CYH 10-K & 10-Q changes, risk factors and insider trading

We may be unable to attract, hire and retain a highly qualified and diverse workforce, including senior management personnel and key management.employees.

We have a significant amount of indebtedness, which is more fully described in the Liquidity and Capital Resources section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Form 10-K and Note 6 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K. The maximum aggregate principal amount under the ABL Facility is $1.0 billion, subject to borrowing base capacity. At December 31, 2024,2025, we had no outstanding borrowings of $341 million and approximately $491$786 million of additional borrowing capacity (after taking into consideration $66$34 million of outstanding letters of credit) under the ABL Facility.

it may limit our ability to refinance existing indebtedness or obtain additional debt or equity financing on favorable terms, or at all, for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes;

We and our subsidiaries have the ability to incur substantial additional indebtedness in the future, subject to restrictions contained in the ABL Facility and the indentures governing our outstanding notes. The maximum aggregate principal amount under the ABL Facility is $1.0 billion, subject to borrowing base capacity. At December 31, 2024,2025, we had no outstanding borrowings of $341 million and approximately $491$786 million of additional borrowing capacity (after taking into consideration $66$34 million of outstanding letters of credit) under the ABL Facility. The aggregate amount we may draw under the ABL Facility may not exceed the “borrowing base” (as calculated thereunder) less outstanding letters of credit thereunder, which fluctuates from time to time. Aside from the ABL Facility, our ability to incur other additional secured debt (other than secured debt used to refinance existing secured debt) is highly limited by certain of the indentures governing our outstanding notes. If additional indebtedness is added to our current debt levels, the related risks that we currently face related to indebtedness as noted in this section could increase.

The current high interest rate environment has adversely impacted us, and could continue to adversely impact us. If interest rates remain at their current elevated levels or increase, this could adversely impact our ability to refinance existing indebtedness or obtain additional debt financing on acceptable terms or at all, and otherwise could increase our debt service obligations in connection with future debt refinancings. In addition, any borrowings under the ABL Facility are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on such variable rate indebtedness would increase even though the amount borrowed remained the same, and our net incomeprofitability would decrease.be negatively impacted. As of December 31, 2024,2025, we had no outstanding borrowings of $341 million under the ABL Facility.

Economic conditions in the United States continue to be challenging in certain respects, and the United States economy has experienced significant inflationary pressures in recent periods, elevated interest rates, challenging labor market conditions, impacts from the imposition of, or changes in, tariffs, and uncertainty and possible adverse effects associated with currentpolitical and geopolitical instability. Taking into account these factors, we have incurred in certain recent periods, and may continue to incur, increased expenses arising from factors such as wage inflation for permanent employees, increased rates for and utilization of temporary contract labor (including contract nursing personnel) and increased rates for outsourced medical specialists. Moreover, if economic conditions in the United States significantly deteriorate, any such developments could materially and adversely affect our results of operations, financial position, and/or our cash flows.

Other risks we faceface, particularly during periods of economic weakness include potential declines in the population covered by commercial insurance, increased patient decisions to postpone or cancel elective and non-emergency healthcare procedures (including delaying surgical procedures), which may lead to poorer health and higher acuity interventions, potential increases in the uninsured and underinsured populations, increased adoption of health plan structures that shift financial responsibility to patients, and increased difficulties in collecting patient receivables for copayment and deductible receivables. In addition, challenging macroeconomic conditions in the United States (including elevated interest rates) have had, and may continue to have, an adverse impact on capital and financial market conditions, which could limit our ability to refinance existing indebtedness or obtain additional debt or equity financing on acceptable terms or at all. Challenging macroeconomic conditions in the United States have also resulted in, and may continue to result in, increased budget deficits at federal, state and local governmental levels, which may negatively impact government spending for health and human services programs, including Medicare, Medicaid and similar programs that represent significant third-party payor sources for our healthcare facilities. Moreover, it is difficult to predict whether, when, or what additional deficit or other spending reduction initiatives may be proposed by Congress, but future legislation may include or otherwise result in additional Medicare and Medicaid spending reductions, which may adversely affect our business and financial results. Further, there is ongoing uncertainty regarding the federal budget and federal spending levels, including the possible impacts of a failure to increase the “debt ceiling.” Any U.S. government default on its debt could have broad macroeconomic effects. In addition, any shutdown of the federal government, failure to enact annual appropriations, or other lapses in appropriations, hold on congressionally authorized spending or interruptions in the distribution of governmental funds could adversely affect our financial results.

We have divested certain of our hospitals and non-hospital businesses in recent years, and may give consideration to divesting certain additional hospitals and non-hospital businesses. For a description of recent divestitures, see “Acquisition, Divestiture and Closure Activity” under Part II, Item 7 of this Form 10-K. Generally, these hospitals and non-hospital businesses are not in one of our strategically beneficial service areas, are less complementary to our business strategy and/or have lower operating margins. In addition, we continue to receive interest from potential acquirers for certain of our hospitals and non-hospital businesses. As such, we may selldivest additional hospitals and/or non-hospital businesses if we consider any such disposition to be in our best interests. However, there is no assurance that potential divestitures will be completed or, if they are completed, the aggregate amount of proceeds we will receive, that potential divestitures will be completed within our targeted timeframe, or that potential divestitures will be completed on terms favorable to us. Moreover, the current challenging macroeconomic environment may make it more difficult for us to complete divestitures on acceptable termsterms, or at all. Additionally, the results of operations for these hospitals and non-hospital businesses that we may divest and the potential gains or losses on the sales of those businesses may adversely affect our results of operations. We may also incur asset impairment charges related to potential or completed divestitures that reduce our profitability. In addition, after entering into a definitive agreement, we may be subject to the satisfaction of pre-closing conditions as well as necessary regulatory and governmental notices and approvals, which, if not satisfied or obtained, may prevent us from completing the sale. Divestitures may also involve continued financial exposure related to the divested business, such as through indemnities or retained obligations, that present risk to us.

Our business strategy has historically included growth by acquisitions, and we may complete additional acquisitions in the future. However, not-for-profit hospital systems and other for-profit hospital companies generally attempt to acquire the same type of hospitalshospital as we may desire to acquire. Some of the competitors for our acquisitions have greater financial resources than we have. Furthermore, some hospitals are sold through an auction process, which may result in higher purchase prices than we believe are reasonable. Therefore, we may not be able to acquire additional hospitals on terms favorable to us.

The healthcare industry is highly competitive among hospitals, other healthcare providers and other industry participants, for patients, affiliations with physicians and other personnel and acquisitions. Generally, other hospitals and healthcare facilities, including specialized care providers such as outpatient surgery, orthopedic, oncology and diagnostic centers, in our service areas provide services similar to those we offer. Many individuals are seeking a broader range of services at outpatient facilities as a result of the growing availability of outpatient facilities, the increase in payor reimbursement policies that restrict inpatient coverage and the increase in services that can be provided on an outpatient basis, among other factors. Changes in licensure or other regulations, recognition of new provider types or payment models and industry consolidation could negatively impact our competitive position. For example, in states with certificate of needCON or similar prior approval requirements, removal of these requirements could remove barriers to entry and increase competition in our service areas. Our hospitals, our competitors, and other healthcare industry participants are increasingly implementing physician alignment strategies, such as acquiring physician practice groups, employing physicians and participating in ACOs or other clinical integration models.models, which may negatively affect our competitive position, including by impacting our recruiting and retention efforts. Increasing consolidation within the payor industry, vertical integration efforts involving payors and healthcare providers and cost-reduction strategies by payors, large employer groups and their affiliates may impact our ability to contract with payors on favorable terms and participate in favorable payment tiers or provider networks and otherwise may affect our competitive position. Legislative and regulatory initiatives, such as changes in Texas law that eliminated restrictions on tiered networks and steeringpermit insurers to use financial incentives to steer patients to particular providers, may accelerate or otherwise impact these trends.

Trends toward transparency and value-based purchasing may also have an impact on our competitive position, ability to obtain and maintain favorable contract terms, and patient volumes in ways that are difficult to predict. CMS websites make available to the public certain data that hospitals and various other types of Medicare-certified providers submit in connection with Medicare reimbursement claims, including performance data related to quality measures and patient satisfaction surveys. If any of our hospitals or other provider types achieve poor results (or results that are lower than our competitors) on the quality measures or on patient satisfaction surveys, we may attract fewer patients. Further, every hospital must establish and update annually a public, online listing of the hospital’s standard charges for all items and services, including discounted cash prices and payor-specific charges, and must also publish a consumer-friendly list of standard charges for certain “shoppable” services or maintain an online price estimator tool for the shoppable services. HHS also requires health insurers to publish online charges negotiated with providers for healthcare services, and health insurers must provide online price comparison tools to help individuals get personalized cost estimates for all covered items and services.

We have a participation agreement with HealthTrust, a GPO. The current term of this agreement extends through the end of December 2025,2026, with automatic renewal terms of one year, unless either party terminates by giving notice of non-renewal. GPOs attempt to obtain favorable pricing on medical supplies with manufacturers and vendors, sometimes by negotiating exclusive supply arrangements in exchange for discounts. To the extent these exclusive supply arrangements are challenged or deemed unenforceable, we could incur higher costs for our medical supplies obtained through HealthTrust. Further, costs of supplies and drugs may continue to increase due to various factors, including market pressure from pharmaceutical companies, new product releases, supply shortages and supply chain disruptions, including as a result of importthe taxesimposition of tariffs or changes in U.S. trade restrictions.policy. Also, there can be no assurance that our arrangement with HealthTrust will provide the discounts we expect to achieve.

