Community Health Systems Announces \$459 Million Sale of Crestwood Medical Center

Key Transaction Details

• On April 1, 2026, Community Health Systems, Inc. (CHS) completed the sale of substantially all assets and certain liabilities related to Crestwood Medical Center in Huntsville, Alabama—including its outpatient centers and practices—to The Health Care Authority of the City of Huntsville, d/b/a Huntsville Hospital Health System.
• The transaction was completed pursuant to a definitive asset purchase agreement entered into on January 20, 2026.
• The purchase price was \$459 million in cash, subject to a post-closing working capital adjustment.
• Transaction expenses totaled approximately \$9 million.

Impact on Financial Statements

• CHS has determined that the divestiture does not meet the criteria for discontinued operations under ASC 205.
• The estimated gain on sale (\$185 million pre-tax; \$138 million after-tax) is reflected in the pro forma consolidated balance sheet within accumulated deficit.
• Pro forma adjustments illustrate the impact as if the sale occurred on December 31, 2025, for the balance sheet, and on January 1, 2025, for the statement of income.
• Cash and cash equivalents increased by \$450 million, reflecting the sale proceeds and net of expenses.
• Elimination of assets and liabilities held for sale attributable to Crestwood Medical Center, including reductions in supplies, prepaid income taxes, property and equipment, goodwill, and certain liabilities.
• Net operating revenues decreased by \$327 million, reflecting the removal of Crestwood’s operations.
• Operating costs and expenses decreased by \$483 million, including reductions in salaries, supplies, other operating expenses, lease costs, and depreciation/amortization.
• Impairment and gain/loss on sale of businesses, net, includes a \$185 million pre-tax gain.
• Provision for income taxes increased by \$54 million, largely driven by the gain on sale.
• Net loss attributable to Community Health Systems stockholders increased by \$101 million, resulting in a pro forma net loss of \$610 million for the year ended December 31, 2025.
• Basic and diluted loss per share increased from \$3.81 and \$3.77 to \$4.57 and \$4.52, respectively, for the pro forma period.

Shareholder Considerations & Price Sensitivity

• This divestiture represents a significant strategic action, providing CHS with a substantial cash inflow (\$459 million), which can be used for debt reduction, reinvestment, or other corporate purposes.
• The removal of Crestwood Medical Center’s operations will reduce CHS’s overall revenues and expenses, but also eliminates associated assets and liabilities.
• The pro forma financials show improved liquidity but a larger net loss due to the accounting treatment of the gain and elimination of operations. Investors should note the \$138 million after-tax gain reflected in accumulated deficit.
• The transaction does not qualify as discontinued operations, meaning future reporting will not separately show Crestwood’s historical results, potentially affecting comparability.
• There may be ongoing effects from corporate overhead costs previously allocated to Crestwood, which will continue post-closing but are not eliminated in these pro forma adjustments.
• Management cautions that the pro forma financials are illustrative only and may not predict the actual impact on future financial condition and results.

Potential Share Price Impact

The sale of a major facility for \$459 million in cash is a material event for Community Health Systems, Inc., and is likely to be price sensitive for shareholders. The influx of cash, reduction in assets, and recognition of a substantial gain could positively impact the company’s liquidity and strategic flexibility. However, the loss of revenue and the accounting increase in net loss per share may also influence investor sentiment.

Summary of Pro Forma Financial Highlights

• Cash & Equivalents: Increased from \$260 million to \$710 million.
• Net Operating Revenues: Decreased from \$12,485 million to \$12,158 million.
• Net Loss per Share: Basic increased from \$3.81 to \$4.57; diluted from \$3.77 to \$4.52.
• Gain on Sale: \$185 million pre-tax, \$138 million after-tax.

Management Commentary

Management notes that these pro forma financial statements are not necessarily indicative of results that would have been achieved had the transaction occurred at the indicated dates, nor do they predict future performance. Actual results may differ materially from the pro forma estimates, due to various factors including management actions post-transaction.

Disclaimer

Disclaimer: The information provided herein is based on unaudited pro forma financial statements and management estimates. Investors should not rely solely on these figures for investment decisions. Forward-looking statements and estimates are subject to risks and uncertainties. Please review official filings and consult professional advisers before making investment decisions.