock and restricted stock units expected to be recognized over a weighted-average period of 29 months. There were 0 modifications to awards during the three months ended March 31, 2022 and 2021.

To date, all options granted under the 2009 Plan have been “nonqualified” stock options for tax purposes. Generally, these options vest in one-third increments on each of the first three anniversaries of the award date and have a 10-year contractual term. ~~As of June 30, 2021, 12,484,327 shares of unissued common stock were reserved for future grants under the 2009 Plan.~~

The exercise price of all options granted under the 2009 Plan is equal to the fair value of the Company’s common stock on the option grant date.

~~The following table reflects the impact of total compensation expense related to stock-based equity plans on the reported operating results for the respective periods (in millions):~~

At June 30, 2021, $34 million of unrecognized stock-based compensation expense related to outstanding unvested stock options, restricted stock and restricted stock units (the terms of which are summarized below) was expected to be recognized over a weighted-average period of 27 months. Of that amount, $6 million relates to outstanding unvested stock options expected to be recognized over a weighted-average period of 27 months and $28 million relates to outstanding unvested restricted stock and restricted stock units expected to be recognized over a weighted-average period of 27 months. There were 0 modifications to awards during the six months ended June 30, 2021 and 2020.

The fair value of stock options was estimated using the Black Scholes option pricing model with the following assumptions and weighted-average fair values during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:

In determining the expected term, the Company examined concentrations of option holdings and historical patterns of option exercises and forfeitures, as well as forward-looking factors, in an effort to determine if there were any discernable employee populations. From this analysis, the Company identified two primary employee populations, one consisting of certain senior executives and the other consisting of substantially all other recipients.

The expected volatility rate was estimated based on historical volatility. In determining expected volatility, the Company also reviewed the market-based implied volatility of actively traded options of its common stock and determined that historical volatility utilized to estimate the expected volatility rate did not differ significantly from the implied volatility.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)~~

The expected term computation is based on historical exercise and cancellation patterns and forward-looking factors, where present, for each population identified. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The pre-vesting forfeiture rate is based on historical rates and forward-looking factors for each population identified. The Company adjusts the estimated forfeiture rate to its actual experience.

Options outstanding and exercisable under the 2009 Plan as of ~~June 30, 2021,~~March 31, 2022, and changes during ~~each of~~ the three-month ~~periods~~period following December 31, ~~2020,~~2021, was as follows (in millions, except share and per share data):

						Weighted-	Aggregate							Weighted-	Aggregate
				Weighted-		Average	Intrinsic					Weighted-		Average	Intrinsic
				Average		Remaining	Value as of					Average		Remaining	Value as of
				Exercise		Contractual	June 30,					Exercise		Contractual	March 31,
	Shares			Price		Term	2021		Shares			Price		Term	2022
Outstanding at December 31, 2020		1,817,525			8.77
Outstanding at December 31, 2021										2,301,753		$	6.77
Granted		749,250			8.81					760,000			10.18
Exercised		(65,165	)		4.97					(56,500	)		4.97
Forfeited and cancelled		(173,189	)		34.66					(151,002	)		14.67
Outstanding at March 31, 2021		2,328,421			6.96
Granted		—			—
Exercised		—			—
Forfeited and cancelled		(22,334	)		24.23
Outstanding at June 30, 2021		2,306,087		$	6.79	8.5 years	$	20
Exercisable at June 30, 2021		735,162		$	6.82	7.2 years	$	7
Outstanding at March 31, 2022										2,854,251		$	7.30	8.5 years	$	13
Exercisable at March 31, 2022										1,316,912		$	5.64	7.7 years	$	8

~~NaN stock options were granted during the three months ended June 30, 2021 and 2020.The~~The weighted-average grant date fair value of stock options granted during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 was $7.25 and ~~2020 was~~ $6.22, ~~and $3.17,~~ respectively. The aggregate intrinsic value (calculated as the number of in-the-money stock options multiplied by the difference between the Company’s closing stock price on the last trading day of the reporting period ($~~15.44)~~11.87) and the exercise price of the respective stock options) in the table above represents the amount that would have been received by the option holders had all option holders exercised their options on ~~June 30, 2021.~~March 31, 2022. This amount changes based on the market value of the Company’s common

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

stock. The aggregate intrinsic value of options exercised ~~during the six months ended June 30, 2021~~ was less than $1 ~~million; 0 options were exercised~~million during both of the ~~three months~~three-month periods ended ~~June 30,~~March 31, 2022 and 2021. ~~There were 0 options exercised during the three or six months ended June 30, 2020.~~ The aggregate intrinsic value of options vested and expected to vest approximates that of the outstanding options.

The Company has also awarded restricted stock under the 2009 Plan to employees of certain subsidiaries. With respect to time-based vesting restricted stock that has been awarded under the 2009 Plan, the restrictions on these shares have generally lapsed in one-third increments on each of the first three anniversaries of the award date. In addition, certain of the restricted stock awards granted to the Company’s senior executives have contained performance objectives required to be met in addition to any time-based vesting requirements. If the applicable performance objectives are not attained, these awards will be forfeited in their entirety. For performance-based awards, the performance objectives are measured cumulatively over a three-year period. If the applicable target performance objective is met at the end of the three-year period, then the restricted stock award subject to such performance objective will vest in full on the third anniversary of the award date. Additionally, for these performance-based awards, based on the level of achievement for the applicable performance objective within the parameters specified in the award agreement, the number of shares to be issued in connection with the vesting of the award may be adjusted to decrease or increase the number of shares specified in the original award. Notwithstanding the above-mentioned performance objectives and vesting requirements, the restrictions with respect to restricted stock granted under the 2009 Plan may lapse earlier in the event of death ~~disability~~ or ~~termination of employment by the Company for any reason other than for cause~~disability of the holder of the restricted stock, or change in control of the Company. On March 1, ~~2021,~~2022, restricted stock awards subject to performance objectives granted on March 1, ~~2018~~2019 vested at 200% of the shares originally granted based on the Company’s cumulative performance compared to objectives for the ~~2018-2020~~2019 through 2021 performance period. Restricted stock awards subject to performance objectives that have not yet been satisfied are not considered outstanding for purposes of determining earnings per share unless the performance objectives have been satisfied on the basis of results through the end of each respective reporting period.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)~~

Restricted stock outstanding under the 2009 Plan as of ~~June 30, 2021,~~March 31, 2022, and changes during ~~each of~~ the three-month ~~periods~~period following December 31, ~~2020,~~2021, was as follows:

Restricted stock units (“RSUs”) have been granted to the Company’s non-management directors under the 2009 Plan. Each of the Company’s then serving non-management directors received grants under the 2009 Plan of ~~19,296~~17,682 RSUs and ~~34,483~~19,296 RSUs on March 1, 2022 and 2021, respectively. The 2022 and ~~2020, respectively. Each of the~~ 2021 ~~and 2020~~ grants had a grant date fair value of approximately ~~$170,000.~~$180,000 and $170,000, respectively. Vesting of these RSUs occurs in one-third increments on each of the first three anniversaries of the award date or upon the director’s earlier cessation of service on the board, other than for cause. ~~Beginning with the 2020 grant, each~~Each non-management director may elect, prior to the beginning of the calendar year in which the award is granted, to defer the receipt of shares of the Company’s common stock issuable upon vesting until either his or her (i) separation from service with the Company or (ii) attainment of an age specified in advance by the non-management director. A total of 3 directors elected to defer the receipt of RSUs granted on March 1, 2022 to a future date and a total of 4 directors elected to defer the receipt of RSUs granted on March 1, 2021 to a future ~~date and a total of 5 directors elected to defer the receipt of RSUs granted on March 1, 2020 to a future~~ date.

RSUs outstanding under the 2009 Plan as of ~~June 30, 2021,~~March 31, 2022, and changes during ~~each of~~ the three-month ~~periods~~period following December 31, ~~2020,~~2021, was as follows:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

The Company accounts for all transactions that represent business combinations using the acquisition method of accounting, where the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquired entity are recognized and measured at their fair values on the date the Company obtains ~~a controlling interest in~~control of the acquiree. Such fair values that are not finalized for reporting periods following the acquisition date are estimated and recorded as provisional amounts. Adjustments to these provisional amounts during the measurement period (defined as the date through which all information required to identify and measure the consideration transferred, the assets acquired, the liabilities assumed and any noncontrolling interests has been obtained, limited to one year from the acquisition date) are recorded when identified. Goodwill is determined as the excess of the fair value of the consideration conveyed in the acquisition over the fair value of the net assets acquired.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)~~

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, one or more subsidiaries of the Company paid approximately $4$1 million to acquire the operating assets and related businesses of certain physician practices, clinics and other ancillary businesses that operate within the communities served by the Company’s affiliated hospitals. The Company allocated the purchase price to property and equipment, working capital, noncontrolling interests and goodwill.

NaN hospitals were divested during the three months ended March 31, 2022. The following table provides a summary of hospitals that the Company divested during the ~~six months ended June 30, 2021 and the~~ year ended December 31, ~~2020:~~2021:

			Licensed
Hospital	Buyer	City, State	Beds	Effective Date
2021 Divestitures:
Lea Regional Medical Center	Covenant Health System	Hobbs, NM	6884	January 1, 2021
Tennova Healthcare - Tullahoma	Vanderbilt University Medical Center	Tullahoma, TN	135	January 1, 2021
Tennova Healthcare - Shelbyville	Vanderbilt University Medical Center	Shelbyville, TN	60	January 1, 2021
Northwest Mississippi Medical Center	Delta Health System	Clarksdale, MS	181	February 1, 2021
AllianceHealth Midwest	SSM Health Care of Oklahoma	Midwest City, OK	255	April 1, 2021

~~2020 Divestitures:~~
~~Berwick Hospital Center~~	~~Fayette Holdings, Inc.~~	~~Berwick, PA~~	90	~~December 1, 2020~~
~~Brownwood Regional Medical Center~~	~~Hendrick Health System~~	~~Brownwood, TX~~	~~188~~	~~October 27, 2020~~
~~Abilene Regional Medical Center~~	~~Hendrick Health System~~	~~Abilene, TX~~	~~231~~	~~October 27, 2020~~
~~San Angelo Community Medical Center~~	~~Shannon Health System~~	~~San Angelo, TX~~	~~171~~	~~October 24, 2020~~
~~Bayfront Health St. Petersburg~~	~~Orlando Health, Inc.~~	~~St. Petersburg, FL~~	~~480~~	~~October 1, 2020~~
~~Hill Regional Hospital~~	~~AHRK Holdings, LLC~~	~~Hillsboro, TX~~	25	~~August 1, 2020~~
~~St. Cloud Regional Medical Center~~	~~Orlando Health, Inc.~~	~~St. Cloud, FL~~	84	~~July 1, 2020~~
~~Northern Louisiana Medical Center~~	~~Allegiance Health Management, Inc.~~	~~Ruston, LA~~	~~130~~	~~July 1, 2020~~
~~Shands Live Oak Regional Medical Center~~	~~HCA Healthcare, Inc. (~~“~~HCA”)~~	~~Live Oak, FL~~	25	~~May 1, 2020~~
~~Shands Starke Regional Medical Center~~	~~HCA~~	~~Starke, FL~~	49	~~May 1, 2020~~
~~Southside Regional Medical Center~~	~~Bon Secours Mercy Health System~~	~~Petersburg, VA~~	~~300~~	~~January 1, 2020~~
~~Southampton Memorial Hospital~~	~~Bon Secours Mercy Health System~~	~~Franklin, VA~~	~~105~~	~~January 1, 2020~~
~~Southern Virginia Regional Medical Center~~	~~Bon Secours Mercy Health System~~	~~Emporia, VA~~	80	~~January 1, 2020~~

~~A purchase agreement was entered into on May 1, 2021 among certain subsidiaries~~On March 7, 2022, one or more affiliates of the Company ~~and HCA~~entered into a definitive agreement for the sale of substantially all of the ~~Company’s unconsolidated minority equity interest~~assets of AllianceHealth Seminole (32 licensed beds) in ~~Macon Healthcare, LLC. Macon Healthcare, LLC~~Seminole, Oklahoma, to affiliates of SSM Health Care of Oklahoma. This hospital is ~~a joint venture with certain subsidiaries~~classified as held for sale as of ~~HCA representing 2 hospitals in Macon, Georgia, in which the Company holds a 38% interest. The sale, which~~March 31, 2022 and its disposition is ~~scheduled~~expected to be completed induring the ~~third quarter~~second half of ~~2021, is expected to result in cash proceeds to~~2022.

No divestitures or potential divestitures meet the ~~Company~~criteria for reporting as a discontinued operation as of ~~approximately $110 million.~~March 31, 2022.

The total amount of unrecognized benefit that would affect the effective tax rate, if recognized, was less than $1 million as of ~~June 30, 2021.~~March 31, 2022. A total of less than $1 million of interest and penalties is included in the amount of the liability for uncertain tax positions at ~~June 30, 2021.~~March 31, 2022. It is the Company’s policy to recognize interest and penalties related to unrecognized benefits in its condensed consolidated statements of ~~income (loss)~~loss as income tax expense.

It is possible the amount of unrecognized tax benefit could change in the next 12 months as a result of a lapse of the statute of limitations and settlements with taxing authorities; however, the Company does not anticipate the change will have a material impact on the Company’s condensed consolidated results of operations or financial position.

The Company’s federal income tax ~~returns~~return for the ~~2014, 2015 and~~ 2018 tax ~~years are~~year remains under examination by the Internal Revenue Service. The Company believes the ~~results~~result of ~~these examinations~~this examination will not be material to its ~~condensed~~ consolidated results of operations or consolidated financial position. The Company has extended the federal statute of limitations through ~~December 31, 2021~~June 30, 2022 for Community Health Systems, Inc. for the tax periods ended December 31, 2014 and 2015. In addition, the Company has extended the federal statute of limitations through December 31, 2023 for the tax period ended December 31, 2018.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

The Company’s effective tax rates were ~~59.3%~~43.4% and ~~(165.7)%~~202.9% for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and 98.4% and 209.6% for the six months ended June 30, 2021 and 2020,~~ respectively. The difference in the Company’s effective tax rate for the three and six months ended June 30, 2021, when compared to the three and six months ended June 30, 2020, was primarily due to an increase in the valuation allowanceValuation allowances recognized on IRC Section 163(j) interest carryforwards created as a result of the financing ~~transactions~~transaction completed during the six months ended June 30, 2021. The Company’s effective tax rate for the three and six months ended June 30, 2020 reflects the changes in tax benefits as a result of an increase to the deductible interest expense allowed for 2019 and 2020 under ~~the CARES Act that was enacted~~ during the three months ended March 31, ~~2020~~.2022 were lower than valuation allowances recognized related to the financing transactions completed during the three months ended March 31, 2021, resulting in a period-over-period decrease in the effective tax rate.

Cash paid for income taxes, net of refunds received, resulted in a net payment of approximately $1$2 million and less than $1 million during the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and a net payment of approximately $1 million and a net refund of $2 million during the six months ended June 30, 2021 and 2020,~~ respectively.

Long-term debt, net of unamortized deferred debt issuance costs, consists of the following (in millions):

	June 30,			December 31,			March 31,			December 31,
	2021			2020			2022			2021
6⅞% Senior Notes due 2022	$	—		$	126
6¼% Senior Secured Notes due 2023		—			95
8⅝% Senior Secured Notes due 2024		—			1,033
6⅝% Senior Secured Notes due 2025		1,462			1,462		$	—		$	1,462
8% Senior Secured Notes due 2026		2,101			2,101			2,101			2,101
8% Senior Secured Notes due 2027		700			700			700			700
5⅝% Senior Secured Notes due 2027		1,900			1,900			1,900			1,900
6⅞% Senior Notes due 2028		767			767			767			767
6% Senior Secured Notes due 2029		900			900			900			900
5¼% Senior Secured Notes due 2030								1,535			—
4¾% Senior Secured Notes due 2031		1,095			—			1,095			1,095
9⅞% Junior-Priority Secured Notes due 2023		—			1,769
8⅛% Junior-Priority Secured Notes due 2024		—			1,348
6⅞% Junior-Priority Secured Notes due 2029		1,775			—			1,775			1,775
6⅛% Junior-Priority Secured Notes due 2030		1,440			—			1,440			1,440
ABL Facility		—			—			—			—
Finance lease and financing obligations		249			239			420			398
Other		23			26			53			37
Less: Unamortized deferred debt issuance costs and note premium		(459	)		(250	)		(489	)		(435	)
Total debt		11,953			12,216			12,197			12,140
Less: Current maturities		(27	)		(123	)		(43	)		(31	)
Total long-term debt	$	11,926		$	12,093		$	12,154		$	12,109

On ~~January 28, 2021, the remaining~~February 4, 2022, CHS/Community Health Systems, Inc. (“CHS”) completed a private offering of $1.535 billion aggregate principal amount of ~~the~~ 6¼5¼% Senior Secured Notes due ~~2023 of approximately $95 million was redeemed using cash on hand.~~

~~On February 2, 2021, the Company completed a private offering of $1.775 billion aggregate principal amount of 6⅞~~May 15, 2030 (the “5¼% ~~Junior-Priority~~Senior Secured Notes due ~~April 15, 2029 (the “6⅞% Junior-Priority Secured Notes due 2029”~~2030”). The proceeds of the offering ~~together with cash on hand,~~ were used to redeem the 9⅞6⅝% ~~Junior-Priority~~Senior Secured Notes due ~~2023 in~~2025 on February ~~2021~~4, 2022, and to pay related fees and expenses. The 6⅞5¼% ~~Junior-Priority~~Senior Secured Notes due ~~2029~~2030 bear interest at a rate of ~~6.875%~~5.250% per year payable semi-annually in arrears on ~~April~~May 15 and ~~October~~November 15, ~~of each year,~~ commencing on ~~October~~November 15, ~~2021.~~2022. The 6⅞5¼% ~~Junior-Priority~~Senior Secured Notes due ~~2029~~2030 are unconditionally guaranteed on a ~~junior-priority~~senior-priority secured basis by the Company and each of the current and future domestic subsidiaries of ~~CHS/Community Health Systems, Inc. (“CHS”)~~CHS that provide guarantees under ~~CHS’ ABL Facility,~~the revolving asset-based loan facility (the “ABL Facility”), any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS.

The 6⅞5¼% ~~Junior-Priority~~Senior Secured Notes due ~~2029~~2030 and the related guarantees are secured by shared (i) ~~second-priority~~first-priority liens on the ~~Non-ABL Priority Collateral~~collateral that also secures on a first-priority basis CHS’ senior-priority secured notes and (ii) ~~third-priority~~second-priority liens on the ~~ABL-Priority Collateral~~collateral that secures on a first-priority basis the ABL Facility, ~~(and also secures on~~in each case subject to permitted liens described in the indenture governing the 5¼% Senior Secured Notes due 2030.

CHS is entitled, at its option, to redeem all or a ~~second-priority basis CHS’~~portion of the 5¼% Senior Secured Notes due 2030 at any time prior to May 15, 2025, upon not less than 10 nor more than 60 days’ notice, at a price equal to 100% of the principal amount of the 5¼% Senior Secured Notes due 2030 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 5¼% Senior Secured Notes due 2030.

CHS may redeem up to 40% of the aggregate principal amount of the 5¼% Senior Secured Notes due 2030 at any time prior to May 15, 2025 using the net proceeds from certain equity offerings at a redemption price of 105.250% of the principal amount of the 5¼% Senior Secured Notes due 2030 redeemed, plus accrued and unpaid interest, if any. In addition, any time prior to May 15, 2025, but not more than once during each twelve-month period, CHS may redeem up to 10% of the original aggregate principal amount of

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

~~senior-priority secured notes), in each case subject to permitted liens described in~~ the ~~indenture governing the~~ 6⅞5¼% ~~Junior-Priority~~Senior Secured Notes due ~~2029.~~

~~At any time and from time to time prior to April 15, 2024, CHS may redeem the~~ 6⅞~~% Junior-Priority Secured Notes due 2029 in whole or in part, at its option, upon not less than 15 nor more than 60 days’ prior written notice~~2030 at a redemption price equal to ~~100%~~103% of the principal amount of the 6⅞5¼% ~~Junior-Priority~~Senior Secured Notes due ~~2029~~2030 to be redeemed, plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 6⅞% Junior-Priority Secured Notes due 2029. In addition, CHS may redeem up to 40% of the aggregate principal amount of the 6⅞% Junior-Priority Secured Notes due 2029 at any time prior to April 15, 2024 using the net proceeds from certain equity offerings at a redemption price of 106.875% of the principal amount of the 6⅞% Junior-Priority Secured Notes due 2029 redeemed, plus accrued and unpaid interest, if any.