During the year ended December 31, 2024,2025, 32.9%33.4% of our net operating revenues came from the Medicare and Medicaid programs. However, as healthcare expenditures continue to increase, federal and state governments have made, and may continue to make, significant changes in the Medicare and Medicaid programs. These changes may include reductions in reimbursement levels,levels and supplemental payments, funding restrictions, limitations on scope of coverage or patient eligibility, changes affecting utilization review and new or modified Medicaid waiver programs. SomeThese and other changes may impact the scale and scope of thesethe changesMedicare haveand decreased,Medicaid orprograms, couldmay decrease,affect the cost of providing services to patients, and may decrease the amount of money we receive for our services relating to the Medicare and Medicaid programs. For example, as a result of sequestration measures that extend through the first eightfive months of federal fiscal year 2032,2033, Medicare payments are automatically reduced by 2% per fiscal year. It is difficult to predict whether, when or what other deficit reduction initiatives may be proposed by Congress, but we anticipate that efforts to address the federal budget deficit will continue to place pressures on government healthcare programs. In addition, from time to time, CMS revises the reimbursement systems used to reimburse healthcare providers, including changes to the inpatient hospital MS-DRG system and other payment systems, which may result in reduced Medicare payments. Our business may also be adversely affected by delays or issues implementing reimbursement-related rules and interruptions in the distribution of governmental funds. Changes to government healthcare programs that reduce Medicare reimbursement may also negatively impact payments from commercial payors, since, in some cases, commercial payors rely on all or portions of Medicare payment systems to determine commercial payment rates.

In addition, governmentGovernment and commercial payors as well as other third parties from whom we receive payment for our services attempt to control healthcare costs by, for example, requiring hospitals and other providers to discount payments for their services in exchange for exclusive or preferred participation in their benefit plans, reducing coverage of inpatient and emergency room services and shifting care to outpatient settings, implementing site-neutral payment policies to align payment for services across care settings, using utilization review tools including prior authorizations and implementing alternative payment models. We are increasingly involved in disputes with payors, as cost control efforts have resulted in an increase in reimbursement denials and delays by governmental and commercial payors, which may increase operational and administrative costs and decrease the reimbursement we receive. Efforts to impose more stringent cost controls are expected to continue and may be enhanced by the increasing consolidation of insurance and managed care companies, vertical integration of health insurers with healthcare providers and regulatory changes. These efforts may reduce our net operating revenues and adversely affect our business and financial condition.

Our ability to maintain and obtain favorable contracts with commercial payors significantly affects the revenues and operating results of our facilities. During the year ended December 31, 2024,2025, 65.8% of our net operating revenues came from commercial payors. Commercial payors typically reimburse healthcare providers at a higher rate than Medicare, Medicaid, other government healthcare programs or self-pay patients. Commercial payors continue to demand discounted fee structures, and the trend toward consolidation among private third-party payors tends to increase payor bargaining power. Payors may utilize plan structures such as narrow networks and tiered networks, which may exclude our facilities and employed physicians or favor other providers, and other healthcare providers may negotiate exclusivity provisions or otherwise impact our ability to contract with third-party payors. Price and clinical transparency initiatives and increasing vertical integration efforts involving third-party payerspayors and healthcare providers may also impact our ability to obtain or maintain favorable contract terms. For example, hospitals are required to publish online payor-specific negotiated charges and de-identified minimum and maximum charges. In addition, alignment efforts between third-party payerspayors and healthcare providers and the requirements of the No Surprises Act provide payerspayors with increased access to performance and pricing data, which may increase payerpayor bargaining power.

Limitations on balance billing may reduce the amount that hospitals and other providers are able to collect for out-of-network services. For example, the No Surprises Act prohibits providers from charging patients an amount beyond the in-network cost sharing amount for services rendered by out-of-network providers, subject to limited exceptions. For services for which balance billing is prohibited (even when no balance billing occurs), the No Surprises Act includes provisions that may limit the amounts received by out-of-network providers by health plans,plans and also establishes an independent dispute resolution process for providers and payors to handle payment disputes that cannot be resolved through direct negotiation. The regulations and related guidance implementing the No Surprises Act, including those establishing the dispute resolution process, are the subject of legal challenges and, potentially, regulatory changes.

If we are unable to negotiate increased reimbursement rates, maintain existing rates or other favorable contract terms, effectively respond to payor cost controls and reimbursement policies or comply with the terms of our payor contracts, or if we experience reductions in the number of patients with private health insurance coverage, the payments we receive for our services may be reduced, which may cause our net operating revenues to decline and could adversely affect our business.

IfAny we experience continued growthincrease in self-paythe volume andof revenuesself-pay patients or if we experience deterioration in the collectability of patient responsibility accounts,accounts could adversely affect our financial condition or results of operations could be adversely affected.operations.

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. Collections are impacted by the economic ability of patients to pay and the effectiveness of our collection efforts. Significant changes in payor mix, business office operations, economic conditions or trends in federal and state governmental healthcare coverage may affect our collection of patient accounts receivable and are considered in our estimates of patient accounts receivable collectability.

In recent years, federal and state legislatures have considered or passed various proposals impacting or potentially impacting the size of the uninsured population. TheFor numberexample, federal legislation temporarily enhanced subsidies available for purchasing coverage through Affordable Care Act marketplaces, but these enhanced subsidies expired at the end of 2025. Their expiration is expected to adversely impact health insurance exchange enrollment and identitysignificantly increase the uninsured rate. Further, the end of statesthe thatcontinuous chooseenrollment torequirement expandestablished orby otherwiseCOVID-19 modifyrelief Medicaid programslegislation, and the terms of expansion and other program modifications continue to evolve. Further, under early COVID-related legislation, states that maintained continuous Medicaid enrollment, among other requirements, were eligible for a temporary increase in federal funds for state Medicaid expenditures. The resumption of Medicaid eligibility redeterminations following the expiration of this continuous coverage requirement in 2023 has2023, resulted in significant Medicaid coverage disruptions and dis-enrollments of Medicaid enrollees, and overall Medicaid enrollment declined in 20242025 in comparison to 2023.2024. The 2025 Reconciliation Law is expected to further adversely affect the uninsured rate, including by requiring pre-enrollment verification of eligibility in a plan with subsidies and restricting subsidized marketplace coverage, effectively ending automatic renewals of coverage, and by limiting Medicare and Medicaid enrollmenteligibility based on immigration status and other factors, among other measures. Rates of uninsured and underinsured individuals may also be affectedinfluenced by potentialother changeslegislative and regulatory initiatives related to health insurance, such as permitting the federalsale fundingof formulainsurance for Medicaid. For example, some states have trigger lawsplans that wouldlack endcurrently theirrequired Medicaidconsumer expansion or require other changes if federal funding for expansion populations is reduced. In addition, COVID-19 relief legislation temporarily increased the value of premium tax credit subsidies for subsidy-eligible individuals purchasing health insurance coverage through the federal and state-run marketplaces and expanded eligibility for the tax credit subsidies to more individuals. Subsequent legislation extended these enhanced subsidies through 2025, but further extension is uncertain.protections. Some states impose financial penalties on individuals who fail to maintain health insurance mandates or offer public health insurance options. These variables, among others, make it difficult to predict the number of uninsured individuals and what percentage of our total revenue will be comprised of self-pay revenues.

We may be adversely affected by the growth in patient responsibility accounts as a result of the adoption of plan structures, including high-deductible health plans and health savings accounts, narrow networks and tiered networks, that shift greater responsibility for care to individuals through greater exclusions and copayment and deductible amounts. Further,For ourexample, to address anticipated increases in health insurance premiums for consumers, CMS announced in September 2025 that it would expand eligibility for high-deductible catastrophic health insurance plans. Our ability to collect patient responsibility accounts may be limited by statutory, regulatory and investigatory initiatives, including private lawsuits directed at hospital charges and collection practices for uninsured and underinsured patients and regulatory restrictions on charges for out-of-network services. For example, the No Surprises Act requires providers to send uninsured and self-pay patients a good faith estimate of expected charges for items and services. The estimate must be provided in advance of the scheduled date for the item or service or upon request and cover items and services that are reasonably expected to be provided together with the primary item or services, including those that may be provided by other providers. If the uninsured or self-pay patient receives a bill that is substantially greater than the expected charges in the good faith estimate or the provider furnishes an item or service that was not included in the good faith estimate, they may initiate a patient-provider dispute resolution process established by regulation. In addition, a deterioration of economic conditions in the United States could potentially lead to higher levels of uninsured patients, result in higher levels of patients covered by lower paying government programs, result in fiscal uncertainties for both government payors and private insurers and/or limit the economic ability of patients to make payments for which they are responsible. IfAny we experience continued growthincrease in the volume of self-pay volumepatients or deterioration in collectability of patient responsibility accounts,accounts could adversely affect our financial condition or results of operations could be adversely affected.operations.