At any time and from time to time on or after ~~April~~May 15, ~~2024,~~2025, CHS may redeem the 6⅞5¼% ~~Junior-Priority~~Senior Secured Notes due ~~2029~~2030 in whole or in part, upon not less than 1510 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 6⅞% Junior-Priority Secured Notes due 2029 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the twelve-month period beginning on April 15 of the years indicated below:

~~On February 9, 2021, the Company completed a private offering of $1.095 billion aggregate principal amount of 4¾~~5¼% Senior ~~Secured Notes due February 15, 2031 (the “4¾% Senior Secured Notes due 2031”). The proceeds of the offering, together with cash on hand, were used to redeem the~~ 8⅝% Senior Secured Notes due 2024 on February 9, 2021, and to pay related fees and expenses. The 4¾% Senior Secured Notes due 2031 bear interest at a rate of 4.750% per year payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2021. The 4¾% Senior Secured Notes due 2031 are unconditionally guaranteed on a senior-priority secured basis by each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS.

~~The~~ 4¾% Senior Secured Notes due 2031 and the related guarantees are secured by shared (i) first-priority liens on the Non-ABL Priority Collateral and (ii) second-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 4¾% Senior Secured Notes due 2031.

~~CHS is entitled, at its option, to redeem all or a portion of the~~ 4¾% Senior Secured Notes due 2031 at any time prior to February 15, 2026, upon not less than 15 nor more than 60 days’ notice, at a price equal to 100% of the principal amount of the 4¾% Senior Secured Notes due 2031 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 4¾% Senior Secured Notes due 2031.

~~CHS may redeem up to 40% of the aggregate principal amount of the~~ 4¾% Senior Secured Notes due 2031 at any time prior to February 15, 2024 using the net proceeds from certain equity offerings at a redemption price of 104.750% of the principal amount of the 4¾% Senior Secured Notes due 2031 redeemed, plus accrued and unpaid interest, if any. In addition, any time prior to February 15, 2026, but not more than once during each twelve-month period, CHS may redeem up to 10% of the original aggregate principal amount of the 4¾% Senior Secured Notes due 2031 at a redemption price equal to 103% of the principal amount of the 4¾% Senior Secured Notes due 2031 to be redeemed, plus accrued and unpaid interest, if any.

~~At any time and from time to time on or after February 15, 2026, CHS may redeem the~~ 4¾% Senior Secured Notes due 2031 in whole or in part, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 4¾% Senior Secured Notes due 2031 redeemed, to,

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)~~

~~but excluding, the applicable date of redemption, if redeemed during the twelve-month period beginning on February 15 of the years indicated below:~~

~~On March 1, 2021, the Company redeemed the remaining principal amount of the~~ ~~6⅞%~~ ~~Senior Notes due 2022 of approximately $126 million using cash on hand.~~

~~On May 19, 2021, the Company completed a private offering of $1.440 billion aggregate principal amount of~~ ~~6⅛%~~ Junior-Priority Secured Notes due April 1, 2030 (the “6⅛% Junior-Priority Secured Notes due 2030”). The proceeds of the offering, together with cash on hand, were used to redeem the 8⅛% Junior-Priority Secured Notes due 2024 on May 19, 2021, and to pay related fees and expenses. The 6⅛% Junior-Priority Secured Notes due 2030 bear interest at a rate of 6.125% per year payable semi-annually in arrears on April 1 and October 1, commencing on October 1, 2021. The 6⅛% Junior-Priority Secured Notes due 2030 are unconditionally guaranteed on a junior-priority secured basis by each of CHS’ current and future domestic subsidiaries that provide guarantees under the ABL facility, any capital market debt securities of CHS (including CHS’ outstanding senior notes) and certain other long-term debt of CHS.

~~The~~ 6⅛% Junior-Priority Secured Notes due 2030 and the related guarantees are secured by shared (i) second-priority liens on the Non-ABL Priority Collateral and (ii) third-priority liens on the ABL Priority Collateral that secures on a first-priority basis the ABL Facility, in each case subject to permitted liens described in the indenture governing the 6⅛% Junior-Priority Secured Notes due 2030.

CHS is entitled, at its option, to redeem all or a portion of the 6⅛% Junior-Priority Secured Notes due 2030 at any time prior to April 1, 2025, upon not less than 15 nor more than 60 days’ notice, at a price equal to 100% of the principal amount of the 6⅛% Junior-Priority Secured Notes due 2030 redeemed plus accrued and unpaid interest, if any, plus a “make-whole” premium, as described in the indenture governing the 6⅛% Junior-Priority Secured Notes due 2030.

CHS may redeem up to 40% of the aggregate principal amount of the 6⅛% Junior-Priority Secured Notes due 2030 at any time prior to May 15, 2024 using the net proceeds from certain equity offerings at a redemption price of 106.125% of the principal amount of the 6⅛% Junior-Priority Secured Notes due 2030 redeemed, plus accrued and unpaid interest, if any.

~~At any time and from time to time on or after April 1, 2025, CHS may redeem the~~ 6⅛% Junior-Priority Secured Notes due 2030 in whole or in part, upon not less than 15 nor more than 60 days’ prior written notice at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the 6⅛% Junior-Priority Secured Notes due 2030 redeemed, to, but excluding, the applicable date of redemption, if redeemed during the twelve-month period beginning on ~~April 1~~May 15 of the years indicated below:

The maximum aggregate principal amount under the ABL Facility is $1.0 billion. At ~~June 30, 2021,~~March 31, 2022, the available borrowing base under the ABL Facility was ~~$762 million,~~$1.0 billion, of which ~~$120~~$103 million was reserved for outstanding letters of credit and ~~$642~~$897 million represented excess availability. The Company had 0 outstanding borrowings as of June 30, 2021. Letters of credit were reduced during the six months ended June 30, 2021 by $30 million in relation to a professional liability claim that was settled and funded during the three months ended DecemberMarch 31, ~~2020.~~2022. The issued letters of credit are primarily in support of potential insurance-related claims and certain bonds.

The ABL Facility contains customary representations and warranties, subject to limitations and exceptions, and customary covenants restricting the Company’s ability, subject to certain exceptions, to, among other things (1) declare dividends, make distributions or redeem or repurchase capital stock, (2) prepay, redeem or repurchase other debt, (3) incur liens or grant negative pledges, (4) make loans and investments and enter into acquisitions and joint ventures, (5) incur additional indebtedness or provide certain guarantees, (6) engage in mergers, acquisitions and asset sales, (7) conduct transactions with affiliates, (8) alter the nature of

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)~~

the Company’s, CHS’ or the guarantors’ businesses, (9) grant certain guarantees with respect to physician practices, (10) engage in sale and leaseback transactions or (11) change the Company’s fiscal year. The Company is also required to comply with a consolidated fixed charge coverage ratio, upon certain triggering events described below, and various affirmative covenants. The consolidated fixed charge coverage ratio is calculated as the ratio of (x) consolidated EBITDA (as defined in the ABL Facility) less capital expenditures to (y) the sum of consolidated interest expense (as defined in the ABL Facility), scheduled principal payments, income taxes and restricted payments made in cash or in permitted investments. For purposes of calculating the consolidated fixed charge coverage ratio, the calculation of consolidated EBITDA as defined in the ABL Facility is a trailing 12-month calculation that begins with the Company’s consolidated net income, ~~(loss),~~ with certain adjustments for interest, taxes, depreciation and amortization, net income attributable to noncontrolling interests, stock compensation expense, restructuring costs, and the financial impact of other non-cash or non-recurring items recorded during any such 12-month period. The consolidated fixed charge coverage ratio is a required covenant only in periods where the total borrowings outstanding under the ABL Facility reduce the amount available in the facility to less than the greater of (i) $95 million or (ii) 10% of the calculated borrowing base. As a result, in the event the Company has less than $95 million available under the ABL Facility, the Company would need to comply with the consolidated fixed charge coverage ratio. At ~~June 30, 2021,~~March 31, 2022, the Company is not subject to the consolidated fixed charge coverage ratio as such triggering event had not occurred during the ~~last~~ twelve months ended ~~June 30, 2021.~~ March 31, 2022.

The Company paid interest of ~~$101~~$242 million and ~~$222~~$203 million on borrowings during the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $304 million and $486 million on borrowings during the six months ended June 30, 2021 and 2020,~~ respectively.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

The fair value of financial instruments has been estimated by the Company using available market information as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, and valuation methodologies considered appropriate. The estimates presented in the table below are not necessarily indicative of amounts the Company could realize in a current market exchange (in millions):

	June 30, 2021				December 31, 2020				March 31, 2022				December 31, 2021
	Carrying		Estimated Fair		Carrying		Estimated Fair		Carrying		Estimated Fair		Carrying		Estimated Fair
	Amount		Value		Amount		Value		Amount		Value		Amount		Value
Assets:
Cash and cash equivalents	$	1,250	$	1,250	$	1,676	$	1,676	$	460	$	460	$	507	$	507
Investments in equity securities		127		127		129		129		135		135		144		144
Available-for-sale debt securities		138		138		110		110		177		177		178		178
Trading securities		12		12		12		12		12		12		13		13
Liabilities:
6⅞% Senior Notes due 2022		—		—		125		125
6¼% Senior Secured Notes due 2023		—		—		95		99
8⅝% Senior Secured Notes due 2024		—		—		1,025		1,080
6⅝% Senior Secured Notes due 2025		1,430		1,545		1,427		1,543		—		—		1,434		1,517
8% Senior Secured Notes due 2026		2,076		2,268		2,074		2,275		2,079		2,194		2,078		2,210
8% Senior Secured Notes due 2027		692		779		692		760		693		744		692		758
5⅝% Senior Secured Notes due 2027		1,813		2,029		1,809		2,048		1,823		1,939		1,819		2,011
6⅞% Senior Notes due 2028		758		761		758		618		759		698		759		758
6% Senior Secured Notes due 2029		858		965		857		973		861		911		860		966
5¼% Senior Secured Notes due 2030										1,441		1,477		—		—
4¾% Senior Secured Notes due 2031		1,090		1,098		—		—		1,090		1,033		1,090		1,108
9⅞% Junior-Priority Secured Notes due 2023		—		—		1,756		1,861
8⅛% Junior-Priority Secured Notes due 2024		—		—		1,336		1,408
6⅞% Junior-Priority Secured Notes due 2029		1,618		1,865		—		—		1,629		1,743		1,625		1,823
6⅛% Junior-Priority Secured Notes due 2030		1,348		1,460		—		—		1,354		1,343		1,352		1,431
ABL Facility and other debt		21		21		23		23		48		48		32		32

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)~~

The carrying value of the Company’s long-term debt in the above table is presented net of unamortized deferred debt issuance costs. The estimated fair value is determined using the methodologies discussed below in accordance with accounting standards related to the determination of fair value based on the ~~U.S.~~ GAAP fair value hierarchy as discussed in Note 7. The estimated fair value for financial instruments with a fair value that does not equal its carrying value is considered a Level 1 valuation. The Company utilizes the market approach and obtains indicative pricing through publicly available subscription services such as Bloomberg to determine fair values where relevant.

Cash and cash equivalents. The carrying amount approximates fair value due to the short-term maturity of these instruments (less than three months).

Investments in equity securities. Estimated fair value is based on closing price as quoted in public markets.

Available-for-sale debt securities. Estimated fair value is based on closing price as quoted in public markets or other various valuation techniques.

Trading securities. Estimated fair value is based on closing price as quoted in public markets.

Senior Notes, Senior Secured Notes and Junior-Priority Secured Notes. Estimated fair value is based on the closing market price for these notes.

ABL Facility and other debt. The carrying amount of the ABL Facility and all other debt approximates fair value due to the nature of these obligations.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Company utilizes the ~~U.S.~~ GAAP fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumption about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

The inputs used to measure fair value are classified into the following fair value hierarchy:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 includes values determined using pricing models, discounted cash flow methodologies, or similar techniques reflecting the Company’s own assumptions.

In instances where the determination of the fair value hierarchy measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment of factors specific to the asset or liability. Transfers between levels within the fair value hierarchy are recognized by the Company on the date of the change in circumstances that requires such transfer. There were 0 transfers between levels during the ~~six-month~~three-month periods ended ~~June 30, 2021~~March 31, 2022 or ~~2020.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)~~

The following table sets forth, by level within the fair value hierarchy, the financial assets and liabilities recorded at fair value on a recurring basis as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (in millions):

Investments in Equity Securities, Available-for-Sale Debt Securities and Trading Securities

Investments in equity ~~securities and trading~~ securities classified as Level 1 are measured using quoted market prices. Level 2 available-for-sale debt securities and trading securities primarily consisted of bonds and notes issued by the United States government and its agencies and domestic and foreign corporations. The estimated fair values of these securities are determined using various valuation techniques, including a multi-dimensional relational model that incorporates standard observable inputs and assumptions such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids/offers and other pertinent reference data.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

The Company utilizes operating and finance leases for the use of certain hospitals, medical office buildings, and medical equipment. The components of lease cost and rent expense for the three months ended March 31, 2022 and ~~six month periods ended June 30,~~ 2021 ~~and 2020~~ are as follows (in millions):

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
Lease Cost	2021			2020			2021			2020			2022			2021
Operating lease cost:
Operating lease cost	$	50		$	51		$	99		$	101		$	51		$	48
Short-term rent expense		23			27			47			54			23			25
Variable lease cost		6			6			12			11			4			6
Sublease income		(1	)		(2	)		(2	)		(3	)		(1	)		(1	)
Total operating lease cost	$	78		$	82		$	156		$	163		$	77		$	78
Finance lease cost:
Amortization of right-of-use assets	$	1		$	3		$	4		$	6		$	3		$	3
Interest on finance lease liabilities		2			2			3			4			4			1
Total finance lease cost	$	3		$	5		$	7		$	10		$	7		$	4

19Supplemental balance sheet information related to leases was as follows (in millions):

Supplemental cash flow information related to leases for the three months ended March 31, 2022 and 2021 is as follows (in millions):

(1)Included in the change in other operating assets and liabilities in the condensed consolidated statements of cash flows.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

~~Supplemental balance sheet information related to leases was as follows (in millions):~~

~~Supplemental cash flow information related to leases for the six months ended June 30, 2021 and 2020 is as follows (in millions):~~

Authorized capital shares of the Company include 400,000,000 shares of capital stock consisting of 300,000,000 shares of common stock and 100,000,000 shares of preferred stock. Each of the aforementioned classes of capital stock has a par value of $0.01 per share. Shares of preferred stock, NaN of which were outstanding as of ~~June 30, 2021,~~March 31, 2022, may be issued in one or more series having such rights, preferences and other provisions as determined by the Board of Directors without approval by the holders of common stock.

The Company is a holding company which operates through its subsidiaries. The ~~Company’s~~ ABL Facility and the indentures governing each series of the Company’s outstanding notes contain various covenants under which the assets of the subsidiaries of the Company are subject to certain restrictions relating to, among other matters, dividends and distributions, as referenced in the paragraph below.

The ABL Facility and the indentures governing each series of the Company’s outstanding notes restrict the Company’s subsidiaries from, among other matters, paying dividends and making distributions to the Company, which thereby limits the Company’s ability to pay dividends and/or repurchase stock. As of ~~June 30, 2021,~~March 31, 2022, under the most restrictive test in these agreements (and subject to certain exceptions), the Company has approximately ~~$200~~$300 million of capacity to pay permitted dividends and/or repurchase shares of stock or make other restricted payments.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)~~

The following schedule presents the reconciliation of the carrying amount of total equity, equity attributable to the Company’s stockholders, and equity attributable to noncontrolling interests as of ~~June 30, 2021,~~March 31, 2022, and during ~~each of~~ the three-month ~~periods~~period following December 31, ~~2020~~2021 (in millions):

Community Health Systems, Inc. Stockholders

Redeemable
Noncontrolling
Interest

Common
Stock

Additional
Paid-In
Capital

Accumulated
Other
Comprehensive
Loss (Income)

Accumulated
Deficit

Noncontrolling
Interest

Total
Stockholders’
Deficit

Balance, December 31, 2020

$
484

$
1

$
2,094

$
(13
)

$
(3,707
)

$
87

$
(1,538
)
Comprehensive income (loss)

21

—

—

(3
)

(64
)

8

(59
)
Distributions to noncontrolling interests

(12
)

—

—

—

—

(9
)

(9
)
Dispositions of less-than-wholly owned business

(7
)

—

—

—

—

—

—

Noncontrolling interest in acquired entity

2

—

—

—

—

—

—

Adjustment to redemption value of redeemable
   noncontrolling interests

(7
)

—

7

—

—

—

7

Cancellation of restricted stock for tax withholdings
   on vested shares

—

—

(4
)

—

—

—

(4
)
Share-based compensation

—

—

8

—

—

—

8

Balance, March 31, 2021

481

1

2,105

(16
)

(3,771
)

86

(1,595
)
Comprehensive income

24

—

—

1

6

7

14

Distributions to noncontrolling interests

(31
)

—

—

—

—

(14
)

(14
)
Purchase of subsidiary shares from noncontrolling
   interests

(2
)

—

—

—

—

—

—

Other reclassifications of noncontrolling interests

1

—

(1
)

—

—

—

(1
)
Adjustment to redemption value of redeemable
   noncontrolling interests

25

—

(25
)

—

—

—

(25
)
Share-based compensation

—

—

5

—

—

—

5

Balance, June 30, 2021

$
498

$
1

$
2,084

$
(15
)

$
(3,765
)

$
79

$
(1,616
)

				Community Health Systems, Inc. Stockholders
	Redeemable Noncontrolling Interest			Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Loss (Income)			Accumulated Deficit			Noncontrolling Interest			Total Stockholders’ Deficit
Balance, December 31, 2021	$	480		$	1	$	2,118		$	(14	)	$	(3,477	)	$	82		$	(1,290	)
Comprehensive income (loss)		16			—		—			(8	)		(1	)		15			6
Distributions to noncontrolling interests		(12	)		—		—			—			—			(17	)		(17	)
Purchases of subsidiary shares from noncontrolling interests		1			—		(1	)		—			—			—			(1	)
Contributions from noncontrolling interests		1			—		—			—			—			—			—
Adjustment to redemption value of redeemable noncontrolling interests		7			—		(7	)		—			—			—			(7	)
Cancellation of restricted stock for tax withholdings on vested shares		—			—		(8	)		—			—			—			(8	)
Share-based compensation		—			—		5			—			—			—			5
Balance, March 31, 2022	$	493		$	1	$	2,107		$	(22	)	$	(3,478	)	$	80		$	(1,312	)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

The following schedule presents the reconciliation of the carrying amount of total equity, equity attributable to the Company’s stockholders, and equity attributable to the noncontrolling interests as of ~~June 30, 2020,~~March 31, 2021, and during ~~each of~~ the three-month ~~periods~~period following December 31, ~~2019~~2020 (in millions):

Community Health Systems, Inc. Stockholders

Redeemable
Noncontrolling
Interest

Common
Stock

Additional
Paid-In
Capital

Accumulated
Other
Comprehensive
Loss

Accumulated
Deficit

Noncontrolling
Interest

Total
Stockholders’
Deficit

Balance, December 31, 2019

$
502

$
1

$
2,008

$
(9
)

$
(4,218
)

$
77

$
(2,141
)
Comprehensive income

8

—

—

2

18

8

28

Distributions to noncontrolling interests

(22
)

—

—

—

—

(8
)

(8
)
Purchase of subsidiary shares from noncontrolling
   interests

(1
)

—

(1
)

—

—

—

(1
)
Other reclassifications of noncontrolling interests

8

—

—

—

—

(8
)

(8
)
Adjustment to redemption value of redeemable
   noncontrolling interests

7

—

(7
)

—

—

��
—

(7
)
Cancellation of restricted stock for tax withholdings
   on vested shares

—

—

(1
)

—

—

—

(1
)
Share-based compensation

—

—

2

—

—

—

2

Balance, March 31, 2020

502

1

2,001

(7
)

(4,200
)

69

(2,136
)
Comprehensive income

7

—

—

2

69

16

87

Distributions to noncontrolling interests

(17
)

—

—

—

—

(10
)

(10
)
Purchase of subsidiary shares from noncontrolling
   interests

(1
)

—

1

—

—

—

1

Other reclassifications of noncontrolling interests

1

—

—

—

—

—

—

Adjustment to redemption value of redeemable
   noncontrolling interests

(3
)

—

3

—

—

—

3

Share-based compensation

—

—

3

—

—

—

3

Balance, June 30, 2020

$
489

$
1

$
2,008

$
(5
)

$
(4,131
)

$
75

$
(2,052
)

				Community Health Systems, Inc. Stockholders
	Redeemable Noncontrolling Interest			Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Noncontrolling Interest			Total Stockholders’ Deficit
Balance, December 31, 2020	$	484		$	1	$	2,094		$	(13	)	$	(3,707	)	$	87		$	(1,538	)
Comprehensive income (loss)		21			—		—			(3	)		(64	)		8			(59	)
Distributions to noncontrolling interests		(12	)		—		—			—			—			(9	)		(9	)
Dispositions of less-than-wholly owned business		(7	)		—		—			—			—			—			—
Noncontrolling interest in acquired entity		2			—		—			—			—			—			—
Adjustment to redemption value of redeemable noncontrolling interests		(7	)		—		7			—			—			—			7
Cancellation of restricted stock for tax withholdings on vested shares		—			—		(4	)		—			—			—			(4	)
Share-based compensation		—			—		8			—			—			—			8
Balance, March 31, 2021	$	481		$	1	$	2,105		$	(16	)	$	(3,771	)	$	86		$	(1,595	)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

The following schedule discloses the effects of changes in the Company’s ownership interest in its less-than-wholly-owned subsidiaries on Community Health Systems, Inc. stockholders’ deficit (in millions):

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Net income (loss) attributable to Community Health Systems,
   Inc. stockholders

$
6

$
70

$
(58
)

$
87

Transfers to the noncontrolling interests:

Net increase in Community Health Systems,
   Inc. paid-in-capital for purchase of
   subsidiary partnership interests

—

1

—

—

Net transfers to the noncontrolling interests

—

1

—

—

Change to Community Health Systems, Inc. stockholders'
   deficit from net income (loss) attributable to
   Community Health Systems, Inc. stockholders and
   transfers to noncontrolling interests

$
6

$
71

$
(58
)

$
87

	Three Months Ended
	March 31,
	2022			2021
Net loss attributable to Community Health Systems, Inc. stockholders	$	(1	)	$	(64	)
Transfers to the noncontrolling interests:
Net (decrease) increase in Community Health Systems, Inc. paid-in-capital for purchase of subsidiary partnership interests		(1	)		0
Net transfers to the noncontrolling interests		(1	)		—
Change to Community Health Systems, Inc. stockholders' deficit from net loss attributable to Community Health Systems, Inc. stockholders and transfers to noncontrolling interests	$	(2	)	$	(64	)

The following table sets forth the components of the denominator for the computation of basic and diluted earnings per share for net ~~(loss) income~~loss attributable to Community Health Systems, Inc. common stockholders:

The Company generated a loss attributable to Community Health Systems, Inc. common stockholders for both of the ~~six months~~three-month periods ended ~~June 30,~~March 31, 2022 and 2021, so the effect of dilutive securities is not considered because their effect would be antidilutive. If the Company had generated income during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, the effect of restricted stock awards, employee stock options, and other equity-based awards on the diluted shares calculation would have been an increase inof 2,198,436 shares ~~of 2,967,814.~~

The Company is a party to various legal, regulatory and governmental proceedings incidental to its business. Based on current knowledge, management does not believe that loss contingencies arising from pending legal, regulatory and governmental matters will have a material adverse effect on the condensed consolidated financial position or liquidity of the Company. However, in light of the inherent uncertainties involved in pending legal, regulatory and governmental matters, some of which are beyond the Company’s control, and the very large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to the Company’s results of operations or cash flows for any particular reporting period.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (continued)

With respect to all legal, regulatory and governmental proceedings, the Company considers the likelihood of a negative outcome. If the Company determines the likelihood of a negative outcome with respect to any such matter is probable and the amount of the loss can be reasonably estimated, the Company records an accrual for the estimated loss for the expected outcome of the matter. If the likelihood of a negative outcome with respect to material matters is reasonably possible and the Company is able to determine an estimate of the possible loss or a range of loss, whether in excess of a related accrued liability or where there is no accrued liability, the Company discloses the estimate of the possible loss or range of loss. However, the Company is unable to estimate a possible loss or range of loss in some instances based on the significant uncertainties involved in, and/or the preliminary nature of, certain legal, regulatory and governmental matters.

The table below presents a reconciliation of the beginning and ending liability balances (in millions) during the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, with respect to the Company’s determination of the contingencies of the Company in respect of which an accrual has been recorded. The liability as of ~~June 30, 2021~~March 31, 2022 is comprised of individually insignificant amounts for various matters.

In accordance with applicable accounting guidance, the Company establishes a liability for litigation, regulatory and governmental matters for which, based on information currently available, the Company believes that a negative outcome is known or is probable and the amount of the loss is reasonably estimable. For all such matters (whether or not discussed in this contingencies footnote), such amounts have been recorded in other accrued liabilities on the condensed consolidated balance sheet and are included in the table above. Due to the uncertainties and difficulty in predicting the ultimate resolution of these contingencies, the actual amount could differ from the estimated amount reflected as a liability on the condensed consolidated balance sheet.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read this discussion together with our condensed consolidated financial statements and the accompanying notes included herein.

Throughout this ~~Quarterly Report on~~ Form 10-Q, we refer to Community Health Systems, Inc., or the Parent Company, and its consolidated subsidiaries in a simplified manner and on a collective basis, using words like “we,” “our,” “us” and the “Company”. This drafting style is suggested by the Securities and Exchange Commission, or SEC, and is not meant to indicate that the publicly traded Parent Company or any particular subsidiary of the Parent Company owns or operates any asset, business or property. The hospitals, operations and businesses described in this filing are owned and operated by distinct and indirect subsidiaries of Community Health Systems, Inc.

We are one of the largest publicly traded ~~hospital companies~~providers of healthcare services in the United States and a leading operator of general acute care hospitals and outpatient facilities in communities across the country. We provide healthcare services through the hospitals that we own and operate and affiliated businesses in non-urban and selected urban markets throughout the United States. We generate revenues by providing a broad range of general and specialized hospital healthcare services and outpatient services to patients in the communities in which we are located. As of ~~June 30, 2021,~~March 31, 2022, we owned or leased 8483 hospitals, comprised of 8281 general acute care hospitals and two stand-alone rehabilitation or psychiatric hospitals. We are paid for our services by governmental agencies, private insurers and directly by the patients we serve.

We previously implemented a portfolio rationalization and deleveraging strategy involving the divestiture of hospitals and non-hospital businesses which concluded on December 31, 2020 (inclusive of definitive agreements with respect to the sale of five hospitals entered into in 2020 which have closed in 2021). However, we continue to receive interest from potential acquirers for certain of our hospitals, and may, from time to time, consider selling additional hospitals or our unconsolidated equity interests in hospitals if we consider any such disposition to be in our best interests.

~~A novel strain of coronavirus causing the disease known as COVID-19 was first identified in December 2019, and has spread throughout the world, including across the United States. The Secretary of~~ ~~the U.S. Department of Health and Human Services, or~~ HHS, has renewed the agency’s declaration of a national public health emergency, which was originally declared in January 2020, due to the continued consequences of the COVID-19 pandemic. In an attempt to contain the spread and impact of COVID-19, authorities throughout the United States and the world have recommended and mandated precautions such as travel bans and restrictions, quarantines, stay-at-home and shelter-in-place orders, the promotion of social distancing, and limitations on business activity. However, in the United States, the number of COVID-19 cases has declined in comparison to earlier levels at the height of the pandemic as vaccines have become widely available, and most restrictions related to the COVID-19 pandemic have been relaxed.

As a provider of healthcare services, we ~~are~~have been and continue to be significantly affected by the public health and economic effects of the COVID-19 ~~pandemic.~~pandemic, which has been declared a public health emergency by the Secretary of the U.S. Department of Health and Human Services Agency, or HHS. The safety of our patients, physicians, nurses, and employees in the communities ~~in which~~ we serve remains our primary focus. ~~We have been working with federal, state and local health authorities to respond to the COVID-19 pandemic in the communities we serve.~~

Our hospitals, medical clinics, medical personnel, and employees have been actively caring for COVID-19 ~~patients. Although~~patients, and we have ~~implemented considerable safety measures, treatment of COVID-19 patients has associated risks, which may include the manner in which medical personnel perceive~~been working with federal, state and local health authorities to respond to ~~such risks. While our hospitals have not generally experienced major capacity constraints to date arising from~~COVID-19 cases in the ~~treatment of COVID-19 patients, there are hospitals in~~communities we serve.

Taking into account the pandemic and other factors, the United States ~~that~~economy has recently experienced general inflationary pressures, significant disruptions to global supply networks, and an extremely competitive labor market. We have ~~been overwhelmed~~experienced disruptions in ~~caring for COVID-19 patients, which has prevented such hospitals from treating all patients who seek care. One or more~~connection with the provision of equipment, pharmaceuticals and medical supplies to us, as well as ongoing inflationary pressures in connection with the operation of our ~~hospitals could be subject to such conditions in the future if a major COVID-19 outbreak occurs in a geographic region where any of our hospitals are located.~~

Webusiness. In this regard, we have incurred, and may continue to incur, certain increased expenses arising from the ~~COVID-19~~ pandemic and these economic conditions, including additional labor, supply chain, capital and other expenditures. While we have implemented cost containment and other measures to try to counteract these developments, we may be unable to fully offset these increases in our costs and otherwise effectively respond to supply disruptions.

Negative economic conditions and other factors resulting from the COVID-19 pandemic have affected, and may continue to affect, our service mix, revenue mix, payor mix and/or patient volumes, as well as our ability to collect outstanding receivables. ~~These factors may continue to adversely affect demand for our services, as well as~~To this end, we experienced the ~~ability~~largest COVID-19 surge to-date during the three months ended March 31, 2022, which negatively impacted net operating revenues, labor expense and length of ~~patients and other payors to pay for services rendered. We have observed deterioration in~~stay during the collectability of patient accounts receivable from uninsured patients compared to pre-pandemic levels which, if sustained, may adversely affect our financial results and require an increased level of working capital.

period. While we are not able to fully quantify the impact that the COVID-19 pandemic will have on our future financial results, we expect developments related to COVID-19 to continue to affect our financial performance. Moreover, if a major COVID-19 outbreak occurs in a geographic region where any of our hospitals or other facilities are located, we could be affected by responsive measures affecting treatment capacity and care, such as restrictions on elective medical procedures. In addition, the COVID-19 pandemic may otherwise have material adverse effects on our results of operations, financial position, and/or our cash flows if economic and/or public health conditions in the United States deteriorate. The ~~ultimate~~ongoing impact of the pandemic on our financial results will depend on, among other factors, the duration and severity of the pandemic, the impact of the pandemic on economic conditions, the volume of canceled or rescheduled procedures at our facilities, the volume of COVID-19 patients cared for across our health systems, the timing, availability and ~~adoption~~acceptance of effective medical treatments, the availability, acceptance of and need for additional doses of vaccines, the spread of potentially more contagious and/or virulent forms of the virus, including any ~~possible~~ variants of the virus that may be resistant to currently available vaccines, and the impact of government actions and administrative regulation on the hospital industry and broader economy, including through existing and any future stimulus ~~efforts.~~efforts as well as vaccine requirements. As discussed below under ~~“Legislative Overview”~~“Overview of Legislative Developments”, we have received, and may continue to receive, payments and advances made available under ~~the Coronavirus Aid, Relief,~~various federal and ~~Economic Security act, or the CARES Act, the Paycheck Protection Program and Health Care Enhancement Act, or the PPPHCE Act, the Consolidated Appropriations Act, 2021, or the CAA, and other~~state stimulus laws, which have been beneficial in partially mitigating the impact of the COVID-19 pandemic on our results of operation and financial position to date. ~~The American Rescue Plan Act of 2021, or ARPA, is another relief package with a number provisions that affect healthcare providers.~~ The federal government may consider additional stimulus and relief efforts but we are unable to predict whether any additional stimulus measures will be enacted or their impact, if any. We are unable to assess the extent to which potential ongoing negative impacts on us arising from the COVID-19 pandemic will ultimately be offset by amounts received, and benefits which we may in the future receive, under ~~the CARES Act, the PPPHCE Act, the CAA, the ARPA or any future~~various federal and state stimulus ~~measures.~~programs.

~~During~~No hospitals were divested during the ~~six~~three months ended ~~June 30,~~March 31, 2022.

During 2021, we completed the divestiture of five hospitals, including three which closed effective January 1, 2021 (for these hospitals we received net proceeds at a preliminary closing on December 31, 2020). These five hospitals represented annual net operating revenues in 2020 of approximately $275 million and, including the net proceeds for the three hospital divestitures that preliminarily closed on December 31, 2020, we received total net proceeds of approximately $28 million in connection with the disposition of these hospitals.

During 2020, we completed the divestiture of 13 hospitals, including three which closed effective January 1, 2020 (for these hospitals we received the net proceeds at a preliminary closing on December 31, 2019), but not including the divestiture of three hospitals noted in the prior paragraph which closed on January 1, 2021. These 13 hospitals represented annual net operating revenues in 2019 of approximately $1.2 billion and, including the net proceeds for the divestiture of three hospitals that preliminarily closed on December 31, 2019, we received total net proceeds of approximately $845 million in connection with the disposition of these hospitals.

The following table provides a summary of hospitals that we divested during the ~~six months ended June 30, 2021 and the~~ year ended December 31, ~~2020:~~2021:

Hospital	Buyer	City, State	Licensed Beds	Effective Date
2021 Divestitures:
Lea Regional Medical Center	Covenant Health System	Hobbs, NM	6884	January 1, 2021
Tennova Healthcare - Tullahoma	Vanderbilt University Medical Center	Tullahoma, TN	135	January 1, 2021
Tennova Healthcare - Shelbyville	Vanderbilt University Medical Center	Shelbyville, TN	60	January 1, 2021
Northwest Mississippi Medical Center	Delta Health System	Clarksdale, MS	181	February 1, 2021
AllianceHealth Midwest	SSM Health Care of Oklahoma	Midwest City, OK	255	April 1, 2021

~~2020 Divestitures:~~
~~Berwick Hospital Center~~	~~Fayette Holdings, Inc.~~	~~Berwick, PA~~	90	~~December 1, 2020~~
~~Brownwood Regional Medical Center~~	~~Hendrick Health System~~	~~Brownwood, TX~~	~~188~~	~~October 27, 2020~~
~~Abilene Regional Medical Center~~	~~Hendrick Health System~~	~~Abilene, TX~~	~~231~~	~~October 27, 2020~~
~~San Angelo Community Medical Center~~	~~Shannon Health System~~	~~San Angelo, TX~~	~~171~~	~~October 24, 2020~~
~~Bayfront Health St. Petersburg~~	~~Orlando Health, Inc.~~	~~St. Petersburg, FL~~	~~480~~	~~October 1, 2020~~
~~Hill Regional Hospital~~	~~AHRK Holdings, LLC~~	~~Hillsboro, TX~~	25	~~August 1, 2020~~
~~St. Cloud Regional Medical Center~~	~~Orlando Health, Inc.~~	~~St. Cloud, FL~~	84	~~July 1, 2020~~
~~Northern Louisiana Medical Center~~	~~Allegiance Health Management, Inc.~~	~~Ruston, LA~~	~~130~~	~~July 1, 2020~~
~~Shands Live Oak Regional Medical Center~~	~~HCA Healthcare, Inc. (~~“~~HCA”)~~	~~Live Oak, FL~~	25	~~May 1, 2020~~
~~Shands Starke Regional Medical Center~~	~~HCA~~	~~Starke, FL~~	49	~~May 1, 2020~~
~~Southside Regional Medical Center~~	~~Bon Secours Mercy Health System~~	~~Petersburg, VA~~	~~300~~	~~January 1, 2020~~
~~Southampton Memorial Hospital~~	~~Bon Secours Mercy Health System~~	~~Franklin, VA~~	~~105~~	~~January 1, 2020~~
~~Southern Virginia Regional Medical Center~~	~~Bon Secours Mercy Health System~~	~~Emporia, VA~~	80	~~January 1, 2020~~

~~While the Company’s formal~~Our portfolio rationalization ~~program~~and deleveraging strategy involving the divestiture of hospitals and non-hospital businesses concluded asat the end of ~~December 31, 2020 (inclusive of definitive agreements entered into in 2020 for the sale of five hospitals which have been completed in 2021),~~2020. However, we continue to receive interest from potential acquirers for certain of our hospitals, and may, from time to time, consider selling additional ~~hospitals or our unconsolidated equity interest in~~ hospitals if we consider any such disposition to be in our best interests. We expect proceeds from any such divestitures to be used for general corporate purposes and capital expenditures.

On March 7, 2022, we entered into a definitive agreement for the sale of substantially all of the assets of AllianceHealth Seminole (32 licensed beds) in Seminole, Oklahoma, to affiliates of SSM Health Care of Oklahoma. This disposition is expected to be completed during the second half of 2022.

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, we paid approximately $4$1 million to acquire the operating assets and related businesses of certain physician practices, clinics and other ancillary businesses that operate within the communities served by our hospitals. We allocated the purchase price to property and equipment, working capital, noncontrolling interests and goodwill.

As described in the Notes to Condensed Consolidated Financial Statements (Unaudited) in Part I, Item 1 of this Form 10-Q under the heading “Acquisitions and Divestitures”, a purchase agreement was entered into on May 1, 2021 among certain subsidiaries of the Company and HCA for the sale of the Company’s unconsolidated minority equity interest in Macon Healthcare, LLC. Macon Healthcare, LLC is a joint venture with certain subsidiaries of HCA representing two hospitals in Macon, Georgia, in which the Company holds a 38% interest. The sale, which is scheduled to be completed in the third quarter of 2021, is expected to result in cash proceeds to the Company of approximately $110 million. There can be no assurance that this sale will be completed, or if this sale is completed, the ultimate timing of the completion of this sale.

~~Our net~~Net operating revenues ~~for the three months ended June 30, 2021~~ increased ~~$488 million to approximately~~from $3.0 ~~billion compared to approximately $2.5~~ billion for the three months ended ~~June 30, 2020.~~March 31, 2021 to $3.1 billion for the three months ended March 31, 2022. On a same-store basis, net operating revenues for the three months ended ~~June 30, 2021~~March 31, 2022 increased ~~$697~~$113 million. Increases in net operating revenues, both on a consolidated and same-store basis, for the three months ended June 30, 2021 compared to 2020, reflect recovery from COVID-19 pandemic-induced reductions in volume in 2020.

We had net income of ~~$37~~$30 million during the three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~$93~~a net loss of $35 million for the three months ended ~~June 30, 2020.~~March 31, 2021. Net income for the three months ended ~~June 30,~~March 31, 2022 included the following:

• an after-tax charge of $14 million for loss from early extinguishment of debt, and

Consolidated inpatient admissions for the three months ended ~~June 30, 2021, increased 4.8%~~March 31, 2022, decreased 1.7%, compared to the three months ended ~~June 30, 2020.~~March 31, 2021. Consolidated adjusted admissions for the three months ended ~~June 30, 2021,~~March 31, 2022, increased ~~15.7%~~2.2%, compared to the three months ended ~~June 30, 2020.~~March 31, 2021. Same-store inpatient admissions for the three months ended ~~June 30, 2021, increased 17.0%~~March 31, 2022, decreased 0.3%, compared to the three months ended ~~June 30, 2020,~~March 31, 2021, and same-store adjusted admissions for the three months ended ~~June 30, 2021,~~March 31, 2022, increased ~~28.5%~~3.2%, compared to the three months ended ~~June 30, 2020. These increases reflect recovery from COVID-19 pandemic-induced reductions in volume in 2020.~~

~~Our net operating revenues for the six months ended June 30, 2021 increased $476 million to approximately $6.0 billion compared to approximately $5.5 billion for the six months ended June~~March 31, 2020. On a same-store basis, net operating revenues for the six months ended June 30, 2021 increased $966 million. Increases in net operating revenues, both on a consolidated and same-store basis, for the six months ended June 30, 2021 compared to 2020, reflect recovery from COVID-19 pandemic-induced reductions in volume in 2020.2021.

We had net income of $2 million during the six months ended June 30, 2021, compared to $126 million for the six months ended June 30, 2020. Net income for the six months ended June 30, 2021 included the following:

Consolidated inpatient admissions for the six months ended June 30, 2021, decreased 5.5%, compared to the six months ended June 30, 2020. Consolidated adjusted admissions for the six months ended June 30, 2021, decreased 2.0%, compared to the six months ended June 30, 2020. Same-store inpatient admissions for the six months ended June 30, 2021, increased 5.1%, compared to the six months ended June 30, 2020, and same-store adjusted admissions for the six months ended June 30, 2021, increased 8.7%, compared to the six months ended June 30, 2020. These same-store increases primarily resulted from lower volumes during the prior year period due to the impact of the COVID-19 pandemic.