Some of the non-urban communities in which we operate have been facing particularly challenging economic conditions, whichor may face such conditions in certain instances predate, and/or are broader than or disproportionately exacerbated by, the current challenging macroeconomic conditions impacting the United States economy.future. In addition,particular, the economies in the non-urban communities in which our hospitals primarily operate are often dependent on a small number of large employers, especially manufacturing or similar facilities. These employers often provide income and health insurance for a disproportionately large number of community residents who may depend on our hospitals for care. The failure of one or more large employers, or the closure or substantial reduction in the number of individuals employed at manufacturing or other facilities located in or near many of the non-urban communities in which our hospitals primarily operate, could cause affected employees to move elsewhere for employment or lose insurance coverage that was otherwise available to them. When patients are experiencing personal financial difficulties or have concerns about general economic conditions, they may delay or forgo elective procedures, choose to seek care in emergency rooms and purchase high-deductible insurance plans or no insurance at all, which increases a hospital’s dependence on self-pay revenue and may adversely affect our results of operations.

Our admissions and adjusted admissions as well as volume, case-mix and acuity trends may be impacted by factors beyond our control. For example, seasonal fluctuations in the severity of influenza and other critical illnesses, such as COVID-19, unplanned shutdowns or unavailability of our facilities due to weather or other unforeseen events, decreases in trends in high-acuity service offerings, changes in competition from other service providers, turnover in physicians affiliated with our hospitals, governmental restrictions on the provision of medical care and changes in medical practices, treatment regimens and medical technology can have an impact on the demand for services at our hospitals and affiliated providers.

In addition, trends in physician treatment protocols and health plan design, such as health plans that shift greater financial responsibility to patients, could result in shifts to lower intensity and lower cost treatment methodologies or in patients seeking care from other providers. Our inpatient admissions may decline if various inpatient hospital procedures become eligible for reimbursement when performed in outpatient settings, and we may also be impacted by expansion of in-home acute care models. In addition, certain of our facilities are located in hurricane-prone coastal regions in Florida and other states, and our operations from time to time have been adversely impacted by, and may continue to be adversely impacted by, severe weather conditions, such as hurricanes, tornadoes, floods, and winter storms. For example, certain of our facilities in Florida, Georgia and Tennessee experienced an interruption in their business and incurred additional costs as a direct result of Hurricane Helene, which made landfall in late September 2024 and Hurricane Milton, which made landfall in early October 2024.2024, Further,and oura hospital in Punta Gorda, Florida,Florida which is contemplated to bewas sold pursuant to an asset purchase agreement entered into by us in November2025 2024, hashad indefinitely suspended inpatient operations due to the effects of Hurricanes Helene and Milton.Milton Adverseprior weather conditions may be more frequent and/or severe asto the resultcompletion of climatesuch change.sale. Moreover,We wealso could be affected by climateweather-related changeevents andor other environmental issues to the extent such issues adversely affect the general economy or specific markets, adversely impact our supply chain or increase the costs of supplies needed for our operations or otherwise result in disruptions impacting the communities in which our facilities are located. In addition, legal requirements regulating greenhouse gas emissions and energy inputs or otherwise associated with the transition to a lower carbon economy may increase in the future, which could increase our costs associated with compliance and otherwise disrupt and adversely affect our operations.

As a provider of healthcare services, we are subject to the health, economic and other effects of public health conditions,conditions. andFor example, we were significantly impacted by the public health and economic effects of the COVID-19 pandemic. If a future pandemic, epidemic, outbreak of an infectious disease or other public health crisis were to occur in a market in which we operate or otherwise affects our markets, our business and operations could be adversely affected. Any such crisis could diminish the public trust in healthcare facilities, especially hospitals that fail to accurately or timely diagnose, or that are treating (or have treated) patients affected by, contagious diseases. If any of our facilities are involved, or perceived as being involved, in treating patients for such a contagious disease, other patients might cancel elective procedures or fail to seek needed care at our facilities. Patient volumes may decline or volumes of uninsured and underinsured patients may increase, depending on the economic circumstances surrounding the pandemic, epidemic, or outbreak. Further, a pandemic, epidemic, or outbreak might adversely impact our business by causing a temporary shutdown or diversion of patients, by causing disruption or delays in supply chains for materials and products or by causing staffing shortages in our facilities. Although we have contingency plans in place, including infection control and disaster plans, the potential impact of, as well as the public’s and government’s response to, any such future pandemic, epidemic or outbreak of an infectious disease with respect to our markets or our facilities is difficult to predict and could adversely impact our business and operations.

HHS continues to focus on tying Medicare payments to quality or value through alternative payment models, which generally aim to make providers more attentive to the quality and cost of care they deliver to patients. Examples of alternative payment models include ACOs and bundled payment arrangements. An ACO is a care coordination model intended to produce savings as a result of improved quality and operational efficiency. By 2030, the CMS Innovation Center aims to have all fee-for-service Medicare beneficiaries and the vast majority of Medicaid beneficiaries in an accountable care relationship with providers who are responsible for quality and total medical costs. In bundled payment models, providers accept accountability for costs and quality of care by receiving one payment for services provided to patients for certain medical conditions or episodes of care. Providers may receive supplemental Medicare payments or owe repayments to CMS depending on whether spending exceeds or falls below a specified spending target and whether certain quality standards are met. Generally, participation in Medicare bundled payment programs is voluntary, but some models are mandatory. For example, beginning January 2026, CMS requiredrequires hospitals in selected markets to participate in a bundled payment initiative for specific orthopedic procedures, which ended December 31, 2024. Hospitals in selected markets will be required to participate inTEAM, a new model focused on five specified surgical procedure episodes beginning in January 2026.episodes. CMS has signaled its intentcontinues to streamlinesupport itsthe transition from Medicare fee-for-service models to value-based payment and care delivery models and to increasepromote provideralternative participationpayment throughmodels implementationthat ofinvolve moredownside mandatoryrisk models.or that shift some financial risk from conveners to providers.

There are also several state-driven value-based care initiatives. For example, some states have aligned quality metrics across payors through legislation or regulation. CMS has signaled its intent to support value-based initiatives in the Medicaid context.context, Forsuch example,as athrough its May 2024 final rule issuedrevising inSDP Mayarrangement 2024requirements, reduceswhich reduced state burdens forto implementing some SDP arrangements, with the intent of helpinghelp states use these arrangements to implement value-based initiatives. However, the 2025 Reconciliation Law’s limitations on SDP arrangements may affect states’ ability to continue or increase Medicaid value-based initiatives. Commercial payors are also transitioning toward value-based reimbursement arrangements as well.arrangements. For example, many commercial payors require hospitals to report quality data and restrict reimbursement for certain preventable adverse events.

We expect value-based purchasing programs, including programs that condition reimbursement on patient outcome measures,measures or involve downside risk, to become more common and to involve a higher percentage of reimbursement amounts. It may be difficult to predict the nature of these programs, the administrative burden involved, and their effects on our operations. It is unclear whether these and other alternative payment models will successfully coordinate care and reduce costs and whether they will decrease aggregate reimbursement. While we believe we are adapting our business strategies to compete in a value-based reimbursement environment, we are unable at this time to predict how this trend will affect our results of operations. If we perform at a level below the outcomes demonstrated by our competitors, are unable to meet or exceed the quality performance standards under any applicable value-based purchasing program or otherwise fail to effectively provide or coordinate the efficient delivery of quality healthcare services, our reputation in the industry may be negatively impacted, we may receive reduced reimbursement amounts and we may owe repayments to payors, causing our net operating revenues to decline.

Our revenues are particularly sensitive to regulatory and economic changes in states in which we generate a significant portion of our revenues, including Indiana, Alabama, TexasTexas, Florida and Florida.Tennessee. Accordingly, any change in the current demographic, economic, competitive, or regulatory conditions in these states could have an adverse effect on our business, financial condition, or results of operations. In particular, changes to Medicaid and other payment programs in these states, including modifications, expiration or termination of Medicaid waiver programs or supplemental payment programs, could also have an adverse effect on our business, financial condition, results of operations, or cash flows. For example, a Medicaid waiver in Texas provides the federal authority for operations of most of the state’s Medicaid managed care programs and provides funding for uncompensated care. Although CMS has approved the Texas waiver program through 2030, various payment programs operated under the waiver, such as SDP programs, have more limited approval periods. The 2025 Reconciliation Law includes limitations on SDP arrangements, directing HHS to revise SDP regulations to tie caps on total payment rates paid by Medicaid managed care organizations for specified services, including hospital services, to Medicare payment rates instead of average commercial rates. Several states in which we operate, including Texas, currently tie caps on total payment rates paid by managed care organizations to average commercial rates. If SDP programs or similar programs in which we participate are modified or not extended or CMS does not continue to approve these programs, our net operating revenues could be negatively impacted.

We may face increased challenges recruiting and retaining quality physicians as the physician population reaches retirement age, if there is a shortage of physicians willing and able to provide comparable services. Moreover, changes in immigration or visa policies could reduce the availability of international medical graduates. In some markets, physician recruitment and retention may be affected by a shortage of physicians in certain specialties, difficulties in obtaining professional liability insurance and state law restrictions on the provision of medical care, including reproductive health services. Shortages of physicians, particularly within emergency medicine, radiology, and anesthesiology, may adversely affect hospital operations. The types, amount and duration of compensation and assistance we can provide when recruiting physicians are limited by the federal Physician Self-Referral Law (commonly known as the Stark Law), the federal Anti-Kickback Statute and similar state restrictions. If we are unable to provide adequate support personnel or technologically advanced equipment and facilities that meet the needs of those physicians and their patients, our ability to recruit and retain quality physicians may be negatively impacted. Challenges recruiting and retaining physicians may affect our admissions and capacity and may otherwise adversely impact our business.