Self-pay revenues represented approximately ~~0.9%~~1.4% and ~~(2.2)%~~0.5% of net operating revenues for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and 0.7% and (0.5)% for the six months ended June 30, 2021 and 2020,~~ respectively. The amount of foregone revenue related to providing charity care services as a percentage of net operating revenues was approximately ~~7.1%~~11.7% and ~~5.5%~~7.6% for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and 7.4% and 5.5% for the six months ended June 30, 2021 and 2020,~~ respectively. Direct and indirect costs incurred in providing charity care services as a percentage of net operating revenues was approximately ~~0.9%~~1.3% and ~~0.7%~~0.9% for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and 0.9% and 0.7% for the six months ended June 30, 2021 and 2020,~~ respectively.

The U.S. Congress and certain state legislatures have introduced and passed a large number of proposals and legislation designed to make major changes in the healthcare system, including changes that have impacted access to health insurance. The most prominent of these efforts, the Affordable Care Act, ~~affected~~regulates how healthcare services are covered, delivered and reimbursed. The Affordable Care Act increased health insurance coverage through a combination of public program expansion and private sector health insurance ~~reforms and mandated that substantially all U.S. citizens maintain health insurance.~~reforms. The Affordable Care Act also made a number of changes to Medicare and Medicaid reimbursement, such as a productivity offset to the Medicare market basket update and reductions to ~~the~~ Medicare and Medicaid disproportionate share hospital, or DSH, payments. However, reductions to Medicaid DSH payments have been delayed by the Consolidated Appropriations Act, or the CAA, through ~~2023.~~2023 (to begin in federal fiscal year 2024).

The Affordable Care Act has been subject to legislative and regulatory changes and court challenges and, although the current presidential administration has indicated its intent to protect the Affordable Care Act, it is possible that there may be continued changes to the law, its implementation or its interpretation.challenges. For example, final rules issued in 2018 expand availability of association health plans and allow the sale of short-term, limited-duration health plans, neither of which are required to cover all of the essential health benefits mandated by the Affordable Care Act. Additionally, effective January 1, 2019, the financial penalty associated with the ~~individual~~ mandate that most individuals enroll in a health insurance plan was ~~eliminated as part of the 2017 tax reform legislation.~~effectively eliminated. This change resulted in legal challenges to the constitutionality of the individual mandate and validity of the Affordable Care Act as a whole. However, in June 2021, the U.S. Supreme Court determined that the plaintiffs lacked standing, allowing the law to remain in place. Nonetheless, the elimination of the individual mandate penalty and other changes may impact the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if purchased. Some states have imposed individual health insurance mandates, and other states have explored or offer public health insurance options.

The current presidential administration has indicated that it generally intends to protect and strengthen the Affordable Care Act and Medicaid programs. For example, in January 2021, President Biden issued an executive order that instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to health insurance coverage. In a final rule published in September 2021, HHS extended the annual open enrollment period for coverage through federal marketplaces and granted state exchanges flexibility to lengthen their open enrollment periods.

Of critical importance to us is the potential impact of any changes specific to the Medicaid program, including the funding and expansion provisions of the Affordable Care Act ~~or any~~and subsequent legislation or agency initiatives. Historically, the states with the

greatest reductions in the number of uninsured adult residents have expanded Medicaid. A number of states have opted out of the Medicaid coverage expansion provisions, but could ultimately decide to expand their programs at a later date. Of the 16 states in which we operated hospitals as of ~~June 30, 2021,~~March 31, 2022, nine states have taken action to expand their Medicaid programs. At this time, the other seven states have not, including Florida, Alabama, Tennessee, Mississippi and Texas, where we operated a significant number of hospitals as of ~~June 30, 2021. Some~~March 31, 2022. In addition, some states use, or have applied to use, waivers granted by ~~the Centers for Medicare and Medicaid Services, or~~ CMS to implement expansion, impose different eligibility or enrollment conditions, or otherwise implement programs that vary from federal standards.

~~We believe that~~ There is uncertainty regarding the ~~Affordable Care Act has had a positive impact on~~ongoing net ~~operating revenues and income as the result of the expansion of private sector and Medicaid coverage that has occurred. However, other provisions~~effect of the Affordable Care Act ~~such as requirements related~~due to ~~employee~~the potential for continued changes to the law’s implementation and its interpretation by government agencies and courts. There is also uncertainty regarding the potential impact of other health reform efforts at the federal and state levels. Some reforms may have a positive impact on our business, while others may increase our operating costs, adversely impact the reimbursement we receive, or require us to modify certain aspects of our operations. For example, some members of Congress have proposed measures that would expand government-sponsored health insurance coverage, including single-payor models, and ~~changes to Medicare and Medicaid reimbursement,~~some states have ~~increased our operating costs~~implemented or ~~adversely impacted the reimbursement we receive.~~are considering public health insurance options. Legislative and executive branch efforts related to healthcare reform could result in increased prices for consumers purchasing health insurance coverage or destabilize insurance ~~markets.~~markets, among other effects. Some current initiatives, requirements and proposals, including those aimed at price transparency and out-of-network charges, may impact prices, our competitive position and the relationships between hospitals, insurers and ~~insurers. In addition, members~~patients. For example, the No Surprises Act requires providers to send an insured patient’s health plan a good faith estimate of ~~Congress have proposed measures that would expand government-sponsored coverage,~~expected charges, including ~~single-payor models,~~billing and ~~some states have implemented~~diagnostic codes, prior to when the patient is scheduled to receive the item or ~~are considering public health insurance options.~~

Itservice. HHS is ~~difficult to predict the ongoing effect~~deferring enforcement of the Affordable Care Act due to executive orders, changes to the law’s implementation, clarifications and modifications resulting from the rule-making process, judicial interpretations resulting from court challenges to its interpretation, whether and how many states ultimately decide to expand Medicaid coverage, the number of uninsured who elect to purchase health insurance coverage, budgetarythis requirement until it issues at federal and state levels, and efforts to change or repeal the statute. We may not be able to fully realize the positive impact the Affordable Care Act may otherwise have on our business, results of operations, cash flow, capital resources and liquidity. We cannot predict whether we will be able to modify certain aspects of our operations to offset any potential adverse consequences from the Affordable Care Act or the impact of any alternative provisions that may be adopted.additional regulations.

In recent years, a number of laws, including the Affordable Care Act and the Medicare Access and CHIP Reauthorization Act, ~~of 2015, or MACRA,~~ have promoted shifting from traditional fee-for-service reimbursement models to alternative payment models that tie reimbursement to quality and cost of care. For example, CMS currently administers various accountable care organizations and bundled payment demonstration ~~projects~~projects. In October 2021, the CMS Innovation Center published an outline of its strategy for the next decade, noting the need to accelerate the movement to value-based care and ~~has indicated that it will continue to pursue similar initiatives.~~drive broader system transformation. However, the COVID-19 pandemic may impact provider performance and data reporting under ~~these~~value-based care initiatives. CMS has temporarily modified requirements of certain programs by, for example, ~~extending reporting deadlines.~~implementing special scoring and payment policies intended to mitigate negative impacts of the public health emergency on hospitals participating in the Hospital Value-Based Purchasing Program and similar programs.

~~As a result of~~ In response to 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.~~emergency and to provide financial relief. These measures include temporary relief from Medicare conditions of participation requirements for healthcare providers, temporary relaxation of licensure requirements for healthcare professionals, temporary relaxation of privacy restrictions for telehealth remote communications, promoting use of telehealth by temporarily expanding the scope of services for which Medicare reimbursement is available, and limited waivers of fraud and abuse laws for activities related to COVID-19 during the public health emergency period.

~~One of the primary~~ Primary legislative sources of COVID-19 relief ~~for healthcare providers is~~include the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act, ~~an economic stimulus package signed into law on March 27, 2020. The~~the Paycheck Protection Program and Health Care Enhancement Act, or the PPPHCE Act, the CAA, and the ~~CAA, both expansions~~American Rescue Plan Act of 2021, or the CARES Act that include additional emergency appropriations, were signed into law on April 24, 2020 and December 27, 2020, respectively. The ARPA, another relief package with numerous provisions that affect healthcare providers, was enacted on March 11, 2021. In total,ARPA. Together, these stimulus laws authorize over ~~$178~~$186 billion in funding to be distributed through the Public Health and Social Services Emergency Fund, or the PHSSEF, to eligible providers, including public entities and Medicare- and/or Medicaid-enrolled providers. PHSSEF payments are intended to compensate healthcare providers for lost revenues ~~and~~or 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, not using PHSSEF funds to reimburse expenses or losses that other sources have been or are obligated to reimburse and audit and reporting requirements.

In addition, the CARES Act expanded the Medicare Accelerated and Advance Payment Program to increase cash flow to providers impacted by the COVID-19 pandemic. Inpatient acute care hospitals were able to request accelerated payment of up to 100% of their Medicare payment amount for a six-month period. The Medicare Accelerated and Advanced Payment Program payments are advances that providers must repay. Providers are required to repay accelerated payments beginning one year after the payment was issued. After such one-year period, Medicare payments owed to providers will be recouped according to the repayment terms. The repayment terms specify that for the first 11 months after repayment begins, repayment will occur through an automatic recoupment of 25% of Medicare payments otherwise owed to the provider. At the end of the eleven-month period, recoupment will increase to 50% for six months. At the end of the six months (or 29 months from the receipt of the initial accelerated payment), Medicare will issue a letter for full repayment of any remaining balance, as applicable. In such event, if payment is not received within 30 days, interest will accrue at

~~the annual percentage rate of four percent (4%) from the date the letter was issued, and will be assessed for each full 30-day period that the balance remains unpaid.~~

The CARES Act and related legislation include other provisions offering financial relief, for example suspending the Medicare sequestration payment adjustment from May 1, 2020 through December 31, 2021, which would have otherwise reduced payments to Medicare providers by 2% as required by the Budget Control Act of 2011 (but also extending sequestration through 2030). ~~These laws~~Congress further delayed these sequestration cuts through March 31, 2022, and reduced the sequestration adjustment to 1% from April 1 through June 30, 2022, but increased the reductions set for 2030. The CARES Act and related legislation also delay scheduled reductions to Medicaid DSH payments, provide a 20% add-on to the inpatient PPS DRG rate for COVID-19 patients for the duration of the public health emergency, ~~and permit~~permitted the deferral of payment of the employer portion of social security taxes between March 27, 2020 and December 31, 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, ~~2022.~~2022, and provided claims reimbursement to healthcare providers for the provision of COVID-19 testing, treatment, and vaccine administration to uninsured individuals by way of the Health Resources & Services Administration, or HRSA, COVID-19 Uninsured Program. However, in addition to providing funding for healthcare providers, the ARPA ~~increases~~increased the federal budget deficit in a manner that triggers an additional statutorily mandated sequestration under the Pay-As-You-Go Act of ~~2010, or PAYGO Act.~~2010. As a result, ~~absent congressional action,~~an additional Medicare spending ~~will be reduced by~~reduction of up to 4% was required to take effect in ~~fiscal year~~January 2022. However, Congress has delayed implementation of this payment reduction until 2023.

Through March, 31, 2022, ~~in addition~~net of amounts that have been repaid to the ~~existing sequestration requirements of the Budget Control Act of 2011.~~

~~Through June 30, 2021,~~respective federal state, and local agency, we received approximately ~~$712~~$805 million in pandemic relief fund payments through ~~the PHSSEF and~~ various federal, state and local programs on a cumulative basis since their ~~enactment of which~~enactment. Of the net amount received to-date, approximately ~~$705~~$42 million was received during the ~~year~~three months ended ~~December~~March 31, ~~2020~~2022 and the ~~balance of which~~remainder was received during the ~~six months~~years ended ~~June 30, 2021. The estimate of the amount of payments received through the PHSSEF or state~~December 31, 2021 and local programs for which we are reasonably assured of meeting the underlying terms and conditions is based on, among other things, the CARES Act, the CAA, various Post-Payment Notice of Reporting Requirements issued by HHS during the period, responses to frequently asked questions as published by HHS, expenses incurred attributable to coronavirus and our results of operations during such period as compared to our 2020 budget. The PHSSEF and state and local program payments2020. Payments recognized to-date ~~did~~have not ~~impact~~impacted net operating revenues, and had a positive impact on net ~~income~~loss attributable to Community Health Systems, Inc. ~~common~~ stockholders during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, in the amount of ~~less than $1~~$35 million and ~~$63~~$62 million, ~~respectively, and $333 million during both the three and six months ended June 30, 2020.~~respectively. Amounts received through ~~the PHSSEF~~various federal, state or ~~state and~~ local programs that have not yet been recognized ~~as a reduction in operating costs and expenses~~ or otherwise have not been refunded to HHS are included within accrued liabilities-other in the condensed consolidated balance ~~sheet,~~sheets, and such unrecognized amounts may be returned to HHS or the respective state or local agency, as applicable, or may be recognized ~~as a reduction in operating costs and expenses~~ in future periods if the underlying conditions for recognition are reasonably assured of being met.

HHS’ interpretation of the underlying terms and conditions of such PHSSEF payments, including auditing and reporting requirements, continues to evolve. In June 2021, HHS issued guidance that set forth deadlines for using and reporting on the use of PHSSEF funds, depending on the dates on which the funds were received. Additional guidance or new and amended interpretations of existing guidance on the terms and conditions of such PHSSEF payments may result in changes in our estimate of amounts for which the terms and conditions are reasonably assured of being met, and any such changes may be material. Additionally, any such changes may result in our inability to recognize additional PHSSEF payments or may result in the derecognition of amounts previously recognized, which (in any such case) may be material. In addition, to the extent that any unrecognized PHSSEF payments that have been or may be received by us do not qualify for reimbursement based on future operations, we may be required to return such unrecognized payments to HHS.

With respect to the Medicare Accelerated and Advanced Payment Program, we received Medicare accelerated payments of approximately $1.2 billion in April 2020. No additional Medicare accelerated payments have been received by us since such time and because CMS is no longer accepting new applications for accelerated payments, we do not expect to receive additional Medicare accelerated payments. CMS began recouping Medicare accelerated payments in April 2021. As of December 31, 2021, ~~and as of June 30, 2021, approximately $116 million of~~all Medicare accelerated payments ~~previously~~ received by us ~~have been~~were recouped or repaid to CMS or assumed by ~~CMS. Additionally,~~buyers related to hospitals we divested. In this regard, approximately ~~$18 million~~$1.1 billion and $77 million of ~~amounts previously received~~Medicare accelerated payments were recouped or repaid to CMS or assumed by buyers related to hospitals we divested during the ~~six months ended June 30, 2021 and the year~~years ended December 31, 2021 and 2020, respectively. As of June 30, 2021 approximately $680 million of Medicare accelerated payments are reflected within accrued liabilities-other in the condensed consolidated balance sheet while the remaining approximately $267 million is included within other long-term liabilities.

There is still a high degree of uncertainty ~~surrounding~~regarding the ~~implementation~~magnitude and timing of any future payments or benefits that we may receive or realize under the CARES Act and other stimulus ~~legislation.~~legislation passed in response to the COVID-19 pandemic. In addition, the public health emergency continues to evolve. Some of the measures allowing for flexibility in delivery of care and various financial supports for ~~health care~~healthcare providers are available only until funds expire or for the duration of the public health emergency, and it is unclear whether or for how long the public health emergency declaration will be extended. The current declaration expires ~~October 18, 2021.~~July 15, 2022. The HHS Secretary may choose to renew the declaration for successive 90-day periods for as long as the emergency continues to exist and may terminate the declaration whenever he determines that the public health emergency no longer exists, but has indicated ~~that the public health emergency will likely extend through 2021 and~~ that HHS will provide states with 60 days’ notice prior to termination of the declaration. 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 on us. For example, the HRSA COVID-19 Uninsured Program has stopped accepting claims for reimbursement for testing, treatment, and vaccinations, and we are unable to predict whether this program will receive additional funding. There can be no assurance as to the total amount of financial and other types of assistance that we will receive under ~~the CARES Act, other enacted~~federal, state and local stimulus ~~legislation,~~ or ~~future measures, if any,~~relief programs, and it is difficult to predict the impact of such measures on our operations or how they will affect operations of our competitors. Further, there

can be no assurance that the terms of provider relief funding or other programs will not change or be interpreted in ways that affect our funding or eligibility to participate or our ability to comply with applicable requirements and retain amounts received. We continue to assess the potential impact of the CARES Act and other enacted stimulus legislation, the potential impact of future stimulus measures, if any, and the impact of other laws, regulations, and guidance related to COVID-19 on our business, results of operations, financial condition and cash flows.

In June 2019, the U.S. Supreme Court ruled in Azar v. Allina Health Services that HHS failed to comply with statutory notice and comment rulemaking procedures before announcing an earlier policy related to DSH payments made under Medicare to hospitals. In response to this adverse ruling, CMS proposed a ~~new~~ rule in August 2020 in an attempt to retroactively cure the underlying procedural errors cited by the U.S. Supreme Court as the basis in their decision. ~~CMS’~~CMS’s action has introduced uncertainty regarding the potential outcomes from the Supreme Court ruling, and the proposed rule has resulted in further litigation. If HHS or CMS are unsuccessful in their attempt to assert the proposed rule or another legal basis for their policy, one potential outcome is the federal government could be required to reimburse hospitals, including our affiliated hospitals, for Medicare DSH payments which otherwise would have been payable over certain prior time periods absent the enactment of this policy. While the ruling in Allina was specific to the DSH payments calculated for federal fiscal year 2012 for the plaintiff hospitals, we believe that, because of the precedent of this ruling, prior time periods with the potential for higher DSH payments, including federal fiscal years 2005 to 2013, could be impacted. There continues to be uncertainty regarding the extent to which, if any, Medicare DSH payments will be remitted to our affiliated hospitals as the result of Allina and subsequent litigation, and, if so, the timing of any such payments. Litigants in lawsuits challenging the proposed rule are seeking such relief. We anticipate that if it is ultimately determined that our affiliated hospitals are entitled to receive such Medicare DSH payments for these prior time periods, these payments could have a material positive impact on a non-recurring basis in any future period in which net income is recognized in respect thereof as well as on our cash flows from operations in any future period in which these payments are received.

As a result of our current levels of cash, ~~funds~~pandemic relief fund payments we have received and may in the future receive under ~~the CARES Act, other enacted~~federal, state or local stimulus ~~legislation and any future stimulus measures,~~or relief programs, available borrowing capacity, long-term outlook on our debt repayments, the refinancing of certain of our notes, proceeds from the sale of hospitals and the continued projection of our ability to generate cash flows, we anticipate that we will be able to invest the necessary capital in our business over the next twelve ~~months.~~months and for the foreseeable future thereafter. We believe there continues to be ample opportunity to strengthen our market share in substantially all of our markets by decreasing the need for patients to travel outside their communities for healthcare. Furthermore, we will continue to strive to improve operating efficiencies and procedures in order to improve the performance of our hospitals.

The following table presents the approximate percentages of net operating revenues by payor source for the periods indicated. The data for the periods presented are not strictly comparable due to the effect that hospital acquisitions and divestitures have had on these statistics.

As shown above, we receive a substantial portion of our revenues from the Medicare and Medicaid programs. Included in Managed Care and other third-party payors is operating revenues from insurance companies with which we have insurance provider contracts, Medicare managed care, insurance companies for which we do not have insurance provider contracts, workers’ compensation carriers and non-patient service revenue, such as rental income and cafeteria sales. In the future, we generally expect the portion of revenues received from the Medicare and Medicaid programs to increase over the long-term due to the general aging of the population and the impact of the Affordable Care Act. The Affordable Care Act has increased the number of insured patients in states that have expanded Medicaid, which in turn, has reduced the percentage of revenues from self-pay patients. In addition, thereother factors, including health reform initiatives. There has been a trend toward increased enrollment in Medicare and Medicaid managed care, which may adversely affect our operating revenue. We may also be impacted by regulatory requirements imposed on insurers, such as minimum medical-loss ratios and specific benefit requirements. Furthermore, in the normal course of business, managed care programs, insurance companies and employers actively negotiate the amounts paid to hospitals. Our relationships with payors may be impacted by price transparency initiatives and out-of-network billing ~~restrictions.~~restrictions, including those in the No Surprises Act, which took effect January 1, 2022. There can be no assurance that we will retain our existing reimbursement arrangements or that ~~these~~ third-party payors will not attempt to further reduce the rates they pay for our services.