The healthcare industry has been experiencing a challenging labor market arising out of current macroeconomic conditions. Our hospitals and other healthcare facilities, like many other healthcare providers, have experiencedexperienced, and may continue to experience, increased labor costs due to labor shortages, public health conditions, inflationary conditions, workforce burnout and other factors. New limitations on federal loan eligibility and other student loan changes imposed pursuant to the 2025 Reconciliation Law may also impact healthcare personnel shortages. We may also be required to continue to enhance wages and benefits to recruit and retain nurses, other healthcare professionals and medical support personnel, and/or to hire more expensive temporary or contract personnel. In addition, in some markets in which we operate, a shortage of available nurses, other healthcare professionals and medical support personnel has been an operating issue. To the extent we are unable to maintain sufficient staffing levels at our hospitals, we may be required to limit the acute healthcare services provided at certain of our hospitals, which would have a corresponding adverse effect on our net operating revenues. We also depend on the available labor pool of semi-skilled and unskilled employees in each of the markets in which we operate.operate and the available labor pool may not be sufficient for our demands. In some of our markets, employers across various industries have increased their wages for these roles, which has created more competition for this sector of employees. The impact of labor shortages across the healthcare industry may result in other healthcare facilities, such as nursing homes, limiting admissions, which may constrain our ability to discharge patients to such facilities and further exacerbate the demand on our resources.

In addition, federal and state laws and regulations may increase our costs of maintaining qualified nurses and other medical support personnel. The federal government or the states in which we operate could adopt mandatory nurse-staffing ratios or related measures aimed at regulating staffing or could revise state-level mandatory nurse-staffing ratios or related measures already in place. Any of these measures could significantly affect labor costs and could have an adverse impact on our net operating revenues if we are required to limit admissions, hire additional personnel or incur other costs in order to comply with such requirements.

We may be unable to attract, hire, and retain a highly qualified and diverse workforce, including senior management personnel and key management.employees.

If our labor costs continue to increase, we may not be able to raise rates to offset these increased costs. We depend on the ability of these senior management team members and key employees to successfully manage our operations, and on our ability to attract and retain skilled employees. Because a significant percentage of our revenues consists of fixed, prospective payments, our ability to pass along increased labor costs to patients is constrained. In the event we are not entirely effective at recruiting and retaining qualified facility management, nurses and other medical support personnel, or in controlling labor costs, this could continue to have an adverse effect on our results of operations.

The success of our hospitals depends in part on the adequacy of staffing, including through contracts with third parties. We contract with various third parties who provide hospital-based physicians in a number of specialties, including emergency, anesthesiology, hospitalist/inpatient care, radiology, tele-radiology and surgery. Third-party providers of hospital-based physicians, including those with whom we contract, have experienced significant disruption in the form of regulatorypolicy changes, including those stemming from enactment of the No Surprises Act, challenging labor market conditions resulting from a shortage of physicians and inflationary wage-related pressures, as well as increased competition through consolidation of physician groups. In some instances, providers of outsourced medical specialists have become insolvent and unable to fulfill their contracts with us for providing hospital-based physicians. Our efforts to mitigate the potential impact to our business from third-party providers who are unable to fulfill their contracts to provide hospital-based physicians, including through acquisitions of outsourced medical specialist businesses, employment of physicians and re-negotiation or assumption of existing contracts, may be unsuccessful. If we are unable to adequately contract with providers, or effectively respond to and mitigate the potential impact of third-party providers not fulfilling their contracts, our admissions may decrease, and our operating performance, capacity and growth prospects may be adversely affected, which may adversely impact our business and financial results.

In particular, government investigations, as well as qui tam lawsuits, may lead to significant fines, penalties, damages payments or other sanctions, including exclusion from government healthcare programs. Settlements of lawsuits involving Medicare and Medicaid issues routinely require both monetary payments and corporate integrity agreements, each of which could have an adverse effect on our business, financial condition, results of operations and/or cash flows. For a further discussion of certain legal matters, see “Legal Proceedings” in Part I, Item 3 of this Form 10-K.

The healthcare industry has been and continues to be impacted by healthcare reform efforts. Many recent reform initiatives have focused on reducing government spending and increasing or, more recently, decreasing access to health insurance. For example, the Affordable Care Act affects how healthcare services are covered, delivered, and reimbursed, and expanded health insurance coverage through a combination of public program expansion and private sector health insurance reforms. However, changesChanges in the law’s implementation, subsequent legislation and regulations, state initiatives and other factors have and may continue to affect the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if obtained, and may impact our payerpayor mix. Reductions in the number of insured individuals or the scope of insurance coverage, or an increase in patients covered under governmental health programs or other health plans with lower reimbursement levels, may have an adverse effect on our business. For example, federal legislation temporarily enhanced subsidies available for purchasing coverage through Affordable Care Act marketplaces by lowering premiums and raising income eligibility thresholds.thresholds, Subsequent legislation extendedbut these enhanced subsidies throughexpired 2025,at butthe furtherend extensionof is2025. uncertain, and theirTheir expiration may adversely impact enrollment through the Affordable Care Act marketplaces and significantly raise the uninsured rate. Other legislative and executive branch initiatives related to health insurance could also result in increased prices for consumers purchasing health insurance coverage or may permit the sale of insurance plans that do not satisfy current Affordable Care Act consumer protections, which could increase rates of uninsured and underinsured individuals and destabilize insurance markets. Reductions in the number of insured individuals or the scope of insurance coveragecoverage, or an increase in patients covered under governmental health programs or other health plans with lower reimbursement levels, may have an adverse effect on our business.

Other recent health reform initiatives and proposals at the federal and state levels include those focused on price transparency and out-of-network charges, which may impact prices, our competitive position, patient volumes and the relationships between hospitals, patients, payors, and ancillary providers (such as anesthesiologists, radiologists, and pathologists)., Forand example,site-neutral amongpayment otherpolicies, consumerwhich protections,may reduce the Noreimbursement Surpriseswe Act imposes various requirements on providers and health plans intended to prevent “surprise” medical bills.receive. Some states are considering or have imposed rate-setting measures, including limits on hospital rates, or site-neutral pricing requirements.rates. Other industry participants, such as private payors and large employer groups and their affiliates, may also introduce financial or delivery system reforms.

The data protection landscape is rapidly evolving. We are subject to numerous state and federal laws, requirements and regulations governing the collection, use, storage, processing, disclosure, retention, privacy and security of health-related and other regulated, sensitive or confidential information and may become subject to additional legal requirements of this nature in the future. For example, the Health Insurance Portability and Accountability Act of 1996, the Health Information Technology for Economic and Clinical Health Act of 2009, each as amended, and the privacy and security regulations that implement these laws (collectively, “HIPAA”) establish national privacy and security standards for the protection of protected health information, or PHI, by health plans, healthcare clearinghouses and certain healthcare providers, referred to as covered entities, and the business associates with whom such covered entities contract for services. HIPAA regulates permissible uses and disclosures of PHIPHI, establishes individual rights related to PHI, including the right to access PHI, and requires covered entities and business associates to adopt administrative, physical and technical safeguards to protect such information. Covered entities must notify affected individuals without unreasonable delay of breaches of unsecured PHI, the HHS Office for Civil Rights, or OCR, which enforces HIPAA, and, in the case of larger breaches, the media. Failure to comply with the HIPAA privacy and security standards can result in civil monetary penalties, resolution agreements, monitoring agreements, and criminal penalties including fines and/or imprisonment. A covered entity may be subject to penalties as a result of a business associate violating HIPAA. In addition, state attorneys general may enforce the HIPAA privacy and security regulations in response to violations that threaten the privacy of state residents. Although HIPAA does not create a private right of action allowing individuals to sue in civil court for violations, the laws and regulations have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.

In addition, we are subject to consumer protection laws and regulations in connection with our business activities. For example, the FTC uses its consumer protection authority to initiate enforcement actions in response to data breaches. Failing to take appropriate steps to keep consumers’ personal information secure may violate the Federal Trade Commission Act, or the FTCA.Act. For information that is not subject to HIPAA and deemed to be “personal health records,” the FTC may also impose penalties for violations of the Health Breach Notification Rule, or HBNR, to the extent we are considered a “personal health record-related entity” or “third party service provider.” The FTC has taken several enforcement actions under HBNR and indicated that the FTC will continue to protect consumer privacy through greater use of the agency’s enforcement authorities. As a result, we expect scrutiny by federal and state regulators and others of our collection, use and disclosure of health information. Additionally, federal and state consumer protection laws are increasingly being applied by FTC and states’ attorneys general to regulate the collection, use, storage, and disclosure of personal or personally identifiable information, through websites or otherwise, and to regulate the presentation of website content. Our marketing and patient engagement activities are subject to communications laws such as the Telephone Consumer Protection Act, or the TCPA, and the Controlling the Assault of Non-Solicited Pornography and Marketing Act, or CAN-SPAM. Determination by a court or regulatory agency that our calling, texting or email practices violate the TCPA or CAN-SPAM could subject us to civil penalties and could require us to change some portions of our business. Even an unsuccessful challenge by patients or regulatory authorities of our activities could result in adverse publicity and could require a costly response from and defense by us.