Net operating revenues include amounts estimated by management to be reimbursable by Medicare and Medicaid under prospective payment systems and provisions of cost-based reimbursement and other payment methods. In addition, we are reimbursed by non-governmental payors using a variety of payment methodologies. Amounts we receive for the treatment of patients covered by Medicare, Medicaid and non-governmental payors are generally less than our standard billing rates. We account for the differences between the estimated program reimbursement rates and our standard billing rates as contractual allowance adjustments, which we deduct from gross revenues to arrive at net operating revenues. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the periods that such adjustments become known. Contractual allowance adjustments related to final settlements and previous program reimbursement estimates impacted net operating revenues and net income (loss) by an insignificant amount in each of the ~~three and six-month~~three-month periods ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

The payment rates under the Medicare program for hospital inpatient and outpatient acute care services are based on a prospective payment ~~system, depending~~systems, which depend upon ~~the diagnosis of~~ a patient’s ~~condition.~~diagnosis or the clinical complexity of services provided to a patient, among other factors. These rates are indexed for inflation annually, although increases have historically been less than actual inflation. On ~~September 18, 2020,~~August 13, 2021, CMS ~~issued~~published the final rule to increase this index by ~~2.4%~~2.7% for hospital inpatient acute care services that are reimbursed under the prospective payment system ~~beginning~~for federal fiscal year 2022 (which began October 1, ~~2020. The final rule also provides for a 0.5 percentage point increase in accordance with MACRA, which, together~~2021). Together with other changes to payment policies, ~~is expected to yield an average 2.9% increase in reimbursement~~payment rates for hospital inpatient acute care ~~services.~~services are expected to increase approximately 2.5%. Hospitals that do not submit required patient quality data are subject to a reduction in payments. We are complying with this data submission requirement. Payments may also be affected by various other adjustments, ~~such as~~including those that depend on patient-specific or hospital specific factors. For example, the “two midnight rule” establishes admission and medical review criteria for inpatient services ~~commonly known as the “two midnight rule.” This rule limits~~limiting when services to Medicare beneficiaries are payable as inpatient hospital services. Reductions in the rate of increase or overall reductions in Medicare reimbursement may cause a decline in the growth of our net operating revenues.

Payment rates under the Medicaid program vary by state. In addition to the base payment rates for specific claims for services rendered to Medicaid enrollees, several states utilize supplemental reimbursement programs to make separate payments that are not specifically tied to an individual’s care, some of which offset a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from CMS and are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. The programs are generally authorized for a specified period of time and require CMS’s approval to be extended. We are unable to predict whether or on what terms CMS will extend the supplemental programs in the states in which we operate. Under these supplemental programs, we recognize revenue and related expenses in the period in which amounts are estimable and ~~collection~~payment is reasonably assured. Reimbursement under these programs is reflected in net operating revenues and included as Medicaid revenue in the table above, and fees, taxes or other program related costs are reflected in other operating expenses.

Our hospitals offer a ~~variety of services involving a~~ broad ~~range~~variety of inpatient and outpatient medical and surgical services. These include general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic services, psychiatric and rehabilitation services. Historically, the strongest demand for hospital services generally occurs during January through April and the weakest demand for these services generally occurs during the summer months. Accordingly, eliminating the effects of new acquisitions and/or divestitures, our net operating revenues and earnings are historically highest during the first quarter and lowest during the third quarter. As previously noted, the COVID-19 pandemic has disrupted the pattern of demand for services we provide.

The following tables summarize, for the periods indicated, selected operating data.

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2021			2020			2021			2020			2022			2021
Operating results, as a percentage of net operating revenues:
Net operating revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Operating expenses (a)		(85.1	)		(82.2	)		(84.5	)		(86.6	)		(87.0	)		(83.9	)
Depreciation and amortization		(4.4	)		(5.6	)		(4.5	)		(5.1	)		(4.1	)		(4.6	)
Impairment and (gain) loss on sale of businesses, net		(0.1	)		(0.4	)		(0.4	)		(1.0	)		(0.2	)		(0.7	)
Income from operations		10.4			11.8			10.6			7.3			8.7			10.8
Interest expense, net		(7.2	)		(10.4	)		(7.5	)		(9.4	)		(7.0	)		(7.7	)
Loss from early extinguishment of debt		(0.3	)		—			(1.3	)		(0.1	)		(0.2	)		(2.3	)
Equity in earnings of unconsolidated affiliates		0.1			—			0.2			0.1			0.2			0.3
Income (loss) before income taxes		3.0			1.4			2.0			(2.1	)
(Provision for) benefit from income taxes		(1.8	)		2.3			(2.0	)		4.4
Net income		1.2			3.7			—			2.3
Income before income taxes														1.7			1.1
Provision for income taxes														(0.7	)		(2.3	)
Net income (loss)														1.0			(1.2	)
Less: Net income attributable to noncontrolling interests		(1.0	)		(0.9	)		(1.0	)		(0.7	)		(1.0	)		(0.9	)
Net income (loss) attributable to Community Health Systems, Inc. stockholders		0.2	%		2.8	%		(1.0	)%		1.6	%
Net loss attributable to Community Health Systems, Inc. stockholders														0.0	%		(2.1	)%

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
Percentage increase (decrease) from prior year:
Net operating revenues		19.4	%		(23.7	)%		8.6	%		(17.0	)%		3.3	%		(0.4	)%
Admissions (b)		4.8			(23.6	)		(5.5	)		(18.3	)		(1.7	)		(14.0	)
Adjusted admissions (c)		15.7			(29.2	)		(2.0	)		(21.0	)		2.2			(15.8	)
Average length of stay (d)		—			2.2			6.7			—			2.0			11.1
Net income (loss) attributable to Community Health Systems, Inc.		(91.4	)		141.9			(166.7	)		130.5
Net loss attributable to Community Health Systems, Inc.														98.4			(455.6	)
Same-store percentage increase (decrease) from prior year (e):
Net operating revenues		30.2	%		(18.4	)%		19.2	%		(10.9	)%		3.8	%		9.8	%
Admissions (b)		17.0			(18.1	)		5.1			(11.5	)		(0.3	)		(4.9	)
Adjusted admissions (c)		28.5			(24.2	)		8.7			(14.5	)		3.2			(7.2	)

Items (b) – (e) are metrics used to manage our performance. These metrics provide useful insight to investors about the volume and acuity of services we provide, which aid in evaluating our financial results.

Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared to Three Months Ended ~~June 30, 2020~~March 31, 2021

Net operating revenues increased ~~by 19.4%~~ to ~~approximately~~$3.1 billion for the three months ended March 31, 2022 compared to $3.0 billion for the three months ended ~~June 30, 2021, from approximately $2.5 billion for the three months ended June 30, 2020.~~March 31, 2021. Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased ~~$697~~$113 million, or ~~30.2%~~3.8%, during the three months ended ~~June 30, 2021,~~March 31, 2022, as compared to the three months ended ~~June 30, 2020. Increases~~March 31, 2021. On a period-over-period basis, the increase in net operating revenues ~~both on a consolidated~~was attributable to increased patient volumes, acuity, and ~~same-store basis, for the three months ended June 30, 2021 compared to 2020, reflect recovery from COVID-19 pandemic-induced reductions in volume in 2020.~~reimbursement rates. Non-same-store net operating revenues decreased ~~$209~~$15 million during the three months ended ~~June 30, 2021,~~March 31, 2022, in comparison to the prior year ~~period, with the decrease attributable primarily to the divestiture of hospitals during 2020 and 2021.~~ period.On a consolidated basis, inpatient admissions decreased by 1.7% and adjusted admissions increased by ~~4.8%~~2.2% during the three months ended ~~June 30, 2021~~March 31, 2022 as compared to the three months ended ~~June 30, 2020. Also on a consolidated basis, adjusted admissions increased by 15.7% during the three months ended June 30, 2021 as compared to the three months ended June 30, 2020.~~March 31, 2021. On a same-store basis, net operating revenues per adjusted admission increased ~~1.3%~~0.5%, while inpatient admissions ~~increased~~decreased by ~~17.0%~~0.3% and adjusted admissions increased by ~~28.5%~~3.2% for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the three months ended ~~June 30, 2020.~~March 31, 2021.

Operating costs and expenses, as a percentage of net operating revenues, increased from ~~88.2%~~89.2% during the three months ended ~~June 30, 2020~~March 31, 2021 to ~~89.6%~~91.3% during the three months ended ~~June 30, 2021.~~March 31, 2022. Operating costs and expenses, excluding depreciation and amortization and impairment and (gain) loss on sale of businesses, as a percentage of net operating revenues, increased from ~~82.2%~~83.9% for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~85.1%~~87.0% for the three months ended ~~June 30, 2021.~~March 31, 2022. Salaries and benefits, as a percentage of net operating revenues, decreased from ~~50.9%~~43.2% for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~42.1%~~42.6% for the three months ended ~~June 30, 2021.~~March 31, 2022, primarily due to employees moving to contract labor roles, partially offset by wage inflation. Supplies, as a percentage of net operating revenues, ~~remained consistent at 16.6%~~ decreased from 16.3%for ~~both of~~ the ~~three-month periods~~three months ended ~~June 30,~~March 31, 2021 ~~and 2020.~~to 16.0% for the three months ended March 31, 2022. Other operating expenses, as a percentage of net operating revenues, ~~decreased~~increased from ~~29.1%~~24.5% for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~23.8%~~27.4% for the three months ended ~~June 30, 2021. Expense related~~March 31, 2022, primarily due to ~~government~~an increase in the utilization of and ~~other legal settlements and related costs, as a percentage of net operating revenues, decreased from 0.1%~~rates for ~~the three months ended June 30, 2020 to 0.0% during the three months ended June 30, 2021.~~contract labor. Lease cost and rent, as a percentage of net operating revenues, decreased from ~~3.3% for the three months ended June 30, 2020 to~~ 2.6% for the three months ended ~~June 30, 2021.~~March 31, 2021 to 2.5% for the three months ended March 31, 2022. Pandemic relief funds, as a percentage of net operating revenues, was ~~less than (0.1)~~(1.5)% for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~(17.8%)~~(2.7)% for the three months ended June 30, 2020. The decrease in salaries and benefits, as a percentage of net operating revenues, during the three months ended June 30, 2021 compared to June 30, 2020 is primarily due to the reduction in personnel associated with divestitures.March 31, 2021.

Depreciation and amortization, as a percentage of net operating revenues, decreased ~~from 5.6%~~to 4.1% for the three months ended ~~June 30, 2020 to 4.4%~~March 31, 2022 from 4.6% for the three months ended ~~June 30, 2021, primarily due to ceasing depreciation on property and equipment at hospitals sold or held for sale.~~March 31, 2021.

Impairment and (gain) loss on sale of businesses, net was $2expense of $6 million for the three months ended ~~June 30, 2021,~~March 31, 2022, which related to a hospital held for sale, compared to ~~$10~~$21 million for the three months ended ~~June 30, 2020,~~March 31, 2021, which related primarily to divestitures ~~in each respective~~during the period.

Interest expense, net, decreased by $4114 million to $~~219~~217 million for the three months ended ~~June 30, 2021~~March 31, 2022 compared to ~~$260~~$231 million for the three months ended ~~June 30, 2020.~~March 31, 2021. This was primarily due to our debt refinancing activities in ~~2020 and~~ 2021 as discussed further in ~~Capital Resources.~~Liquidity.

Loss from early extinguishment of debt of $8$5 million and $71 million was recognized during the three months ended June 30, 2021, as a result of the refinancing of certain of our outstanding notes as discussed further in Capital Resources. No loss from early extinguishment of debt was recognized during the three months ended June 30, 2020.

Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, increased from less than 0.1% for the three months ended June 30, 2020 to (0.1)% for the three months ended June 30, 2021.

The net results of the above-mentioned changes resulted in income before income taxes increasing $56 million from $35 million for the three months ended June 30, 2020 to $91 million for the three months ended June 30, 2021.

Our provision for income taxes for the three months ended June 30, 2021 was $54 million compared to a benefit from income taxes of $58 million for the three months ended June 30, 2020. Our effective tax rates were 59.3% and (165.7)% for the three months ended June 30, 2021 and 2020, respectively. The difference in our effective tax rate for the three months ended June 30, 2021, compared to the three months ended June 30, 2020, was primarily due to an increase in the valuation allowance recognized on IRC Section 163(j) interest carryforwards created as a result of financing transactions completed during the three months ended June 30, 2021. The tax benefit of $58 million during the three months ended June 30, 2020 is primarily attributable to a change in our projected tax benefit for the annual period ending DecemberMarch 31, ~~2020.~~

~~Net income, as a percentage of net operating revenues, was 3.7% for the three months ended June 30, 2020 compared to 1.2% for the three months ended June 30, 2021.~~

Net income attributable to noncontrolling interests as a percentage of net operating revenues was 0.9% for the three months ended June 30, 2020, compared to 1.0% for the three months ended June 30, 2021.

~~Net income attributable to Community Health Systems, Inc. stockholders was $6 million for the three months ended June 30, 2021, compared to $70 million for the three months ended June 30, 2020.~~

Net operating revenues increased by 8.6% to approximately $6.0 billion for the six months ended June 30, 2021, from approximately $5.5 billion for the six months ended June 30, 2020. Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased $966 million, or 19.2%, during the six months ended June 30, 2021, as compared to the six months ended June 30, 2020. Increases in net operating revenues, both on a consolidated and same-store basis, for the six months ended June 30, 2021 compared to 2020, reflect recovery from COVID-19 pandemic-induced reductions in volume in 2020. Non-same-store net operating revenues decreased $489 million during the six months ended June 30, 2021, in comparison to the prior year period, with the decrease attributable primarily to the divestiture of hospitals during 2020 and 2021. On a consolidated basis, inpatient admissions decreased by 5.5% during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. Also on a consolidated basis, adjusted admissions decreased by 2.0% during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. On a same-store basis, net operating revenues per adjusted admission increased 9.6%, while inpatient admissions increased by 5.1% and adjusted admissions increased by 8.7% for the six months ended June 30, 2021, compared to the six months ended June 30, 2020.

Operating expenses, as a percentage of net operating revenues, decreased from 92.7% during the six months ended June 30, 2020 to 89.4% during the six months ended June 30, 2021. Operating expenses, excluding depreciation and amortization and impairment and loss on sale of businesses, as a percentage of net operating revenues, decreased from 86.6% for the six months ended June 30, 2020 to 84.5% for the six months ended June 30, 2021. Salaries and benefits, as a percentage of net operating revenues, decreased from 48.5% for the six months ended June 30, 2020 to 42.7% for the six months ended June 30, 2021. Supplies, as a percentage of net operating revenues, remained consistent at 16.5% for both of the six-month periods ended June 30, 2021 and 2020. Other operating expenses, as a percentage of net operating revenues, decreased from 26.7% for the six months ended June 30, 2020 to 24.1% for the six months ended June 30, 2021. Expense related to government and other legal settlements and related costs, as a percentage of net operating revenues, decreased from 0.1% for the six months ended June 30, 2020 to less than 0.1% during the six months ended June 30, 2021. Lease cost and rent, as a percentage of net operating revenues, decreased from 2.9% for the six months ended June 30, 2020 to 2.6% for the six months ended June 30, 2021. Pandemic relief funds, as a percentage of net operating revenues, was (1.4)% for the six months ended June 30, 2021, compared to (8.1) for the six months ended June 30, 2020.

Depreciation and amortization, as a percentage of net operating revenues, decreased from 5.1% for the six months ended June 30, 2020 to 4.5% for the six months ended June 30, 2021, primarily due to the decrease in net operating revenues during the six months ended June 30, 2020, as a result of the COVID-19 pandemic.

Impairment and (gain) loss on sale of businesses was $23 million for the six months ended June 30, 2021, compared to $56 million for the six months ended June 30, 2020, related to impairment of the long-lived assets and reporting unit goodwill allocated to hospitals classified as held for sale or sold during the respective periods.

~~Interest expense, net, decreased by $74 million to $449 million for the six months ended June 30, 2021 compared to $523 million for the six months ended June 30, 2020.~~ ~~This was primarily due to our debt refinancing activity during 2020~~2022 and 2021, ~~as discussed further in Capital Resources.~~

Loss from early extinguishment of debt of $79 million was recognized during the six months ended June 30, 2021, as a result of the refinancing of certain of our outstanding notes as discussed further in Capital Resources. Loss from early extinguishment of debt of $4 million was recognized during the six months ended June 30, 2020,respectively, as a result of the refinancing of certain of our outstanding notes.

Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, ~~increased from (0.1)% for the six months ended June 30, 2020~~decreased to (0.2)% for the ~~six~~three months ended ~~June~~March 31, 2022 from (0.3)% for the three months ended March 31, 2021, primarily due to the sale of our unconsolidated equity interests in Macon Healthcare, LLC during the three months ended September 30, 2021.

The net results of the above-mentioned changes resulted in income ~~(loss)~~ before income taxes increasing ~~$240~~$19 million ~~from loss of $115~~to $53 million for the ~~six~~three months ended ~~June 30, 2020 to income of $125~~March 31, 2022 from $34 million for the ~~six~~three months ended ~~June 30,~~March 31, 2021.

Our provision for income taxes for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 was ~~$123~~$23 million compared to ~~a benefit from income taxes of $241~~$69 million for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. Our effective tax rates were ~~98.4%~~43.4% and ~~209.6%~~202.9% for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. ~~The difference in our effective tax rate for the six months ended June 30, 2021, when compared to the six months ended June 30, 2020, was primarily due to an increase in the valuation allowance~~Valuation allowances recognized on IRC Section 163(j) interest carryforwards created as a result of the financing ~~transactions~~transaction completed during the six months ended June 30, 2021. The Company’s effective tax rate for the six months ended June 30, 2020 reflects changes in tax benefits as a result of an increase to the deductible interest expense allowed for 2019 and 2020 under ~~the CARES Act that was enacted~~ during the three months ended March 31, ~~2020~~.2022 were lower than valuation allowances recognized related to the financing transactions completed during the three months ended March 31, 2021, resulting in a period-over-period decrease in the effective tax rate.

Net income (loss), as a percentage of net operating revenues, was ~~2.3%~~1.0% for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2022 compared to ~~less than 0.1%~~(1.2)% for the ~~six~~three months ended ~~June 30,~~March 31, 2021.

Net income attributable to noncontrolling interests as a percentage of net operating revenues ~~increased from 0.7% for the six months ended June 30, 2020 to~~was 1.0% for the ~~six~~three months ended ~~June 30,~~March 31, 2022, compared to 0.9% for the three months ended March 31, 2021.

Net loss attributable to Community Health Systems, Inc. stockholders was ~~$(58)~~$(1) million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~net income attributable to Community Health Systems, Inc. stockholders of $87~~$(64) million for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021.

Net cash provided by operating activities ~~decreased $1.430 billion, from approximately $1.710 billion for the six months ended June 30, 2020, to approximately $280~~remained consistent at $101 million for both of the ~~six months~~three-month periods ended ~~June 30,~~March 31, 2022 and 2021. ~~The decrease was primarily attributable to the receipt of Medicare accelerated payments as well as PHSSEF funds under the CARES Act and PPPHCE Act during the six months ended June 30, 2020.~~ Cash paid for interest was ~~$304~~$242 million during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to ~~$486~~$203 million for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. Cash paid for income taxes, net of refunds received, resulted in a net payment of $1$2 million and ~~a net refund of approximately $2~~less than $1 million during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

Our net cash used in investing activities was approximately ~~$255~~$121 million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to approximately ~~$53~~$120 million for the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, an increase of ~~approximately $202~~$1 million. The cash used in investing activities during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 was primarily impacted by a decrease of ~~$145~~$4 million in cash proceeds from dispositions of hospitals and other ancillary operations, an increase ~~in cash used in the purchase~~ of ~~property and equipment of $20~~$11 million ~~an increase of $4 million in cash used for acquisition of facilities and other related businesses, an increase~~ in cash used in the net impact of the purchase and sale of available-for-sale and equity securities, ~~of $19~~a $2 million ~~and an increase~~decrease in cash ~~used to purchase other investments~~proceeds from the sale of ~~$15 million. The increase in cash used in investing activities was partially offset by~~property and equipment and a $1$4 million increase in cash proceeds from the sale of investments in unconsolidated affiliates. These decreases in cash used in investing activities were partially offset by a decrease of $8 million in cash used in the purchase of property and ~~equipment.~~equipment, a decrease of $3 million in cash used for acquisition of facilities and other related businesses and a decrease of $9 million in cash used to purchase other investments.

Our net cash used in financing activities was approximately ~~$451~~$27 million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to approximately ~~$321~~$406 million for the ~~six~~three months ended ~~June 30, 2020, an increase~~March 31, 2021, a decrease in cash used in financing activities of approximately ~~$130~~$379 million. This was primarily due to the net effect of our debt repayments, refinancing activities, and cash paid for deferred financing costs and other debt-related costs during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021.

Amounts received through the PHSSEF or state and local programs that had not yet been recognized as a reduction in operating costs and expenses or otherwise refunded to HHS as of June 30, 2021 totaled approximately $28 million. Such amount is included within accrued liabilities-other in the condensed consolidated balance sheet, and such unrecognized amounts may either be returned to HHS or may be recognized as a reduction in operating costs and expenses in future periods if the underlying conditions for recognition are met.

As noted above, we received Medicare accelerated payments of approximately $1.2 billion in April 2020 under the Medicare Accelerated and Advanced Payments Program. No additional Medicare accelerated payments have been received by us since such time. CMS began recouping Medicare accelerated payments in April 2021 and as of June 30, 2021, approximately $116 million of accelerated payments previously received by us has been recouped by CMS. Additionally, approximately $18 million and $77 million of amounts previously received were repaid to CMS or assumed by buyers related to hospitals we divested during the six months ended June 30, 2021 and year ended December 31, 2020, respectively. As of June 30, 2021, approximately $680 million of Medicare accelerated payments are reflected within accrued liabilities-other in the condensed consolidated balance sheet while the remaining approximately $267 million are included within other long-term liabilities.

The CARES Act provided for deferred payment of the employer portion of social security taxes between March 27, 2020 and December 31, 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. We began deferring the employer portion of social security taxes in mid-April 2020 and, as of June 30, 2021, we had deferred approximately $146 million. Of this amount, approximately $73 million is included within accrued liabilities employee compensation and approximately $73 million is included within other long-term liabilities in the condensed consolidated balance sheet.

There have been no material changes outside of the ordinary course of business to our upcoming cash obligations during the six months ended June 30, 2021 from those disclosed in the table on page 64 of our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission, or SEC, on February 18, 2021, or 2020 Form 10-K, except as discussed below related to debt refinancing activity during 2021.

Cash expenditures for purchases of facilities and other related businesses were approximately $4 million for the six months ended June 30, 2021, compared to less than $1 million for the six months ended June 30, 2020. Our expenditures for the six months ended June 30, 2021 and 2020 were primarily related to physician practices and other ancillary services.

Excluding the cost to construct replacement and de novo hospitals, our cash expenditures for routine capital for the six months ended June 30, 2021 totaled $149 million compared to $119 million for the six months ended June 30, 2020. These capital expenditures related primarily to the purchase of additional equipment, minor renovations and information systems infrastructure. Costs to construct replacement hospitals totaled $34 million for the six months ended June 30, 2021, primarily related to the construction of a replacement facility in Fort Wayne, Indiana. Costs to construct replacement hospitals for the six months ended June 30, 2020 totaled $59 million, primarily related to the construction of a replacement facility in La Porte, Indiana. During the six months ended June 30, 2021 and 2020, we also had cash expenditures of $29 million and $14 million, respectively, that represent both planning and construction costs for two de novo hospitals in the Tucson, Arizona market. We commenced operations for an 18-bed micro-hospital in that market during the fourth quarter of 2020, while the other de novo hospital is expected to be completed by the first quarter of 2022 and have 52 beds.

Pursuant to a hospital purchase agreement from our March 1, 2016 acquisition of Northwest Health - La Porte, formerly known as La Porte Hospital, and Northwest Health – Starke, formerly known as Starke Hospital, we committed to build replacement facilities in both La Porte, Indiana and Knox, Indiana. The completion of the replacement facility for Northwest Health – La Porte, in La Porte, Indiana, and transfer of operations, including renaming the hospital to Northwest Health – La Porte, was completed on October 24, 2020. Construction of the replacement facility for Northwest Health - Starke is required to be completed within five years of the date we enter into a new lease with Starke County, Indiana, the hospital lessor, or in the event we do not enter into a new lease with Starke County, construction shall be completed by September 30, 2026. We have not entered into a new lease with the lessor for Northwest Health - Starke and currently anticipate completing construction of the Northwest Health - Starke replacement facility in 2026. Construction costs for the Northwest Health - Starke replacement facility are currently estimated to be approximately $15 million.

Net working capital was approximately ~~$1.2~~$1.1 billion at ~~June 30, 2021, compared to $1.7 billion at~~both March 31, 2022 and December 31, ~~2020.~~2021. Net working capital ~~decreased~~increased by approximately ~~$511~~$26 million between December 31, ~~2020~~2021 and ~~June 30, 2021.~~March 31, 2022. The ~~decrease~~increase is primarily due to the increase in prepaid expenses and taxes and decreases in accrued interest and other accrued liabilities during the three months ended March 31, 2022, partially offset by a decrease in cash, as a result of debt repayments, ~~repayment of Medicare accelerated payments,~~ refinancing activities and cash paid for deferred financing ~~costs during the six months ended June 30, 2021, partially offset by a decrease in current maturities of long-term debt.~~costs.

In addition to cash flows from operations, available sources of capital include amounts available under the asset-based loan (ABL) credit agreement, or the ABL Credit Agreement, ~~which we entered into~~as amended and restated on ~~April 3, 2018,~~November 22, 2021, as well as anticipated access to public and private debt markets.

Pursuant to the ABL Credit Agreement, the lenders have extended to CHS/Community Health Systems, Inc., or CHS, a revolving asset-based loan facility, or the ABL Facility, in the maximum aggregate principal amount of $1.0 billion, subject to borrowing base capacity. At ~~June 30, 2021,~~March 31, 2022, the available borrowing base under the ABL Facility was ~~$762 million,~~$1.0 billion, of which ~~$120~~$103 million was

reserved for outstanding letters of credit and ~~$642~~$897 million represented excess availability. We had no outstanding borrowings as of June 30, 2021. Letters of credit were reduced during the six months ended June 30, 2021 by $30 million in relation to a professional liability claim that was settled and funded during the three months ended DecemberMarch 31, ~~2020.~~2022. The issued letters of credit ~~are~~were primarily in support of potential insurance-related claims and certain bonds. Principal amounts outstanding under the ABL Facility, if any, will be due and payable in full on ~~April 3, 2023.~~November 22, 2026.

On ~~January 28, 2021, the remaining~~February 4, 2022, CHS completed a private offering of $1.535 billion aggregate principal amount of ~~the 6¼~~5¼% Senior Secured Notes due ~~2023 of approximately $95 million was redeemed using cash on hand.~~

~~On February 2, 2021, we completed a private offering of $1.775 billion aggregate principal amount of 6⅞% Junior-Priority Secured Notes due April~~May 15, 2029, or the 6⅞% Junior-Priority Secured Notes due 2029. The proceeds of the offering were used, together with cash on hand, to redeem the 9⅞% Junior-Priority Secured Notes due 2023 via a tender offer which was funded on February 2, 2021, or to the extent not tendered, to fund the redemption of the remaining notes on February 4, 2021, and to pay related fees and expenses. The 6⅞% Junior-Priority Secured Notes due 2029 bear interest at a rate of 6.875% per year payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2021.

On February 9, 2021, we completed a private offering of $1.095 billion aggregate principal amount of 4¾% Senior Secured Notes due February 15, 2031, or the 4¾% Senior Secured Notes due 2031. The proceeds of the offering were used, together with cash on hand, to redeem the 8⅝% Senior Secured Notes due 2024 on February 9, 2021 and to pay related fees and expenses. The 4¾% Senior Secured Notes due 2031 bear interest at a rate of 4.750% per year payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2021.

~~On March 1, 2021, we redeemed the remaining principal amount of the 6⅞% Senior Notes due 2022 of approximately $126 million using cash on hand.~~

~~On May 19, 2021, we completed a private offering of $1.440 billion aggregate principal amount of 6⅛% Junior-Priority Secured Notes due April 1,~~ 2030, or the 6⅛5¼% ~~Junior-Priority~~Senior Secured Notes due 2030. The proceeds of the offering were used ~~together with cash on hand,~~ to redeem the 8⅛6⅝% ~~Junior-Priority~~Senior Secured Notes due ~~2024~~2025 on ~~May 19, 2021~~February 4, 2022, and to pay related fees and expenses. The 6⅛5¼% ~~Junior-Priority~~Senior Secured Notes due 2030 bear interest at a rate of ~~6.125%~~5.250% per year payable semi-annually in arrears on ~~April 1~~May 15 and ~~October 1,~~November 15, commencing on ~~October 1, 2021.~~November 15, 2022.

Our ability to meet the restricted covenants and financial ratios and tests in the ABL Facility and the indentures governing our outstanding notes can be affected by events beyond our control, and we cannot assure you that we will meet those tests. A breach of any of these covenants could result in a default under the ABL Facility and/or the indentures that govern our outstanding notes. Upon the occurrence of an event of default under the ABL Facility or indentures that govern our outstanding notes, all amounts outstanding under the ABL Facility and the indentures that govern our outstanding notes may become immediately due and payable and all commitments under the ABL Facility to extend further credit may be terminated.

As of ~~June 30, 2021,~~March 31, 2022, approximately ~~$27~~$43 million of our outstanding debt of ~~$11.9~~$12.2 billion is due within the next 12 months.

Through June 30, 2021, we received approximately $1.2 billion of accelerated payments pursuant to the Medicare Accelerated and Advance Payment Program, of which approximately $947 million remained outstanding as of June 30, 2021. As of June 30, 2021, approximately $680 million of Medicare accelerated payments are reflected within accrued liabilities-other in the condensed consolidated balance sheet while the remaining approximately $267 million are included within other long-term liabilities. Recoupment of these funds by CMS began in April 2021 under the repayment framework more specifically described above under “Legislation Overview” of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Additionally, the CARES Act permitted the deferral of payment of the employer portion of social security taxes between March 27, 2020 and December 31, 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. Through June 30, 2021, we had deferred approximately $146 million of which, approximately $73 million is included within accrued liabilities employee compensation and approximately $73 million is included within other long-term liabilities in the condensed consolidated balance sheets. The deferral of the employer portion of social security taxes along with the repayment of Medicare accelerated payments are expected to negatively impact our cash flows from operations during 2021.

As previously discussed, we may require an increased level of working capital if we experience extended billing and collection cycles resulting from negative economic conditions and other factors arising from the COVID-19 pandemic, ~~or other factors,~~ which may impact service mix, revenue mix, payor mix and patient volumes, as well as our ability to collect outstanding receivables. A material increase in the amount or deterioration in the collectability of accounts receivable will adversely affect our cash flows and results of operations, requiring an increased level of working capital.

We believe that internally generated cash flows and current levels of availability for additional borrowing under the ABL Facility, as well as our continued access to the capital markets, will be sufficient to finance acquisitions, capital expenditures, working capital requirements, and any debt repurchases or other debt repayments we may elect to make or be required to make through the next 12 ~~months. PHSSEF~~months and the foreseeable future thereafter. Pandemic relief funds that we have received and may continue to receive ~~under the CARES Act~~through various federal, state and ~~related legislation~~local stimulus or relief programs have been and will continue to be used according to ~~their~~applicable terms and conditions as reimbursement for lost revenues ~~and~~or incremental expenses attributable to COVID-19, including working capital requirements and capital expenditures. As noted above, the COVID-19 pandemic has resulted in, and may continue to result in, significant disruptions of financial and capital markets, which could reduce our ability to access capital and negatively affect our liquidity in the future. Additionally, while we have received PHSSEF payments and accelerated Medicare payments under the CARES Act and related legislation and may continue to receive and be able to utilize PHSSEF payments which have been received, as noted above, there is no assurance regarding the extent to which ~~potential~~anticipated ongoing negative impacts on us arising from the COVID-19 pandemic will be offset by benefits which we may recognize or receive in the future under the CARES Act and related legislation or any future stimulus measures.

We may elect from time to time to continue to purchase our outstanding debt in open market purchases, privately negotiated transactions or otherwise. Any such debt repurchases will depend upon prevailing market conditions, our liquidity requirements, contractual restrictions, applicable securities laws requirements, and other factors.

~~Off-balance Sheet Arrangements~~There have been no material changes outside of the ordinary course of business to our upcoming cash obligations during the three months ended March 31, 2022 from those disclosed under “Capital Resources” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Form 10-K, except as discussed above related to debt refinancing activity during 2022.

Cash expenditures for purchases of ~~letters~~facilities and other related businesses were approximately $1 million for the three months ended March 31, 2022, compared to $4 million for the three months ended March 31, 2021. Our expenditures for the three months ended March 31, 2022 and 2021 were primarily related to physician practices and other ancillary services.

Excluding the cost to construct replacement and de novo hospitals, our cash expenditures for routine capital for the three months ended March 31, 2022 totaled $64 million compared to $76 million for the three months ended March 31, 2021. These capital expenditures related primarily to the purchase of ~~credit~~additional equipment, minor renovations and information systems infrastructure. Costs to construct replacement hospitals totaled $12 million and $16 million for the three months ended March 31, 2022 and 2021, respectively, primarily related to the construction of ~~$120~~a replacement facility in Fort Wayne, Indiana. During the three months ended March 31, 2022 and 2021, we also had cash expenditures of $21 million ~~issued on the ABL Facility, primarily in support of potential insurance-related claims~~ and ~~certain bonds, as well as approximately~~ $13 million, ~~representing~~respectively, that represent both planning and construction costs primarily for one de novo hospital in the ~~maximum potential amount~~Tucson, Arizona market. This de novo hospital is expected to be completed in the first half of ~~future payments under physician recruiting guarantee commitments in excess~~2022 and have 52 beds.

Pursuant to a hospital purchase agreement from our March 1, 2016 acquisition of ~~the liability recorded at June 30, 2021.~~

~~As previously discussed,~~Northwest Health - Starke, formerly known as Starke Hospital, we ~~have a commitment to build one replacement facility. As part of an acquisition in 2016, we agreed~~committed to build a replacement facility in Knox, Indiana. Construction of the replacement facility for Northwest Health - Starke is required to be completed within five years of the date we enter into a new lease with Starke County, Indiana, the hospital lessor, or in the event we do not enter into a new lease with Starke County, construction shall be completed by September 30, 2026. We have not entered into a new lease with the lessor for Northwest Health - Starke and currently anticipate completing construction of the Northwest Health - Starke replacement facility in 2026. The estimated construction costs, including equipment costs, for the construction of this replacement facility in Knox, Indiana are currently estimated to be approximately $15 million. ~~We have incurred no cost to date for the construction of the replacement facility in Knox, Indiana.~~

We have sold noncontrolling interests in certain of our subsidiaries or acquired subsidiaries with existing noncontrolling interest ownership positions. As of June 30, 2021, we have hospitals in eight of the markets we serve, with noncontrolling physician ownership interests ranging from less than 1% to 40%. In addition, as of June 30, 2021, we have five other hospitals with noncontrolling interests owned by non-profit entities or a for-profit subsidiary of a non-profit entity. Redeemable noncontrolling interests in equity of consolidated subsidiaries was $498 million and $484 million at June 30, 2021 and December 31, 2020, respectively, and noncontrolling interests in equity of consolidated subsidiaries was $79 million and $87 million at June 30, 2021 and December 31, 2020, respectively. The amount of net income attributable to noncontrolling interests was $31 million and $23 million for the three month periods ended June 30, 2021 and 2020, respectively, and $60 million and $39 million for the six month periods ended June 30 2021 and 2020, respectively. As a result of the change in the Stark Law “whole hospital” exception included in the Affordable Care Act, we are not permitted to introduce physician ownership at any of our hospital facilities that did not have physician ownership at the time of the adoption of the Affordable Care Act, or increase the aggregate percentage of physician ownership in any of our former or existing hospital joint ventures in excess of the aggregate physician ownership level held at the time of the adoption of the Affordable Care Act.

Ongoing legislative and regulatory efforts could reduce or otherwise adversely affect the payments we receive from Medicare and Medicaid and other payors. Within the statutory framework of the Medicare and Medicaid programs, there are substantial areas subject to administrative rulings, interpretations and discretion which may further affect payments made under those programs, and the federal and state governments might, in the future, reduce the funds available under those programs or require more stringent

utilization and quality reviews of hospital facilities. Additionally, there may be a continued rise in managed care programs and additional restructuring of the financing and delivery of healthcare in the United States. These events could cause our future financial results to be adversely impacted. We cannot estimate the impact of Medicare and Medicaid reimbursement changes that have been enacted or are under consideration. We cannot predict whether additional reimbursement reductions will be made or whether any such changes or other restructuring of the financing and delivery of healthcare would have a material adverse effect on our business, financial conditions, results of operations, cash flow, capital resources and liquidity.

The healthcare industry is labor intensive. Wages and other expenses increase during periods of inflation, when labor shortages occur in the marketplace or when market forces or other factors drive such developments, which has occurred and may continue to occur in connection with the current competitive labor market arising out of the COVID-19 pandemic. Additionally, our suppliers may pass along higher materials costs and shipping/handling fees to us in the form of higher prices. We have implemented cost control measures, including our case and resource management program, to curb increases in operating costs and expenses. We have generally offset increases in operating costs by increasing reimbursement for services, expanding services and reducing costs in other areas. However, we cannot predict our ability to cover or offset future cost increases, particularly any increases in our cost of providing health insurance benefits to our employees.

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with ~~U.S.~~accounting principles generally accepted in the United States of America, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our condensed consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are defined as those policies that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant. We believe that our critical accounting policies are limited to those described below. The following information should be read in conjunction with our significant accounting policies included in Note 1 of the Notes to the Consolidated Financial Statements included under Part II, Item 8 of our 2021 Form 10-K.

We record net operating revenues at the transaction price estimated to reflect the total consideration due from patients and third-party payors in exchange for providing goods and services in patient care. These services are considered to be a single performance obligation and have a duration of less than one year. Revenues are recorded as these goods and services are provided. The transaction price, which involves significant estimates, is determined based on our standard charges for the goods and services provided, with a reduction recorded for price concessions related to third party contractual arrangements as well as patient discounts and patient price concessions. During each of the three and six-month periods ended June 30, 2021 and 2020, the impact of changes to the inputs used to determine the transaction price was considered immaterial to the current period.

Currently, several states utilize supplemental reimbursement programs for the purpose of providing reimbursement to providers to offset a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from the CMS and are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. Under these supplemental programs, we recognize revenue and related expenses in the period in which amounts are estimable and collection is reasonably assured. Reimbursement under these programs is reflected in net operating revenues and fees, taxes or other program-related costs are reflected in other operating expenses.

Net operating revenues include amounts estimated by management to be reimbursable by Medicare and Medicaid under prospective payment systems and provisions of cost-reimbursement and other payment methods. In addition, we are reimbursed by non-governmental payors using a variety of payment methodologies. Amounts we receive for treatment of patients covered by these programs are generally less than the standard billing rates. Explicit price concessions are recorded for contractual allowances that are calculated and recorded through internally-developed data collection and analysis tools to automate the monthly estimation of required contractual allowances. Within this automated system, payors’ historical paid claims data are utilized to calculate the contractual allowances. This data is automatically updated on a monthly basis. All hospital contractual allowance calculations are subjected to monthly review by management to ensure reasonableness and accuracy. We account for the differences between the estimated program reimbursement rates and the standard billing rates as contractual allowance adjustments, which is one component of the deductions from gross revenues to arrive at net operating revenues. The process of estimating contractual allowances requires us to estimate the amount expected to be received based on payor contract provisions. The key assumption in this process is the estimated contractual reimbursement percentage, which is based on payor classification, historical paid claims data and, when applicable, application of the expected managed care plan reimbursement based on contract terms.

Due to the complexities involved in these estimates, actual payments we receive could be different from the amounts we estimate and record. If the actual contractual reimbursement percentage under government programs and managed care contracts differed by 1% at ~~June 30, 2021~~March 31, 2022 from our estimated reimbursement percentage, net ~~loss~~income for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 would have changed by approximately ~~$83~~$87 million, and net accounts receivable at ~~June 30, 2021~~March 31, 2022 would have changed by ~~$107~~$112 million. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the

periods that such adjustments become known. Contractual allowance adjustments related to final settlements and previous program reimbursement estimates impacted net operating revenues and net income (loss) by an insignificant amount for each of the ~~three and six-month~~three-month periods ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

Substantially all of our accounts receivable are related to providing healthcare services to patients at our hospitals and affiliated businesses. Collection of these accounts receivable is our primary source of cash and is critical to our operating performance. Our primary collection risks relate to uninsured patients and outstanding patient balances for which the primary insurance payor has paid some but not all of the outstanding balance, with the remaining outstanding balance (generally deductibles and co-payments) owed by the patient. For all procedures scheduled in advance, our policy is to verify insurance coverage prior to the date of the procedure. Insurance coverage is not verified in advance of procedures for walk-in and emergency room patients.

We estimate any adjustments to the transaction price for implicit price concessions by reserving a percentage of all self-pay accounts receivable without regard to aging category, based on collection history, adjusted for expected recoveries and any anticipated changes in trends. Our ability to estimate the transaction price and any implicit price concessions is not impacted by not utilizing an aging of our net accounts receivable as we believe that substantially all of the risk exists at the point in time such accounts are

identified as self-pay. The percentage used to reserve for all self-pay accounts is based on our collection history. We believe that we collect substantially all of our third-party insured receivables, which include receivables from governmental agencies.