CMS incentivizes the adoption and meaningful use of certified EHR technology through its Medicare Promoting Interoperability Programs and Quality Payment Program. Eligible hospitals that fail to demonstrate meaningful use of certified EHR technology and have not applied and qualified for a hardship exception are subject to reduced reimbursement from Medicare. Eligible healthcare professionals are also subject to positive or negative payment adjustments based, in part, on their use of EHR technology. Thus, ifany failure by our hospitals and employed professionals are unable to properly adopt, maintain, and utilize certified EHR systems, we could be subject to penalties and lawsuits thatsystems may have an adverse effect on our consolidated financial position and consolidated results of operations.

As EHR technologies have become widespread, the federal government has increased its focus on promoting patient access to healthcare data and interoperability. The 21st Century Cures Act and implementing regulations prohibit information blocking by healthcare providers and certain other entities. Information blocking is defined as engaging in activities that are likely to interfere with the access, exchange or use of electronic health information, subject to limited exceptions. Under a rule finalized by HHS in July 2024, aA hospital found to have engaged in information blocking will not qualify as a “meaningful electronic health record user” under the Medicare Promoting Interoperability Program and as a result will lose 75% of the annual market basket increase it would otherwise receive, and MIPS-eligible clinicians, ACOs and ACO participants face similar disincentives.

TheIn legaladdition, the legal, regulatory and regulatoryethical framework with respect to AI/ML initiatives is evolvingevolving, and remains uncertain. InFor December 2023,example, HHS finalizedimposes transparency requirements for AI and other predictive algorithms used in certified health information technology, such as decision support interventions. We expect that additional laws, regulations, and policies will be enacted, including as a result of changes in the presidential administration, and existing laws and regulations may be interpreted in new ways, which could affect our operations and the ways in which we may use AI technology (e.g., the use of clinical support decision tools in patient care). Further, there is additional uncertainty regarding the effectiveness of state laws related to artificial intelligence as the result of an executive order issued by the current presidential administration in December 2025, which directs federal regulators to challenge and preempt state laws that the administration views as obstructive to artificial intelligence innovation. If we are unable to use AI/ML as the result of such laws and regulations, regulators restrict our ability to use AI/ML for certain purposes or our confidential information becomes part of a dataset that is accessible by other third-party AI/ML applications and uses, it could make our business less efficient, result in competitive disadvantages, increase our operating costs, hinder our ability to provide services, and subject us to potential liabilities. In addition, to the extent we use, may use or permit the data we create, receive, maintain, and transmit to be used by any AI/ML platforms, we may be subject to additional risks under health privacy and other laws and regulations. The cost to comply with applicable laws and regulations could be significant and could adversely affect our business, financial condition and results of operations. Any failure or perceived failure by us to comply with AI/ML laws and regulations could result in proceedings, investigations or actions against us by individuals, consumer rights groups, government agencies or others. We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our technology and business. Any such proceedings and any subsequent adverse outcomes may subject us to significant negative publicity. Further,In addition, AI/ML technologies are rapidly changing and present evolving legal, regulatory and ethical issues, including claims of bias, discrimination, a perceived lack of transparency, as well as sometimes unpredictable behaviors or improper use of copyrighted or other protected material, any of which could expose us to the extent that we rely onreputational or legal risk and inhibit our use the output of AI/ML,ML any inaccuracies, biases or errors could hinder our ability to provide services and otherwise have adverse impacts on us, our business, our results of operations or financial condition.technologies. While the ultimate impact of regulatory and legal risks associated with AI/ML is not fully known, if any of these events were to occur, our business, results of operations and financial condition could be materially adversely affected.

Our operations depend heavily on the proper function, availability and security of our information systems, as well as those of our third-party providers, to collect, maintain, process and use sensitive data and other clinical, operational and financial information. Information systems require an ongoing commitment of significant resources to maintain and enhance existing systems and to develop new systems in order to keep pace with continual changes in information technology. Failure to adequately manage implementation of new technology, updates or enhancements of platforms or interfaces between platforms could place us at a competitive disadvantage, disrupt our operations, and have a material, adverse impact on our business and results of operations. Further, we may be adversely impacted by costs associated with new and expensive technology. In addition, we rely on third-party providers of financial, clinical, patient accounting and network information services, including those that interface with our own systems, and, as a result, we face operational challenges in maintaining multiple provider platforms and facilitating the interface of such systems with one another. We rely on these third-party providers to have appropriate controls to protect confidential information and other sensitive or regulated data. While we take steps to require third-party providers to protect confidential information and sensitive data, we do not control the information systems of third-party providers, and in some cases, we may have difficulty accessing information archived on or otherwise processed by third-party systems.

Our networks and information systems, and the networks and information systems of third parties that we rely upon, are also subject to disruption due to events such as a natural disaster, fire, telecommunications failure, power outages, new system implementations, computer viruses, ransomware or other malware, security breaches, cyber-attacks (including ransomware), human acts (such as inadvertent or intentional misuse by employees), acts of war, terrorist or criminal activities or other catastrophic events. Disaster recovery planning, whether conducted by us or a third party, cannot account for all eventualities, and may not be sufficient to mitigate against or recover from such events. If the information systems on which we rely fail or are interrupted or if our access to these systems is limited in the future, or if we experience data loss or manipulation, it could result in harm to patients, unauthorized disclosure, misuse, loss or alteration of such data, interruptions and delays in our normal business operations, potential liability under applicable laws, regulatory penalties, and damage to our reputation. Any of these could have an adverse effect on our business, financial condition or results of operations.

The current cyber threat environment presents increased risk for all companies, particularly companies in the healthcare industry, as the volume and intensity of cyber-attacks on hospitals and health systems hashave continued to increase, and we expect to experience an increase in cybersecurity threats in the future. Moreover, advanced new attacks against our information systems and devices or those of our third-party vendors create risk of cybersecurity incidents, including ransomware, malware and phishing incidents. The preventive actions we take to reduce the risk of such incidents and protect our systems and data may not be sufficient in the future. In addition, cybersecurity threats continue to evolve. Additionally, the rapid evaluation and increased adoption of AI and ML technologies may heighten our cybersecurity risks by making cyber-attacks more difficult to detect, contain and mitigate, particularly with detection devices that use voice recognition or authentication. Because the techniques used in cyber-attacks change frequently and may not be immediately recognized, we may experience security or data breaches that remain undetected for an extended time. We may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities, and we still might not be able to anticipate or prevent certain attack methods.

During 2024, we completed the divestiture of two hospitals. These hospitals represented annual net operating revenues in 2023 of approximately $198 million and we received total net proceeds of approximately $174 million in connection with these dispositions. These total net proceeds do not include additional cash consideration which has been, and may becontinue to be, received in connection with the sale of Tennova Healthcare – Cleveland that was completed on August 1, 20242024, (beyond the approximately $160 million inof cash received at closing),closing. whichIn this regard, during the three months ended December 31, 2025, we received additional paymentscash areconsideration contingentof uponapproximately potential$91 million as a result of modifications to applicable supplemental reimbursement programs as more specifically provided in the asset purchase agreement underlying the transaction. SuchAdditional modifications are not complete as of December 31, 2024 and an estimate ofcash consideration that may be received byin one or more future periods, or a portion of the Companyconsideration previously received may be returned by us to the buyer, subject to periodic reconciliations as set forth in 2025the hasasset thereforepurchase notagreement beenunderlying recognized.the transaction.

The following table provides a summary of hospitals that we divested (or, in the casecases of Lutheran Rehabilitation Hospital, in which the Companywe sold a majority ownership interest, Merit Health Biloxi and Merit Health Madison, in which we divested our 50% ownership interest, and in the case of Cedar Park Regional Medical Center, in which we divested our 80% ownership interest) during the years ended December 31, 2024,2025, 20232024 and 20222023:

Moreover, weWe may give consideration to divesting certain additional hospitals and non-hospital businesses. Generally, these hospitals and non-hospital businesses are not in one of our strategically beneficial servicesservice areas, are less complementary to our business strategy and/or have lower operating margins. In addition, we continue to receive interest from potential acquirers for certain of our hospitals and non-hospital businesses. As such, we may sell additional hospitals and/or non-hospital businesses 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 (including potential debt repayments and/or debt repurchases) and capital expenditures.

Net operating revenues increaseddecreased from approximately $12.6 billion for the year ended December 31, 2024 to approximately $12.5 billion for the year ended December 31, 2023 to approximately $12.6 billion for the year ended December 31, 2024.2025. On a same-store basis, net operating revenues for the year ended December 31, 20242025 increased $653$541 million, compared to the same period in 2023.2024.

We had net lossincome of $(362)$676 million during the year ended December 31, 2024,2025, compared to net incomeloss of $16$(362) million for the year ended December 31, 2023.2024. Net lossincome for the year ended December 31, 20242025 included the following:

an after-tax charge of $28 million for expense related to government and other legal matters and related costs, an after-tax benefit of $61$107 million for gain from early extinguishment of debt, an after-tax charge of $17$7 million for expense related to costs associated with our multi-year initiative to modernize and consolidate technology platforms and associated processes, and an after-tax benefit of $42$249 million resulting from gainsa ongain related to the saledivestiture of fivefour hospitals and thelaboratory saleoutreach ofbusiness and additional cash consideration received from a majorityprior interestyear indivestiture, one hospital,partially offset by losses on the saledivestiture of our ownership interest in three separate hospitals and the impairment of certain long-lived assets that were idled, disposedidled or held-for-sale, and an after-tax charge of $10 million for restructuring charges related to the closure of businessesdisposed as well as servicedivestiture linerelated closures and consolidations at certain hospitals.costs.