Patient accounts receivable can be impacted by the effectiveness of our collection ~~efforts. Additionally,~~efforts and, as described in our significant ~~changes~~accounting policies included in ~~payor mix, business office operations, economic conditions or trends in federal and state governmental healthcare coverage could~~Note 1 of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Form 10-Q, numerous factors may affect the net realizable value of accounts receivable. We also continually review the net realizable value of accounts receivable by monitoring historical cash collections as a percentage of trailing net operating revenues, as well as by analyzing current period net revenue and admissions by payor classification, days revenue outstanding, the composition of self-pay receivables between pure self-pay patients and the patient responsibility portion of third-party insured receivables, the impact of recent acquisitions and dispositions and the impact of current economic and other events. If the actual collection percentage differed by 1% at ~~June 30, 2021~~March 31, 2022 from our estimated collection percentage as a result of a change in expected recoveries, net ~~loss~~income for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 would have changed by ~~$40~~$41 million, and net accounts receivable at ~~June 30, 2021~~March 31, 2022 would have changed by ~~$51~~$52 million. We also continually review our overall reserve adequacy by monitoring historical cash collections as a percentage of trailing net operating revenues, as well as by analyzing current period net revenue and admissions by payor classification, days revenue outstanding, the composition of self-pay receivables between pure self-pay patients and the patient responsibility portion of third-party insured receivables and the impact of recent acquisitions and dispositions.

Our policy is to write-off gross accounts receivable if the balance is under $10.00 or when such amounts are placed with outside collection agencies. We believe this policy accurately reflects our ongoing collection efforts and is consistent with industry practices. We had approximately ~~$2.8~~$1.8 billion at ~~June 30, 2021,~~March 31, 2022, and ~~$3.3~~$2.2 billion at December 31, ~~2020,~~2021, being pursued by various outside collection agencies. We expect to collect less than 3%4%, net of estimated collection fees, of the amounts being pursued by outside collection agencies. As these amounts have been written-off, they are not included in our accounts receivable. Collections on amounts previously written-off are recognized as a recovery of net operating revenues when received. However, we take into consideration estimated collections of these future amounts written-off in determining the implicit price concessions used to measure the transaction price for the applicable portfolio of patient accounts receivable.

All of the following information is derived from our hospitals, excluding clinics, unless otherwise noted.

Patient accounts receivable from our hospitals represent approximately 98% of our total consolidated accounts receivable.

Days revenue outstanding, adjusted for the impact of receivables for state Medicaid supplemental payment programs and divested facilities, was 5456 days and 5255 days at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Total gross accounts receivable (prior to allowance for contractual adjustments and implicit price concessions) was approximately ~~$15.5~~$16.2 billion as of ~~June 30, 2021~~March 31, 2022 and ~~approximately $14.8 billion as of~~ December 31, ~~2020.~~2021. The approximate percentage of total gross accounts receivable (prior to allowance for contractual adjustments and implicit price concessions) summarized by aging categories is as follows:

The approximate percentage of total gross accounts receivable (prior to allowances for contractual adjustments and implicit price concessions) summarized by payor is as follows:

The combined total at our hospitals and clinics for the estimated implicit price concessions for self-pay accounts receivable and allowances for other self-pay discounts and contractuals, as a percentage of gross self-pay receivables, was approximately 90% at March 31, 2022 and approximately 91% at ~~both June 30, 2021 and~~ December 31, ~~2020.~~2021. If the receivables that have been written-off, but where collections are still being pursued by outside collection agencies, were included in both the allowances and gross self-pay receivables specified above, the percentage of combined allowances to total self-pay receivables would have been ~~94%~~93% at both ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~

Goodwill represents the excess of the fair value of the consideration conveyed in the acquisition over the fair value of net assets acquired. Goodwill is evaluated for impairment annually and when an event occurs or circumstances change that, more likely than not, reduce the fair value of the reporting unit below its carrying value. During 2017, we early adopted Accounting Standards Update, or ASU 2017-04, which allows a company to record a goodwill impairment when the reporting units carrying value exceeds the fair value determined in step one. We performed our last annual goodwill impairment evaluation during the fourth quarter of 2020 using the October 31, 2020 measurement date, which indicated no impairment.

At June 30, 2021, we had approximately $4.2 billion of goodwill recorded, all of which resides at our hospital operations reporting unit. A detailed evaluation of potential impairment indicators was performed as of June 30, 2021. ~~On the basis of available evidence as of June 30, 2021, no impairment indicators were identified.~~

The determination of fair value in our goodwill impairment analysis is based on an estimate of fair value for the hospital operations reporting unit utilizing known and estimated inputs at the evaluation date. Some of those inputs include, but are not limited to, the most recent price of our common stock or fair value of our long-term debt, estimates of future revenue and expense growth, estimated market multiples, expected capital expenditures, income tax rates, and costs of invested capital.

Future estimates of fair value could be adversely affected if the actual outcome of one or more of the assumptions described above changes materially in the future, including a decline in or volatility of our stock price and the fair value of its our long-term debt, lower than expected hospital volumes, higher market interest rates or increased operating costs. Such changes impacting the calculation of our fair value, the risks of which are amplified by the COVID-19 pandemic, could result in a material impairment charge in the future.

Whenever events or changes in circumstances indicate that the carrying values of certain long-lived assets may be impaired, we project the undiscounted cash flows expected to be generated by these assets. If the projections indicate that the reported amounts are not expected to be recovered, such amounts are reduced to their estimated fair value based on a quoted market price, if available, or an estimate based on valuation techniques available in the circumstances.

As part of our business of ~~owning and operating hospitals,~~providing healthcare services, we are subject to legal actions alleging liability on our part. We accrue for losses resulting from such liability claims, as well as loss adjustment expenses that are out-of-pocket and directly related to such liability claims. These direct out-of-pocket expenses include fees of outside counsel and experts. We do not accrue for costs that are part of our corporate overhead, such as the costs of our in-house legal and risk management departments. The losses resulting from professional liability claims primarily consist of estimates for known claims, as well as estimates for incurred but not reported claims. The estimates are based on specific claim facts, our historical claim reporting and payment patterns, the nature and level of our hospital operations, and actuarially determined projections. The actuarially determined projections are based on our actual claim data, including historic reporting and payment patterns which have been gathered over an approximately 20-year period. As discussed below, since we purchase excess insurance on a claims-made basis that transfers risk to third-party insurers, the liability we accrue does include an amount for the losses covered by our excess insurance. We also record a receivable for the expected reimbursement of losses covered by our excess insurance. Since we believe that the amount and timing of our future claims payments are reliably determinable, we discount the amount we accrue for losses resulting from professional liability claims using the risk-free interest rate corresponding to the timing of our expected payments.

The net present value of the projected payments was discounted using a weighted-average risk-free rate of approximately 3.0% and 1.8% at ~~both June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021, respectively. This liability is adjusted for new claims information in the period such information becomes known to us. Professional malpractice expense includes the losses resulting from professional liability claims and loss adjustment expense, as well as ~~paid~~ excess insurance premiums, and is presented within other operating expenses in the accompanying condensed consolidated statements of ~~income (loss).~~loss.

Our processes for obtaining and analyzing claims and incident data are standardized across all of our ~~hospitals~~businesses and have been consistent for many years. We monitor the outcomes of the medical care services that we provide and for each reported claim, we obtain various information concerning the facts and circumstances related to that claim. In addition, we routinely monitor current key statistics and volume indicators in our assessment of utilizing historical trends. The average lag period between claim occurrence and payment of a final settlement is between three and four years, although the facts and circumstances of individual claims could result in the timing of such payments being different from this average. Since claims are paid promptly after settlement with the claimant is reached, settled claims represent ~~approximately~~less than 1.0% of the total liability at the end of any period.

For purposes of estimating our individual claim accruals, we utilize specific claim information, including the nature of the claim, the expected claim amount, the year in which the claim occurred and the laws of the jurisdiction in which the claim occurred. Once the case accruals for known claims are determined, information is stratified by loss layers and retentions, accident years, reported years ~~geography,~~ and ~~claims relating to the acquired HMA hospitals versus claims relating to our other hospitals.~~geography. Several actuarial methods are used against this data to produce estimates of ultimate paid losses and reserves for incurred but not reported claims. Each of these methods uses our company-specific historical claims data and other information. ~~This company-specific~~Company-specific data includes information regarding our business, including historical paid losses and loss adjustment expenses, historical and current case loss reserves, actual and projected hospital statistical data, a variety of hospital census information, employed physician information, professional liability retentions for each policy year, geographic information and other data. Significant assumptions are made on the basis of the aforementioned information in estimating reserves for incurred but not reported claims. A 1% change in assumptions for either severity or frequency as of March 31, 2022 would have increased or decreased the reserve between $10 million to $20 million.

Based on these analyses, we determine our estimate of the professional liability claims. The determination of management’s estimate, including the preparation of the reserve analysis that supports such estimate, involves subjective judgment of management. Changes in ~~reserving~~reserve data or the trends and factors that influence ~~reserving~~reserve data may signal fundamental shifts in our future claim development patterns or may simply reflect single-period anomalies. Even if a change reflects a fundamental shift, the full extent of the change may not become evident until years later. Moreover, since our methods and models use different types of data and we select our liability from the results of all of these methods, we typically cannot quantify the precise impact of such factors on our estimates of the liability. Due to our standardized and consistent processes for handling claims and the long history and depth of our company-specific data, our methodologies have historically produced reliably determinable estimates of ultimate paid losses. Management considers any changes in the amount and pattern of its historical paid losses up through the most recent reporting period to identify any fundamental shifts or trends in claim development experience in determining the estimate of professional liability claims. However, due to the subjective nature of this estimate and the impact that previously unforeseen shifts in actual claim experience can have, future estimates of professional liability could be adversely impacted when actual paid losses develop unexpectedly based on assumptions and settlement events that were not previously known or anticipated.

We are primarily self-insured for ~~these~~professional liability claims; however, we obtain excess insurance that transfers the risk of loss to a third-party insurer for claims in excess of our self-insured retentions. Our excess insurance is underwritten on a claims-made basis. For claims reported prior to June 1, 2002, substantially all of our professional and general liability risks were subject to a less than $1 million per occurrence self-insured retention and for claims reported from June 1, 2002 through June 1, 2003, these self-insured retentions were $2 million per occurrence. Substantially all claims reported after June 1, 2003 and before June 1, 2005 are self-insured up to $4 million per claim. Substantially all claims reported on or after June 1, 2005 and before June 1, 2014 are self-insured up to $5 million per claim. Substantially all claims reported on or after June 1, 2014 and before June 1, 2018 are self-insured up to $10 million per claim. Substantially all claims reported on or after June 1, 2018 are self-insured up to $15 million per claim. Management, on occasion, has selectively increased the insured risk at certain hospitals based upon insurance pricing and other factors and may continue that practice in the future.

Excess insurance for all hospitals has been purchased through commercial insurance companies and generally covers us for liabilities in excess of the self-insured retentions. The excess coverage consists of multiple layers of insurance, the sum of which totals up to $95 million per occurrence and in the aggregate for claims reported on or after June 1, 2003, up to $145 million per occurrence and in the aggregate for claims reported on or after January 1, 2008, up to $195 million per occurrence and in the aggregate for claims reported on or after June 1, 2010, and up to at least $215 million per occurrence and in the aggregate for claims reported on or after June 1, 2015. In addition, for integrated occurrence malpractice claims, there is an additional $50 million of excess coverage for claims reported on or after June 1, 2014 and an additional $75 million of excess coverage for claims reported on or after June 1, 2015 through June 1, ~~2020.~~2020. The $75 million in integrated occurrence coverage will also apply to claims reported between June 1, 2020 and June 1, 2022 for events that occurred prior to June 1, 2020 but which were not previously known or reported. For certain policy years prior to June 1, 2014, if the first aggregate layer of excess coverage becomes fully utilized, then the self-insured retention will increase to $10 million per claim for any subsequent claims in that policy year until our total aggregate coverage is met. Beginning June 1, 2018, this drop-down provision in the excess policies attaches over the $15 million per claim self-insured retention.

Effective June 1, 2014, the hospitals acquired from Health Management Associates, Inc., or HMA, were insured on a claims-made basis as described above and through commercial insurance companies as described above for substantially all claims reported on or after June 1, 2014 except for physician-related claims with an occurrence date prior to June 1, 2014. Prior to June 1, 2014, the former HMA hospitals obtained insurance coverage through a wholly-owned captive insurance subsidiary and a risk retention group subsidiary which are domiciled in the Cayman Islands and South Carolina, respectively. Those insurance subsidiaries, which are collectively referred to as the “Insurance Subsidiaries,” provided (i) claims-made coverage to all of the former HMA hospitals and (ii) occurrence-basis coverage to most of the physicians employed by the former HMA hospitals. The employed physicians not covered by the Insurance Subsidiaries generally maintained claims-made policies with unrelated third party insurance companies. To mitigate the exposure of the program covering the former HMA hospitals and other healthcare facilities, the Insurance Subsidiaries bought claims-made reinsurance policies from unrelated third parties for claims above self-retention levels of $10 million or $15 million per claim, depending on the policy year.

Effective January 1, 2008, the former Triad hospitals were insured on a claims-made basis as described above and through commercial insurance companies as described above for substantially all claims occurring on or after January 1, 2002 and reported on or after January 1, 2008. Substantially all losses for the former Triad hospitals in periods prior to May 1, 1999 were insured through a wholly-owned insurance subsidiary of HCA, Triad’s owner prior to that time, and excess loss policies maintained by HCA. HCA has agreed to indemnify the former Triad hospitals in respect of claims covered by such insurance policies arising prior to May 1, 1999. From May 1, 1999 through December 31, 2006, the former Triad hospitals obtained insurance coverage on a claims incurred basis from HCA’s wholly-owned insurance subsidiary with excess coverage obtained from other carriers that is subject to certain deductibles. Effective for claims incurred after December 31, 2006, Triad began insuring its claims from $1 million to $5 million through its wholly-owned captive insurance company, replacing the coverage provided by HCA. Substantially all claims occurring during 2007 were self-insured up to $10 million per claim.

There were no significant changes in our estimate of the reserve for professional liability claims during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

We must make estimates in recording provision for income taxes, including determination of deferred tax assets and deferred tax liabilities and any valuation allowances that might be required against the deferred tax assets. We believe that future income will enable us to realize certain deferred tax assets, subject to the valuation allowance we have established.

The total amount of unrecognized benefit that would impact the effective tax rate, if recognized, was less than $1 million as of ~~June 30, 2021.~~March 31, 2022. A total of less than $1 million of interest and penalties is included in the amount of liability for uncertain tax positions at ~~June 30, 2021.~~March 31, 2022. It is our policy to recognize interest and penalties related to unrecognized benefits in our condensed consolidated statements of ~~income (loss)~~loss as income tax expense.

It is possible the amount of unrecognized tax benefit could change in the next 12 months as a result of a lapse of the statute of limitations and settlements with taxing authorities; however, we do not anticipate the change will have a material impact on our consolidated results of operations or consolidated financial position.

Our federal income tax ~~returns~~return for the ~~2014, 2015 and~~ 2018 tax ~~years remain~~year remains under examination by the Internal Revenue Service. We believe the ~~results~~result of ~~these examinations~~this examination will not be material to our consolidated results of operations or consolidated financial position. We have extended the federal statute of limitations through ~~December 31, 2021~~June 30, 2022 for Community Health Systems, Inc. for the tax periods ended December 31, 2014 and 2015.

In addition, we have extended our federal statute of limitations through December 31, 2023 for the tax period ended December 31, 2018.

~~Some of the matters discussed in this Report include “forward-looking statements”~~This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the ~~federal securities laws, which~~Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 that involve risks ~~assumptions~~ and uncertainties. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “thinks,” and similar expressions are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. A number of factors could affect the future results of the Company or the healthcare industry generally and could cause the Company’s expected results to differ materially from those expressed in this Form 10-Q. These factors include, among other things:

Although we believe that these forward-looking statements are based upon reasonable assumptions, these assumptions are inherently subject to significant regulatory, economic and competitive uncertainties and contingencies, which are difficult or impossible to predict accurately and may be beyond our control. Accordingly, we cannot give any assurance that our expectations will in fact occur, and we caution that actual results may differ materially from those in the forward-looking statements. Given these uncertainties, prospective investors are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this filing. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, there have been no material changes in the quantitative and qualitative disclosures set forth in Item 7A. Quantitative and Qualitative Disclosures about Market Risk in our ~~2020~~2021 Form 10-K.

Our Chief Executive Officer and Chief Financial Officer, with the participation of other members of management, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on such evaluations, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective (at the reasonable assurance level) to ensure that the information required to be included in this report has been recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that the information required to be included in this report was accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

From time to time, we receive inquiries or subpoenas from state regulators, state Medicaid Fraud Control units, fiscal intermediaries, CMS, the ~~Centers for Medicare & Medicaid Services, the~~U.S. Department of Justice and other government entities regarding various Medicare and Medicaid issues. In addition to the matters discussed below, we are currently responding to subpoenas and administrative demands concerning (a) a civil investigative demand related to call coverage services provided by a cardiology group at one of our Tennessee hospitals and (b) a civil investigative demand related to charges for certain emergency department services at our four New Mexico hospitals. In addition, we are subject to other claims and lawsuits arising in the ordinary course of our business including lawsuits and claims related to billing practices and the administration of charity care policies at our hospitals. Based on current knowledge, management does not believe that loss contingencies arising from pending legal, regulatory and governmental matters, including the matters described herein, will have a material adverse effect on the consolidated financial position or liquidity of the Company. However, in light of the inherent uncertainties involved in pending legal, regulatory and governmental matters, some of which are beyond our control, and the very large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to our results of operations or cash flows for any particular reporting period. Settlements of suits involving Medicare and Medicaid issues routinely require both monetary payments as well as corporate integrity agreements. Additionally, qui tam or “whistleblower” actions initiated under the civil False Claims Act, or FCA, may be pending but placed under seal by the court to comply with the ~~False Claims Act’s~~FCA’s requirements for filing such suits. In September 2014, the Criminal Division of the ~~United States~~U.S. Department of Justice ~~or DOJ,~~ announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened. The Criminal Division has also frequently stated an intention to pursue corporations in criminal prosecutions. From time to time, we detect issues of non-compliance with Federal healthcare laws pertaining to claims submission and reimbursement practices and/or financial relationships with physicians. We avail ourselves of various mechanisms to address potential overpayments arising out of these issues, including repayment of claims, rebilling of claims, and participation in voluntary disclosure protocols offered by ~~the Centers for Medicare & Medicaid Services~~CMS and the Office of ~~the~~ Inspector General. Participating in voluntary repayments and voluntary disclosure protocols can have the potential for significant settlement obligations or even enforcement action.

The following legal proceedings are described in detail because, although ~~they~~certain legal proceedings may not be required to be disclosed in this Part II, Item 1 under SEC rules, due to the nature of the business of the Company, we believe that the following discussion of these matters may provide useful information to security holders. This discussion does not include claims and lawsuits covered by medical malpractice, general liability or employment practices insurance and risk retention programs, none of which claims or lawsuits would in any event be required to be disclosed in this Part II, Item 1 under SEC rules.

Caleb Padilla, individually and on behalf of all others similarly situated v Community Health Systems, Inc., Wayne T. Smith, Larry Cash, and Thomas J. Aaron. This purported federal securities class action was filed in the United States District Court for the Middle District of Tennessee on May 30, 2019. It seeks class certification on behalf of purchasers of our common stock between February 20, 2017 and February 27, 2018 and alleges misleading statements resulted in artificially inflated prices for our common stock. On November 20, 2019, the District Court appointed Arun Bhattacharya and Michael Gaviria as lead plaintiffs in the case. The lead plaintiffs filed a consolidated class complaint on January 21, 2020. The Company filed a motion to dismiss the consolidated class complaint on March 23, 2020. That motion is pending. We believe this matter is without merit and ~~will~~are vigorously ~~defend~~defending this case.

Padilla Derivative Litigation. ~~Five~~Four purported shareholder derivative cases have been filed in two District Courts relating to the factual allegations in the Padilla litigation; three of these cases have been consolidated in In re Community Health Systems, Inc. Shareholder Derivative Litigation and are pending in the United States District Court for the District of Delaware; namely, Faisal Hussain v. Wayne T. Smith, et al, filed August 12, ~~2019 in the United States District Court for the District of Delaware;~~ ~~Roger Trombley v. Wayne T. Smith, et al,~~ ~~filed August 20, 2019 in the United States District Court for the Middle District of Tennessee;~~2019; Susheel Tanjavoor v. Wayne T. Smith, et al., filed August 29, ~~2019, in the United States District Court for the District of Delaware;~~ ~~Roofers Local No. 149 Pension Fund v. John A. Clerico, et al,~~ ~~filed October 30, 2019, in the United States District Court for the District of Delaware;~~2019; and Kevin Aronson v. Wayne T. Smith, et al, filed April 29, ~~2020~~2020. The fourth case, Roger Trombley v. Wayne T. Smith, et al, filed August 20, 2019, is pending in the United States District Court for the Middle District of ~~Delaware.~~Tennessee. All ~~five~~four cases seek relief derivatively and on behalf of Community Health Systems, Inc. against certain Company officers and directors based on alleged breaches of fiduciary duty, unjust enrichment, and other acts related to certain Company disclosures in 2017 and 2018 regarding the Company’s adoption of Accounting Standards Update 2014-09, which the Company adopted effective January 1, 2018. ~~The defendants filed a Motion~~All four cases are stayed by court order until the United States District Court for the Middle District of Tennessee rules on the defendants’ motion to ~~Stay on October 21, 2020, which is pending.~~dismiss in the Padilla action.