In recentthe years,last two decades, the U.S. Congress and certain state legislatures have introduced and passed a large number of proposals and legislation affecting the healthcare system, including laws intended to increase access to health insurance and reduce healthcare costs and government spending.spending and increase or, more recently, decrease access to health insurance. For example, the Affordable Care Act, affects how healthcare services are covered, delivered and reimbursed, andAct expanded health insurance coverage through a combination of public program expansion and private sector health insurance reforms.reforms, However,but changes in the law’s implementation, subsequent legislation and regulations, state initiatives and other factors have affected or may affect the number of individuals that elect or are able to obtain public or private health insurance and the scope of such coverage, if obtained. For example, COVID-19 relief legislationlegislation, as modified by subsequent legislation, temporarily enhanced subsidies available for individuals to purchase coverage through Affordable Care Act marketplaces.marketplaces Subsequentthrough legislation2025, extendedbut these enhanced subsidies throughexpired 2025,at butthe further extension is uncertain, and expirationend of the2025. enhancedTheir subsidiesexpiration may significantly increase the uninsurednumber rate.of people who are uninsured. Further, CMS issued a final rule in June 2025 that standardizes and shortens the open enrollment period for individual market coverage, both on and off the Affordable Care Act marketplaces, and requires stricter income-verification measures, among other changes. This rule is currently the subject of legal challenges. Moreover, the 2025 Reconciliation Law includes healthcare policy changes that are expected to decrease access to health insurance. Among other provisions, the 2025 Reconciliation Law makes changes to Affordable Care Act marketplace insurance, including effectively ending automatic renewals of coverage by requiring pre-enrollment verification of eligibility and restricting subsidized marketplace coverage and Medicare and Medicaid eligibility based on immigration status. Other legislative and executive branch initiatives related to health insurance could also result in increased prices for consumers purchasing health insurance coverage or may permit the sale of insurance plans that do not satisfy current Affordable Care Act consumer protections,protections. whichAny of these developments could increase rates of uninsured and underinsured individuals and destabilize insurance markets.

The federal deficit and other federal and state budgetary pressures have affected government healthcare program expenditures, and we anticipate these effects will continue. For example, the payment2025 Reconciliation Law is expected to decrease federal healthcare spending, particularly with respect to Medicaid, and is generally expected to have significant impact on state budgets, which may result in state-level changes such as reductions required byto the Budget Control Actscope of 2011covered andservices subsequentor legislationtax are currently set to continue through the first eight months of federal fiscal year 2032.increases. It is possible that future deficit reduction legislation will impose or otherwise result in additional spending reductions.

Reimbursement by government programs may be affected by broad shifts in payment policy. For example, recent changes related to the 340B Drug Pricing Program have implications for all hospitals reimbursed under the outpatient PPS, including those, like ours, that do not participate in the program. In 2018, CMS implemented a payment policy that reduced Medicare payments for 340B hospitals for most drugs obtained at 340B-discounted rates and that resulted in increased payments for non-340B hospitals. In June 2022, the U.S. Supreme Court, in American Hospital Association v. Becerra, invalidated past payment cuts for hospitals participating in the 340B Drug Pricing Program. In light of the U.S. Supreme Court decision and to achieve budget neutrality, CMS reduced payment rates for non-drug services under the outpatient PPS for calendar year 2023, and lump sum payments were distributed to affected 340B providers as the remedy for calendar years 2018 through 2022. This reduction to payment rates adversely affected our results for the nine months ended September 30, 2025. Moreover, in order to comply with budget neutrality requirements, HHS finalized a corresponding offset in future non-drug item and service payments for all outpatient PPS providers (except new providers) that will reduce the outpatient PPS conversion factor by 0.5% annually.annually until the past invalidated payments are offset. This adjustment0.5% willreduction startbegan in calendar year 2026 and was expected to continue for approximately 16 years.years, Thisbut CMS has indicated that it may accelerate this timeline by implementing a larger reduction tobeginning paymentin ratescalendar adverselyyear affected2027. ourWe resultsanticipate for the years ended December 31, 2023 and 2024, andthat the reduction to the outpatient PPS conversion factor as noted above is anticipated towill adversely impact our results beginning in 2026.results.

As shown above, we receive a substantial portion of our revenues from the Medicare, Medicare Managed Care and Medicaid programs. Included in Managed Care and other third-party payors is net operating revenues from insurance companies with which we have insurance provider contracts, insurance companies for which we do not have insurance provider contracts, workers’ compensation carriers and non-patient service revenue, such as gain (loss) on investments, rental income and cafeteria sales. We generally expect the portion of revenues received from the Medicare,Medicare and Medicare Managed Care and Medicaid programs to increase over the long-term due to the general aging of the population and other factors. ThereThe has been ageneral trend toward increased enrollment in Medicare Managed Care and Medicaid managed care programs, which has slowed or reversed in some cases in recent years, may adversely affect our net operating revenues. 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 policy developments such as price transparency initiatives and out-of-network billing restrictions, including those in the No Surprises Act. There can be no assurance that we will retain our existing reimbursement arrangements or that third-party payors will not attempt to further reduce the rates they pay for our services. The revenues we receive and our relationships with payors are also expected to be impacted by the 2025 Reconciliation Law, which includes healthcare policy changes that are expected to decrease access to health insurance and result in significant cuts to federal healthcare spending.

The payment rates under the Medicare program for hospital inpatient and outpatient acute care services are based on prospective payment systems, which depend upon a patient’s 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. CMSIn has published theits final rule establishing payment rates for federal fiscal year 20252026 (which began October 1, 20242025) for hospital inpatient acute care services reimbursed under the prospective system, increasingCMS increased payment rates by approximately 2.9%.2.6%. This increase reflects a market basket increase of 3.4%,3.3%, reduced by a 0.50.7 percentage point productivity adjustment. Hospitals that do not submit required patient quality data are subject to apayment reduction in payments.reductions. We are complying with this data submission requirement. Payments may also be affected by various other adjustments, 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 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 funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. TheIn programsaddition, areas generallynoted authorizedabove, bythe CMS2025 forReconciliation aLaw specifiedincludes periodseveral ofchanges timeto Medicaid financing mechanisms, including limitations on provider taxes and requireSDP CMS’sarrangements. approvalIt tois be extended. We are unabledifficult to predict the ultimate impact of the legislation on these supplemental programs or 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 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.

Operating expenses include salaries and benefits, supplies, other operating expenses, and lease cost and rent, net of the reduction in operating expenses resulting from the recognition of pandemic relief funds.rent.

Adjusted admissions is a general measure of combined inpatient and outpatient volume. AdjustedWe computed adjusted admissions is computed by multiplying admissions by gross patient revenues and then dividing that number by gross inpatient revenues.

Impairment and (gain) loss on sale of businesses, net was expense of $301 million for the year ended December 31, 2024, compared to a gainincome of $87 million for the same period in 2023. The expense in 2024 and the gain in 2023 related primarily to divestiture activity during each respective period as discussed more specifically under “Acquisition, Divestiture and Closure Activity” herein.

We are one of the nation’s largest healthcare companies. Our affiliates are leading providers of healthcare services, developing and operating healthcare delivery systems in 3432 distinct markets across 1312 states. As of MarchJune 31,30, 2026, our subsidiaries own or lease 6560 affiliated hospitals, with more than 9,0008,000 beds, and operate more than 900800 sites of care, including physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers. 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. For the hospitals and other sites of care that we own and operate, we are paid for our services by governmental agencies, private insurers and directly by the patients we serve.

During the threesix months ended MarchJune 31,30, 2026, we paid approximately $5$53 million to acquire the operating assets and related businesses of certain physician practices and clinics, as well as a controlling interestinterests in antwo ambulatory surgery center.centers. The purchase price for these transactions will primarily be allocated to working capital, goodwill and noncontrolling interests.

During the threesix months ended MarchJune 31,30, 2026, as reflected in the table below, we completed the divestiture of four hospitals in Arkansas, three hospitals in Pennsylvania, one hospital in Alabama, and sold our 80% ownership interest in one hospital in Tennessee. These hospitals represented annual net operating revenues in 2025 of approximately $827$1.6 millionbillion and we received total net proceeds of approximately $657$1.2 millionbillion in connection with these dispositions.

The following table provides a summary of hospitals that we divested (or, in the cases of Merit Health Biloxi and Merit Health Madison, in which we sold our 50% ownership interest, and in the cases of Tennova Healthcare - Clarksville and Cedar Park Regional Medical Center, in which we sold our 80% ownership interest) during the threesix months ended MarchJune 31,30, 2026 and the year ended December 31, 2025.

Net operating revenues decreased from $3.159$3.133 billion for the three months ended MarchJune 31,30, 2025 to $2.965$2.825 billion for the three months ended MarchJune 31,30, 2026. On a same-store basis, net operating revenues for the three months ended MarchJune 31,30, 2026 increased $88$65 million compared to the same period in 2025.

We had net lossincome of $25$104 million during the three months ended MarchJune 31,30, 2026, compared to net income of $25$320 million for the same period in 2025. Net lossincome for the three months ended MarchJune 31,30, 2026 included the following:

an after-tax charge of $8$4 million for loss from early extinguishment of debt, an after-tax charge of $2 million for employee terminations and other restructuring charges, and an after-tax benefit of $15$101 million resulting primarily from a gain from the divestiture of our controlling interest in aone hospital, partially offset by (i) ana net impairment charge to adjust the carrying value of long-lived assets at hospitalsa hospital that werewas divested at a sales price below carrying valuevalue, and (ii) an impairment charge recorded to reduce the carrying value of aseveral hospitalassets that waswere deemedidled, held-for-saledisposed basedor on the difference between the carrying value of the hospital disposal group compared to the estimated fair value less the costs to sell.held-for-sale.

Net income for the three months ended MarchJune 31,30, 2025 included the following:

an after-tax chargebenefit of $7$139 million for expensegain relatedfrom toearly costsextinguishment associatedof with our multi-year initiative to modernize and consolidate technology platforms and associated processes,debt, and an after-tax chargebenefit of $2$151 million resulting from a gain related to the saledivestiture of two hospitals, partially offset by a loss on the saledivestiture of our 50% ownership interest in onea hospital and the impairment of certain long-lived assets that were idled, disposed or held-for-saledisposed as well as divestiture related costs.

Consolidated inpatient admissions for the three months ended MarchJune 31,30, 2026, decreased 10.8%,11.4%, compared to the same period in 2025. Consolidated adjusted admissions for the three months ended MarchJune 31,30, 2026, decreased 10.5%,11.7%, compared to the same period in 2025. Same-store inpatient admissions for the three months ended MarchJune 31,30, 2026, decreasedincreased 1.3%,1.9%, compared to the same period in 2025, and same-store adjusted admissions for the three months ended MarchJune 31,30, 2026, decreasedincreased 0.5%,2.9%, compared to the same period in 2025.

Self-pay revenues represented approximately 1.1%1.4% and 0.6% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 1.2% and 0.6% for the six months ended June 30, 2026 and 2025, respectively. The amount of foregone revenue related to providing charity care services as a percentage of net operating revenues was approximately 11.6%18.3% and 9.7%10.7% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 14.9% and 10.2% for the six months ended June 30, 2026 and 2025, respectively. Direct and indirect costs incurred in providing charity care services as a percentage of net operating revenues was approximately 1.2%1.8% and 1.1% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 1.5% and 1.1% for the six months ended June 30, 2026 and 2025, respectively.

In the last two decades, the U.S. Congress and certain state legislatures have introduced and passed a large number of proposals and legislation affecting the healthcare system, including laws intended to increase access to health insurance and reduce healthcare costs and government spending and increase or, more recently, decrease access to health insurance. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or, collectively, the Affordable Care Act, expanded health insurance coverage through a combination of public program expansion and private sector health insurance reforms, but changes in the law’s implementation, subsequent legislation and regulations, state initiatives and other factors have affected or may affect the number of individuals that elect or are able to obtain public or private health insurance and the scope of such coverage, if obtained. For example, COVID-19 relief legislation, as modified by subsequent legislation, temporarily enhanced subsidies available for individuals to purchase coverage through Affordable Care Act marketplaces through 2025, but these enhanced subsidies expired at the end of 2025.2025, Theirincreasing expirationcoverage maycosts significantlyfor increasemany the number of people who are uninsured.individuals. Further, CMS issued a final rulerules in June 2025 that standardizes and shortens2026 the open enrollment period foraffecting individual market coverage,coverage boththat include changes such as expanding eligibility for high-deductible, low-premium plans and allowing for non-network plans to be offered on andfederally-facilitated offmarketplaces. theThese Affordablerules Care Act marketplaces, and requires stricter income-verification measures, among other changes. This rule isare currently the subject of legal challenges. Moreover, the federal budget reconciliation legislation enacted on July 4, 2025, or the 2025 Reconciliation Law, includes healthcare policy changes that are expected to decrease access to health insurance. Among other provisions, the 2025 Reconciliation Law makes changes to Affordable Care Act marketplace insurance, including effectively ending automatic renewals of coverage by requiring pre-enrollment verification of eligibility and restricting subsidized marketplace coverage and Medicare and Medicaid eligibility based on immigration status. Other legislative and executive branch initiatives related to health insurance could also result in increased prices for consumers purchasing health insurance coverage or may permit the sale of insurance plans that do not satisfy current Affordable Care Act consumer protections. Any of these developments could increase rates of uninsured and underinsured individuals and destabilize insurance markets.

Of critical importance to us is the potential impact of any changes specific to the Medicaid program, including changes resulting from legislative and administrative actions at the federal and state levels. Federal actions may impact funding for, or the structure of, the Medicaid program and may shape provider reimbursement rates, eligibility and coverage policies and other aspects of the state Medicaid programs in a manner that could materially and adversely affect us. For example, the 2025 Reconciliation Law includes policy changes that have resulted in and are expected to continue to result in Medicaid spending reductions and changes in administration of state Medicaid programs. The law limits eligibility for Medicaid, including by imposing work or community engagement requirements for adults in Medicaid expansion states, and limits some Medicaid financing mechanisms, including through restrictions intended to reduce the federal matching funds received by state Medicaid programs. Reductions in federal matching funds and increased state obligations and administrative burden could have significant effects, such as resulting in state limitations on eligibility or coverage or changes to Medicaid expansion programs, particularly if states are unable to offset reductions. The effects of the 2025 Reconciliation Law could be particularly significant in states that expanded Medicaid under the Affordable Care Act, especially if a significant number of individuals formerly covered under Medicaid expansion lose Medicaid eligibility but do not obtain other health insurance coverage. Of the 1312 states in which we operated hospitals as of MarchJune 31,30, 2026, sevensix states have taken action to expand their Medicaid programs. The other six states in which we operated hospitals as of MarchJune 31,30, 2026, have opted out of Medicaid expansion, including Florida, Alabama, Tennessee, Mississippi and Texas, in which states we operated a significant number of hospitals as of MarchJune 31,30, 2026. Although we are unable to fully assess the magnitude of the future impact of the 2025 Reconciliation Law, we expect the law to adversely impact our revenue and financial results as well as increase the amount of our self-pay patients, including as a result of this legislation’s limitations on Medicaid eligibility and reductions in federal Medicaid funding as noted above.

The 2025 Reconciliation Law authorized the Rural Health Transformation, or RHT, Program, which is intended to strengthen and modernize healthcare in rural communities. Through the RHT Program, $50 billion in federal grants will be distributed over five years, with $10 billion available in each of federal fiscal years 2026 through 2030, which may partially offset Medicaid spending reductions expected as a result of the 2025 Reconciliation Law as described herein, although the magnitude of such grants will be far less than the anticipated Medicaid spending reductions. In December 2025, CMS announced that all 50 states will receive awards under the RHT Program. Providers may be granted subcontracts or subawards, and providers could receive payments for healthcare items and services, subject to funding policies and limitations. All funds must be spent before October 1, 2032. We are actively monitoringevaluating and pursuing various funding opportunities in each state in which we operate. No funds have been obligated to or received by us during the three and six months ended MarchJune 31,30, 2026.

Reimbursement by government programs may be affected by broad shifts in payment policy. For example, recent changes related to the 340B Drug Pricing Program have implications for all hospitals reimbursed under the outpatient prospective payment system, or PPS, including those, like ours, that do not participate in the program. In 2018, CMS implemented a payment policy that reduced Medicare payments for 340B hospitals for most drugs obtained at 340B-discounted rates and that resulted in increased payments for non-340B hospitals. In June 2022, the U.S. Supreme Court, in American Hospital Association v. Becerra, invalidated past payment cuts for hospitals participating in the 340B Drug Pricing Program. In light of the U.S. Supreme Court decision and to achieve budget neutrality, CMS reduced payment rates for non-drug services under the outpatient PPS for calendar year 2023, and lump sum payments were distributed to affected 340B providers as the remedy for calendar years 2018 through 2022. This reduction to payment rates adversely affected our results for the three and six months ended MarchJune 31,30, 2026. Moreover, in order to comply with budget neutrality requirements, HHS finalized a corresponding offset in future non-drug item and service payments for all outpatient PPS providers (except new providers) that will reduce the outpatient PPS conversion factor by 0.5% annually until the past invalidated payments are offset. This annual 0.5% reduction began in calendar year 2026 and was expected to continue for approximately 16 years, but CMS has indicated that it may accelerate this timeline by implementing a larger reduction beginning in calendar year 2027. We anticipate that the reduction to the outpatient PPS conversion factor will adversely impact our results.

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 by an insignificant amount in both of the three-monththree- and six-month periods ended MarchJune 31,30, 2026 and 2025.

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 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 by CMS for a specified period of time and require CMS’s approval to be extended. In addition, as noted above, the 2025 Reconciliation Law includes several changes to Medicaid financing mechanisms, including limitations on provider taxes and SDPstate directed payment arrangements. It is difficult to predict the ultimate impact of the legislation on these supplemental programs or 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 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.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Net operating revenues decreased to $2.965$2.825 billion for the three months ended MarchJune 31,30, 2026, compared to $3.159$3.133 billion for the same period in 2025. Net operating revenues on a same-store basis from hospitals that were operated throughout both periods increased $88$65 million, or 3.1%,2.4%, during the three months ended MarchJune 31,30, 2026, compared to the same period in 2025. On a period-over-period basis, the increase in same-store net operating revenues was primarily attributable to increased volumes and reimbursement rates and higher supplemental reimbursement program revenuerevenue, partially offset by lower volumes and an unfavorable change in payor mix. Non-same-store net operating revenues decreased $282$373 million during the three months ended MarchJune 31,30, 2026, compared to the same period in 2025, due to the divestiture of hospitals in 2026 and 2025. On a consolidated basis, inpatient admissions decreased by 10.8%11.4% and adjusted admissions decreased by 10.5%11.7% during the three months ended MarchJune 31,30, 2026, compared to the same period in 2025. On a same-store basis, net operating revenues per adjusted admission increaseddecreased 3.7%,0.5%, while inpatient admissions decreasedincreased by 1.3%1.9% and adjusted admissions decreasedincreased by 0.5%2.9% for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025.