U.S. ex rel Larry Bomar v. Bayfront HMA Medical Center, LLC, et al~~Florida LIP Program CIDs~~ – On September 14, 2017, our former hospital in St. Petersburg, Florida received a civil investigative demand, or CID, from the United States Department of Justice for information concerning its historic participation in the Florida Low Income Pool Program. The Low Income

Pool Program, or LIP, is a funding pool to support healthcare providers that provide uncompensated care to Florida residents who are uninsured or underinsured. The CID sought documentation related to agreements between the hospital and Pinellas County. On June 13, 2019, an additional ten of our affiliated hospitals in Florida received CIDs related to the same subject matter, along with two CIDs addressed to our affiliated

management company and the ~~parent company.~~Parent Company. We ~~are cooperating~~cooperated fully with the investigation. On September 15, 2021, the United States District Court for the Middle District of Florida ordered the unsealing of this ~~investigation.~~qui tam complaint, which contains allegations related to the information sought in the September 14, 2017 CID. Specifically, the relator claims our former hospital in St. Petersburg – Bayfront Medical Center St. Petersburg – along with other, unaffiliated hospitals violated the False Claims Act by allegedly making certain contributions to a non-profit entity for the purpose of receiving supplemental Medicaid funding. The United States has declined to intervene in the case. We filed a motion to dismiss on November 23, 2021. That motion is pending. We believe this matter is without merit and are vigorously defending this case.

Steadfast Insurance Company, et al v. Community Health Systems, Inc., CHS/Community Health Systems, Inc., CHSPSC, LLC and Pecos Valley of New Mexico, LLC; Community Health Systems, Inc., et al v. Steadfast Insurance Company, et al; Anne Sperling, et al v. Community Insurance Group SPC, Ltd. These cases are filed in the Superior Court for the State of Delaware, the Chancery Court for the State of Delaware, and the First Judicial District Court for the State of New Mexico, respectively, and involve insurance coverage disputes related to a $73 million judgment rendered against Pecos Valley of New Mexico, LLC in ~~Anne Sperling, et al v. Pecos Valley of New Mexico, LLC (“Sperling I”). The first case was brought by Steadfast Insurance Company in Delaware Superior Court seeking a declaration that the~~ ~~Sperling I~~ judgment is not a covered loss as defined by the insurance policies that are the subject of the case. The second case, filed by the Company in Delaware Chancery Court, seeks reformation of the subject policies. The third case (“~~Sperling II”), filed by the plaintiffs in~~ ~~Sperling I, seeks recovery from Pecos Valley of New Mexico, LLC’s insurers for the judgment awarded the plaintiffs in their separate, previous action against Pecos Valley of New Mexico, LLC. The~~ ~~Steadfast~~ complaint was served on November 30, 2018. On December 13, 2018, Admiral Insurance Company, Endurance Specialty Insurance Ltd, and Illinois Union Insurance Company moved to intervene in the suit as petitioners. The Company has initiated counterclaims against each insurer in that case, including for bad faith against Steadfast. The Company filed the ~~Community Health Systems~~ ~~complaint on January 22, 2020.~~ ~~Sperling II~~ was filed on July 24, 2019. Plaintiffs amended their complaint to add Pecos Valley of New Mexico, LLC as a defendant in that action on May 21, 2020, and Pecos Valley of New Mexico, LLC filed a third party action against certain insurer defendants in the case on July 6, 2020. On November 12, 2020, Pecos Valley and one of its insurers reached a settlement with the plaintiffs in ~~Sperling I,~~ ~~and as a result the~~ ~~Sperling I~~ ~~case was dismissed with prejudice on November 19, 2020. The~~ ~~Steadfast, Community Health Systems, Inc.~~ ~~and~~ ~~Sperling II~~ ~~cases remain pending. Trial in the~~ ~~Steadfast~~ ~~and~~ ~~Community Health Systems, Inc.~~ ~~consolidated cases is set for December 13, 2021. The~~ ~~Sperling II~~ ~~case is stayed pending the outcome of~~ ~~Steadfast~~ ~~and~~ ~~Community Health Systems, Inc. We will vigorously defend and prosecute these cases.~~

Thomas Mason, MD, Steven Folstad, MD and Mid-Atlantic Emergency Medical Associates, PA v Health Management Associates, LLC f/k/a Health Management Associates, Inc., Mooresville Hospital Management Associates d/b/a Lake Norman Regional Medical Center, ~~and~~ Statesville HMA, LLC d/b/a Davis Regional Medical Center, Envision Healthcare Corporation f/k/a Emergency Medical Services Corporation, Emcare Holdings, Inc., and Emergency Medical Services, LP. This alleged wrongful retaliation case is filed in the United States District Court for the Western District of North Carolina. The plaintiffs allege their agreements with the defendants were terminated in retaliation for plaintiffs’ alleged refusal to admit patients unnecessarily to the defendant hospitals or otherwise perform unnecessary diagnostic testing. The allegations of the complaint relate to time periods prior to the hospitals’ affiliation with the Company. The plaintiffs filed a Third Amended Complaint on April 26, 2019. The defendants filed motions to dismiss, which were granted in part and denied in part on September 5, 2019. ~~Trial of this matter is set for January 3, 2022.~~ We believe these claims are without merit and ~~will~~are vigorously ~~defend the~~defending this case.

Tower Health, f/k/a Reading Health System, et al v CHS/Community Health Systems, Inc., et al. This breach of contract action is pending in the United States District Court for the Eastern District of Pennsylvania. The plaintiffs allege breaches of an asset purchase agreement in connection with the sale of Pottstown Memorial Medical Center. The alleged breaches regard plaintiffs’ contention that the defendants failed to disclose certain conditions related to the physical plant of the hospital, along with various other alleged breaches of the asset purchase agreement. The plaintiffs filed an amended complaint on July 22, 2019. Trial for this matter began May 3, 2021, and ~~closing arguments are scheduled to occur~~closed on October 5, 2021. The court has not issued a decision. We believe these claims are without merit and are vigorously defending ~~the~~this case.

~~Lancaster County Investors Company, et al~~Daniel H. Golden, as Litigation Trustee of the QHC Litigation Trust, and Wilmington Savings Fund Society, FSB, solely in its capacity as indenture trustee v ~~CHS/~~Community Health Systems, Inc., et al ~~This breach of fiduciary duty and demand for accounting~~. A complaint in this case ~~is pending~~was filed on October 25, 2021 in the United States Bankruptcy Court for the District of ~~Common Pleas~~Delaware against various persons, including the Company, certain subsidiaries of ~~Lancaster County, Pennsylvania.~~the Company, certain former executive officers of the Company and Credit Suisse Securities (USA) LLC. Plaintiff Daniel H. Golden is the litigation trustee for a litigation trust which was formed under the plan of reorganization of Quorum Health Corporation, or QHC, and certain affiliated entities confirmed by order of the United States Bankruptcy Court for the District of Delaware wherein QHC and certain affiliated entities contributed various causes of action to such litigation trust. Plaintiff Wilmington Savings Fund Society is the indenture trustee for certain notes issued by QHC. The ~~plaintiffs are~~complaint seeks damages and other forms of recovery arising out of certain ~~minority members~~alleged actions taken by the Company and the other defendants in connection with the spin-off of ~~Rose City HMA, LLC,~~QHC which ~~formerly owned~~was completed on April 29, 2016, and ~~operated Lancaster Regional Medical Center. The plaintiffs generally claim they are entitled to additional compensation related~~includes claims for unjust enrichment and for avoidance of certain transactions and payments by QHC to the ~~sale of Lancaster Regional Medical Center~~Company connected with the spin-off, including the $1.21 billion special dividend paid by ~~Rose City HMA, LLC over and above what they have already received from~~QHC to the ~~proceeds~~Company as part of the ~~sale.~~spin-off transactions. We filed a motion to dismiss on January 14, 2022. That motion is pending. We believe these claims are without merit and will vigorously defend ~~the~~this case.

There have been no material changes with regard to the risk factors previously disclosed in the ~~2020~~2021 Form 10-K.

The following table contains information about our purchases of common stock during the three months ended ~~June 30, 2021.~~March 31, 2022.

Period

Total
Number
of Shares
Purchased (a)

Average
Price
Paid per
Share

Total
Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs (b)

Maximum
Number of
Shares That
May Yet Be
Purchased
Under the
Plans or
Programs (b)

April 1, 2021 -

April 30, 2021

—

$
—

—

—

May 1, 2021 -

May 31, 2021

—

—

—

—

June 1, 2021 -

June 30, 2021

5,101

16.18

—

—

Total

5,101

$
16.18

—

—

Period	Total Number of Shares Purchased (a)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b)		Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (b)
January 1, 2022 -
January 31, 2022		8,921	$	13.33		—		—
February 1, 2022 -
February 28, 2022		—		—		—		—
March 1, 2022 -
March 31, 2022		807,832		10.18		—		—
Total		816,753	$	10.21		—		—

The ABL Facility and the indentures governing each series of our outstanding notes restrict our subsidiaries from, among other matters, paying dividends and making distributions to us, which thereby limits our ability to pay dividends and/or repurchase stock. As of ~~June 30, 2021,~~March 31, 2022, under the most restrictive test in these agreements (and subject to certain exceptions), we have approximately ~~$200~~$300 million of capacity to pay permitted dividends and/or repurchase shares of stock or make other restricted payments.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Delaware	13-3893191
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

4000 Meridian Boulevard Franklin, Tennessee	37067 (Zip Code)
(Address of principal executive offices)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	CYH	New York Stock Exchange

Large accelerated filer ☐☑	Accelerated filer ☑☐	Smaller reporting company ☐

Non-accelerated filer ☐		Emerging growth company ☐



Part I.	Financial Information		Page

	Item 1.	Financial Statements:

		Condensed Consolidated Statements of ~~Income (Loss)~~Loss – Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and March 31, 2021 ~~and June 30, 2020~~ (Unaudited)	2

		Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss - Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and March 31, 2021 ~~and June 30, 2020~~ (Unaudited)	3

		Condensed Consolidated Balance Sheets ~~– June 30, 2021~~- March 31, 2022 and December 31, ~~2020~~2021 (Unaudited)	4

		Condensed Consolidated Statements of Cash Flows ~~– Six~~- Three Months Ended ~~June 30,~~March 31, 2022 and March 31, 2021 ~~and June 30, 2020~~ (Unaudited)	5

		Notes to Condensed Consolidated Financial Statements (Unaudited)	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2521

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4837

	Item 4.	Controls and Procedures	4837

Part II.	Other Information

	Item 1.	Legal Proceedings	4938

	Item 1A.	Risk Factors	5039

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5140

	Item 3.	Defaults Upon Senior Securities	5140

	Item 4.	Mine Safety Disclosures	5140

	Item 5.	Other Information	5140

	Item 6.	Exhibits	5241

Signatures			5342

	Three Months Ended June 30,		Six Months Ended June 30,					Three Months Ended March 31,
	2021	2020	2021		2020			2022		2021
Expected volatility	N/A	N/A	84.3% - 88.9%			73.5	%	84.3% - 87.5%		84.3% - 88.9%
Expected dividends	N/A	N/A		—		—			—		—
Expected term	N/A	N/A	3 - 6 years		6 years			3 - 6 years		3 - 6 years
Risk-free interest rate	N/A	N/A	0.3% - 0.9%			1.0	%	1.5% - 1.6%		0.3% - 0.9%


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

				Weighted-					Weighted-
				Average Grant					Average Grant
	Shares			Date Fair Value		Shares			Date Fair Value
Unvested at December 31, 2020		4,555,735		$	4.84
Unvested at December 31, 2021							4,995,314		$	6.30
Granted		2,829,250			7.97		3,179,000			9.05
Vested		(2,264,992	)		4.70		(2,516,247	)		5.62
Forfeited		(37,334	)		4.94		(30,000	)		6.87
Unvested at March 31, 2021		5,082,659			6.65
Granted		30,000			16.18
Vested		(17,335	)		3.48
Forfeited		(47,670	)		6.81
Unvested at June 30, 2021		5,047,654			6.72
Unvested at March 31, 2022							5,628,067			8.61

~~Period~~	~~Redemption~~ ~~Price~~
~~April 15, 2024 to April 14, 2025~~		~~103.438~~	%
~~April 15, 2025 to April 14, 2026~~		~~101.719~~	%
~~April 15, 2026 to April 14, 2029~~		~~100.000~~	%

~~Period~~	~~Redemption~~ ~~Price~~
~~February 15, 2026 to February 14, 2027~~		~~102.375~~	%
~~February 15, 2027 to February 14, 2028~~		~~101.583~~	%
~~February 15, 2028 to February 14, 2029~~		~~100.792~~	%
~~February 15, 2029 to February 14, 2031~~		~~100.000~~	%

Period	Redemption Price
~~April 1,~~May 15, 2025 to ~~March 31,~~May 14, 2026		~~103.063~~	%102.625%
~~April 1,~~May 15, 2026 to ~~March 31,~~May 14, 2027		~~101.531~~	%101.313%
~~April 1,~~May 15, 2027 to ~~March 31,~~May 14, 2030		~~100.000~~	%100.000%

	June 30, 2021		Level 1		Level 2		Level 3		March 31, 2022		Level 1		Level 2		Level 3
Investments in equity securities	$	127	$	127	$	—	$	—	$	135	$	135	$	—	$	—
Available-for-sale debt securities		138		—		138		—		177		—		177		—
Trading securities		12		—		12		—		12		—		12		—
Total assets	$	277	$	127	$	150	$	—	$	324	$	135	$	189	$	—

	Balance Sheet Classification	March 31, 2022			December 31, 2021
Operating Leases:
Operating lease right-of-use assets	Other assets, net	$	715		$	668

Finance Leases:
Finance lease right-of-use assets	Property and equipment
	Land and improvements	$	8		$	8
	Buildings and improvements		316			289
	Equipment and fixtures		12			17
	Property and equipment		336			314
	Less accumulated depreciation and amortization		(56	)		(54	)
	Property and equipment, net	$	280		$	260

Current finance lease liabilities	Current maturities of long-term debt	$	3		$	8
Long-term finance lease liabilities	Long-term debt		258			233

	Three Months Ended March 31,
Cash flow information	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases ⁽¹⁾	$	50	$	56
Operating cash flows from finance leases		4		1
Financing cash flows from finance leases		6		1
Right-of-use assets obtained in exchange for new finance lease liabilities		31		0
Right-of-use assets obtained in exchange for new operating lease liabilities		69		26

	Probable
	Contingencies
Balance as of December 31, 2020	$	11
Expense		(2	)
Reserve for insured claim		(1	)
Cash payments		(1	)
Balance as of June 30, 2021	$	7

	Probable
	Contingencies
Balance as of December 31, 2021	$	20
Expense		2
Cash payments		(4	)
Balance as of March 31, 2022	$	18

As of June 30, 2021:
As of March 31, 2022:
	% of Gross Receivables												% of Gross Receivables
Payor	0 - 90 Days			90 - 180 Days			180 - 365 Days			Over 365 Days			0 - 90 Days			90 - 180 Days			180 - 365 Days			Over 365 Days
Medicare		13	%		—	%		—	%		1	%		12	%		1	%		—	%		—	%
Medicaid		7	%		1	%		1	%		1	%		7	%		1	%		1	%		1	%
Managed Care and Other		33	%		5	%		3	%		2	%		34	%		5	%		4	%		3	%
Self-Pay		8	%		5	%		9	%		11	%		7	%		5	%		9	%		10	%

As of December 31, 2020:
As of December 31, 2021:
	% of Gross Receivables												% of Gross Receivables
Payor	0 - 90 Days			90 - 180 Days			180 - 365 Days			Over 365 Days			0 - 90 Days			90 - 180 Days			180 - 365 Days			Over 365 Days
Medicare		13	%		1	%		—	%		—	%		12	%		1	%		—	%		—	%
Medicaid		7	%		1	%		1	%		1	%		7	%		1	%		1	%		1	%
Managed Care and Other		31	%		4	%		3	%		3	%		33	%		5	%		3	%		2	%
Self-Pay		8	%		6	%		9	%		12	%		8	%		5	%		9	%		12	%

No.			Description
4.1			Indenture, dated as of ~~May 19, 2021,~~February 4, 2022, among CHS/Community Health Systems, Inc., Community Health Systems, Inc., the guarantors party thereto, ~~and~~ Regions Bank, as ~~trustee~~Trustee, and ~~collateral~~Credit Suisse AG as Collateral Agent, relating to the ~~6.125% Junior-Priority~~5.250% Senior Secured Notes due 2030 (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.'s Current Report on Form 8-K filed ~~May 20, 2021~~February 4, 2022 (No. 001-15925)).
4.2			Form of ~~6.125% Junior-Priority~~5.250% Senior Secured Note due 2030 (included in Exhibit 4.1)
~~10.1~~4.3			†Second Amended and Restated ABL Intercreditor Agreement, dated as of February 4, 2022, among JPMorgan Chase Bank, N.A., as ABL Agent, Credit Suisse AG, as Senior-Priority Collateral Agent, Regions Bank, as 2025 Secured Notes Trustee, 2026 Secured Notes Trustee, March 2027 Secured Notes Trustee, December 2027 Secured Notes Trustee, 2029 Secured Notes Trustee, 2030 Secured Notes Trustee, 2031 Secured Noted Trustee, Junior-Priority Collateral Agent, 2029 Junior-Priority Secured Notes Trustee and 2030 Junior-Priority Secured Notes Trustee, CHS/Community Health Systems, Inc., Community Health Systems, Inc., the subsidiary guarantors party thereto and each additional agent from time to time party thereto (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.'s Current Report on Form 8-K filed February 4, 2022 (No. 001-15925))
4.4			Amended and Restated Senior-Junior Lien Intercreditor Agreement, dated as of February 4, 2022, among CHS/Community Health Systems, Inc., Community Health Systems, Inc., the subsidiaries party thereto, Credit Suisse AG, Cayman Islands Branch, as Initial Senior-Priority Collateral Agent, Regions Bank, as Initial Junior-Priority Collateral Agent and each additional agent from time to time party thereto (incorporated by reference to Exhibit 4.3 to Community Health Systems, Inc.'s Current Report on Form 8-K filed February 4, 2022 (No. 001-15925))
10.1	†	*	Form of Performance Based Restricted Stock Award Agreement (Senior Officers) for Community Health Systems, Inc. 2009 Stock Option and Award Plan ~~as amended~~(for awards granted on or after March 1, 2022)
10.2	†		Retainer Agreement, dated February 28, 2022, by and ~~restated as of March 17, 2021~~between CHSPSC, LLC and Benjamin C. Fordham (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.’s's Current Report on Form 8-K filed ~~May 12, 2021~~February 28, 2022 (No. 001-15925)).
~~10.2~~		*†	~~Community Health Systems, Inc. Directors’ Fees Deferral Plan, as amended and restated on May 11, 2021~~
31.1		*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		*	The following financial information from our quarterly report on Form 10-Q for the quarter ended March 31, 2022 and ~~six months ended June 30,~~ 2021, ~~and 2020,~~ filed with the SEC on ~~July 29, 2021,~~April 28, 2022, formatted in Inline Extensible Business Reporting Language: (i) the condensed consolidated statements of ~~income (loss)~~loss for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and March 31, 2021, ~~and June 30, 2020,~~ (ii) the condensed consolidated statements of comprehensive ~~income (loss)~~loss for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and March 31, 2021, ~~and June 30, 2020,~~ (iii) the condensed consolidated balance sheets at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, (iv) the condensed consolidated statements of cash flows for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and March 31, 2021, ~~and June 30, 2020,~~ and (v) the notes to the condensed consolidated financial statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104		*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


	COMMUNITY HEALTH SYSTEMS, INC. (Registrant)

	By:	/s/ Tim L. Hingtgen
		Tim L. Hingtgen Director and
		Chief Executive Officer



	By:	/s/ Kevin J. Hammons
		Kevin J. Hammons
		President and
		Chief Financial Officer



	By:	/s/ Jason K. Johnson
		Jason K. Johnson
		Senior Vice President and
		Chief Accounting Officer