Total operating expenses, as a percentage of net operating revenues, decreasedincreased from 91.0%83.7% during the three months ended MarchJune 31,30, 2025 to 90.5%86.2% during the three months ended MarchJune 31,30, 2026. Operating expenses, excluding depreciation and amortization and impairment and (gain) loss on sale of businesses, as a percentage of net operating revenues, increased from 87.9% for the three months ended June 30, 2025 to 88.5% for the three months ended MarchJune 31, 2025 to 89.7% for the three months ended March 31,30, 2026. Salaries and benefits, as a percentage of net operating revenues, increased from 43.4%42.4% for the three months ended MarchJune 31,30, 2025 to 44.6%43.8% for the three months ended MarchJune 31,30, 2026, primarily due to increased hiring commensurate with lower utilization of contract labor, inflationary wage increases and the decrease in net operating revenues. Supplies, as a percentage of net operating revenues, decreased from 15.5% for three months ended March 31, 2025 to 14.9%15.0% for the three months ended MarchJune 31,30, 2025 to 14.2% for the three months ended June 30, 2026, primarily due to changes in the mix of services and the benefit of cost savings initiatives, partially offset by the decrease in net operating revenues and changes in the mix of services.revenues. Other operating expenses, as a percentage of net operating revenues, increased from 27.4%28.1% for the three months ended MarchJune 31,30, 2025 to 27.9%28.3% for the three months ended MarchJune 31,30, 2026, primarily due to the decrease in net operating revenues and increasedhigher supplementalmedical reimbursementspecialist programfees, expense.partially offset by lower contract labor and professional liability expenses. Lease cost and rent, as a percentage of net operating revenues, increaseddecreased from 2.4% for the three months ended June 30, 2025 to 2.2% for the three months ended MarchJune 31, 2025 to 2.3% for the three months ended March 31,30, 2026.

Depreciation and amortization, as a percentage of net operating revenues, increased from 3.3%3.4% for the three months ended MarchJune 31,30, 2025 to 3.8% for the three months ended MarchJune 31,30, 2026, primarily due to the decrease in net operating revenues and the placement of additional assets into service in the current year compared to the prior year.revenues.

Impairment and (gain) loss on sale of businesses, net was income of $90$172 million for the three months ended MarchJune 31,30, 2026, compared to $24$239 million for the same period in 2025. The income recognized during the three months ended MarchJune 31,30, 2026 was comprised of a gain of approximately $230$184 million related primarily to the divestiture of our controlling interest in aone hospital, partially offset by (i) an approximately $88$5 million net impairment charge to adjust the carrying value of long-lived assets at hospitals that were divested at a price below carrying value, and (ii) a $52 million impairment charge recorded to reduce the carrying value of a hospital that was deemed 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. The income recognized during the three months ended March 31, 2025 was comprised of a gain of approximately $50 million related to the sale of two hospitals, partially offset by (i) an approximately $10 million impairment charge recorded to reduce the carrying value of a hospital that was deemed 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, (ii) an approximately $11 million impairment charge to adjust the carrying value of long-lived assets at a hospital that was divested at a sales price below carrying value, and (iiiii) an approximately $5$7 million impairment charge recorded to reduce the carrying value of several assets that were idled, disposed of or held-for-sale. The income recognized during the three months ended June 30, 2025 was comprised of a gain of approximately $241 million related to the divestiture of two hospitals, partially offset by an approximately $2 million impairment charge to adjust the carrying value of long-lived assets at a hospital that was divested at a sales price below carrying value.

Interest expense, net, decreased $6$8 million to $213$206 million for the three months ended MarchJune 31,30, 2026 from $219$214 million for the three months ended MarchJune 31,30, 2025.

Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, remained consistent at 0.1% for both of the three-month periods ended MarchJune 31,30, 2026 and 2025.

Loss from early extinguishment of debt of $8$5 million was recognized during the three months ended MarchJune 31,30, 2026, as a result of the redemptionrepurchase of certain of our outstanding notes as discussed further in “Liquidity and Capital Resources.” There was noa lossgain of $138 million from early extinguishment of debt during the three months ended MarchJune 31,30, 2025.

The net results of the above-mentioned changes resulted in income before income taxes decreasing $3$258 million to $64$180 million for the three months ended MarchJune 31,30, 2026, compared to $67$438 million for the same period in 2025.

Our provision for income taxes for the three months ended MarchJune 31,30, 2026 and 2025 was $89$76 million and $42$118 million, respectively, and the effective tax rates were 139.1%42.2% and 62.7%26.9% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increasedecrease in the provision for income taxes and the change in our effective tax rate for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025 was primarily due to ana increasedecrease in income before income taxes, a decrease in non-deductible goodwill related to divested hospitals.hospitals, and the tax effects of the federal budget reconciliation legislation which was enacted on July 4, 2025.

Net (loss) income, as a percentage of net operating revenues, was a net loss of (0.8)%3.7% for the three months ended MarchJune 31,30, 2026, compared to net income of 0.8%10.2% for the same period in 2025.

Net income attributable to noncontrolling interests as a percentage of net operating revenues was 1.2% for both of the three-month periods ended threeJune months ended March 31,30, 2026 and 2025.

Net lossincome attributable to Community Health Systems, Inc. stockholders was $(58)$70 million for the three months ended MarchJune 31,30, 2026, compared to $(13)$282 million for the same period in 2025.

Net cash providedused byin operating activities changed by $417 million, fromwas approximately $120$209 million for the six months ended June 30, 2026, compared to approximately $208 million of net cash provided by operating activities for the threesix months ended MarchJune 31,30, 2025, toa cash used in operating activitieschange of approximately$417 $297 million for the three months ended March 31, 2026.million. The decrease in net cash provided by operating activities is primarily due to a decrease in accounts payable, an increase in patient accounts receivable and thehigher receiptcash ofpaid afor largerinterest, taxpartially refundoffset by lower cash paid for taxes during the threesix months ended MarchJune 31,30, 2025,2026, compared to the same period in 2026.2025. Cash paid for interest was $261$437 million during the threesix months ended MarchJune 31,30, 2026, compared to $229$407 million for the same period in 2025. Cash paid for income taxes, net of refunds received, resulted in a net refundpayment of less than $1$61 million and $80$101 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Approximately $56 million and $74 million of cash paid for taxes during the six months ended June 30, 2026 and 2025, respectively, related to taxes associated with gains on divested hospitals.

Net cash provided by investing activities was approximately $1.0 billion for the threesix months ended MarchJune 31,30, 2026, compared to approximately $444$786 million for the same period in 2025. Net cash provided by investing activities during the threesix months ended MarchJune 31,30, 2026 was impacted by an increase of $545$205 million in cash proceeds from dispositions of hospitals and other ancillary operations and a decrease in cash used for other investments of $28$32 million, partially offset by cash expenditures for the purchases of facilities and other related businesses of $53 million.

Our net cash used in financing activities was approximately $274$902 million for the threesix months ended MarchJune 31,30, 2026, compared to approximately $170$575 million for the same period in 2025, a change of $104$327 million. This was primarily due to the net impact of our debt borrowings and repayments during the threesix months ended MarchJune 31,30, 2026, compared to the same period in 2025.

Net working capital was approximately $1.2$1.1 billion at MarchJune 31,30, 2026 and approximately $1.0 billion at December 31, 2025. Net working capital increased by approximately $180$39 million between December 31, 2025 and MarchJune 31,30, 2026. The increase is primarily due to increases in cash, patient accounts receivable,receivable and prepaid expenses and other current assets and decreases in accounts payable, accrued liabilities for employee compensation and accrued interest during the threesix months ended MarchJune 31,30, 2026, partially offset by decreases in suppliescash, supplies, and increasesother current assets and an increase in income tax payable and other current liabilities.payable.

Pursuant to the ABL Credit Agreement, the lenders have extended to CHS/Community Health Systems, Inc. (a wholly-owned subsidiary of the Parent Company), or CHS, a revolving asset-based loan facility, or ABL Facility. The maximum aggregate amount under the ABL Facility is $1.0 billion, subject to borrowing base capacity. At MarchJune 31,30, 2026, we had no outstanding borrowings and approximately $824$751 million of additional borrowing capacity (after taking into consideration $32 million of outstanding letters of credit) under the ABL Facility. Letters of credit were reduced during the threesix months ended MarchJune 31,30, 2026 by $2 million, primarily due to a reduction in collateral for a construction-related bond. The issued letters of credit 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 June 5, 2029.

On February 2, 2026, we exercised a special call provision to redeem 10% of the original principal amount, or approximately $223 million, of the 10.875% Senior Secured Notes due 2032, at a redemption price of 103% of the principal amount, plus accrued and unpaid interest. A pre-tax loss from early extinguishment of debt of approximately $8 million was recognized associated with this financing activity during the three months ended March 31, 2026.