19. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Senior Notes due 2019, 2020 and 2022, which are senior unsecured obligations of CHS, and the 5⅛% Senior Secured Notes due 2018 and 2021 (collectively, “the Notes”) are guaranteed on a senior basis by the Company and by certain of its existing and subsequently acquired or organized 100% owned domestic subsidiaries. The Notes are fully and unconditionally guaranteed on a joint and several basis, with exceptions considered customary for such guarantees, limited to the release of the guarantee when a subsidiary guarantor’s capital stock is sold, or a sale of all of the subsidiary guarantor’s assets used in operations. The following condensed consolidating financial statements present Community Health Systems, Inc. (as parent guarantor), CHS (as the issuer), the subsidiary guarantors, the subsidiary non-guarantors and eliminations. These condensed consolidating financial statements have been prepared and presented in accordance with SEC Regulation S-X Rule 3-10 “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.”

The accounting policies used in the preparation of this financial information are consistent with those elsewhere in the condensed consolidated financial statements of the Company, except as noted below:

•Intercompany receivables and payables are presented gross in the supplemental condensed consolidating balance sheets.

•Cash flows from intercompany transactions are presented in cash flows from financing activities, as changes in intercompany balances with affiliates, net.

•Income tax expense is allocated from the parent guarantor to the income producing operations (other guarantors and non-guarantors) and the issuer through stockholders’ equity. As this approach represents an allocation, the income tax expense allocation is considered non-cash for statement of cash flow purposes.

•Interest expense, net has been presented to reflect net interest expense and interest income from outstanding long-term debt and intercompany balances.

The Company’s intercompany activity consists primarily of daily cash transfers for purposes of cash management, the allocation of certain expenses and expenditures paid for by the Parent on behalf of its subsidiaries, and the push down of investment in its subsidiaries. This activity also includes the intercompany transactions between consolidated entities as part of the Receivables Facility that is further discussed in Note 12. The Company’s subsidiaries generally do not purchase services from one another; thus, the intercompany transactions do not represent revenue generating transactions. All intercompany transactions eliminate in consolidation.

From time to time, subsidiaries of the Company sell and/or repurchase noncontrolling interests in consolidated subsidiaries, which may change subsidiaries between guarantors and non-guarantors. Effective with the spin-off of QHC, all subsidiaries of the Company that were part of that distribution have been removed as guarantors. Amounts for prior periods have been revised to reflect the status of guarantors or non-guarantors as of June 30, 2016. There were no material changes to the status of guarantors or non-guarantors as of September 30, 2016.



Condensed Consolidating Statement of Loss
Three Months Ended September 30, 2016

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
	(In millions)
Operating revenues (net of contractual
allowances and discounts)	$	-	$	(6)	$	3,205	$	1,885	$	-	$	5,084
Provision for bad debts		-		-		485		219		-		704
Net operating revenues		-		(6)		2,720		1,666		-		4,380
Operating costs and expenses:
Salaries and benefits		-		-		1,118		949		-		2,067
Supplies		-		-		477		246		-		723
Other operating expenses		-		-		717		309		-		1,026
Government and other legal settlements and
related costs		-		-		5		5		-		10
Electronic health records incentive reimbursement		-		-		(3)		(2)		-		(5)
Rent		-		-		58		51		-		109
Depreciation and amortization		-		-		180		85		-		265
Impairment of goodwill and long-lived assets		-		-		28		11		-		39
Total operating costs and expenses		-		-		2,580		1,654		-		4,234
(Loss) income from operations		-		(6)		140		12		-		146
Interest expense, net		-		84		139		10		-		233
Equity in earnings of unconsolidated affiliates		79		14		14		-		(111)		(4)
(Loss) income from continuing operations before
income taxes		(79)		(104)		(13)		2		111		(83)
Provision for (benefit from) income taxes		-		(25)		2		(6)		-		(29)
(Loss) income from continuing operations		(79)		(79)		(15)		8		111		(54)
Discontinued operations, net of taxes:
(Loss) income from operations of entities sold or
held for sale		-		-		(2)		-		-		(2)
(Loss) income from discontinued operations, net of taxes		-		-		(2)		-		-		(2)
Net (loss) income		(79)		(79)		(17)		8		111		(56)
Less: Net income attributable to noncontrolling interests		-		-		-		23		-		23
Net (loss) income attributable to Community Health
Systems, Inc. stockholders	$	(79)	$	(79)	$	(17)	$	(15)	$	111	$	(79)



Condensed Consolidating Statement of Income
Three Months Ended September 30, 2015

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
	(In millions)
Operating revenues (net of contractual
allowances and discounts)	$	-	$	(5)	$	3,122	$	2,463	$	-	$	5,580
Provision for bad debts		-		-		404		330		-		734
Net operating revenues		-		(5)		2,718		2,133		-		4,846
Operating costs and expenses:
Salaries and benefits		-		-		1,077		1,163		-		2,240
Supplies		-		-		465		297		-		762
Other operating expenses		-		-		648		496		-		1,144
Government and other legal settlements and
related costs		-		-		-		-		-		-
Electronic health records incentive reimbursement		-		-		(38)		(16)		-		(54)
Rent		-		-		56		59		-		115
Depreciation and amortization		-		-		177		111		-		288
Total operating costs and expenses		-		-		2,385		2,110		-		4,495
(Loss) income from operations		-		(5)		333		23		-		351
Interest expense, net		-		26		199		17		-		242
Equity in earnings of unconsolidated affiliates		(52)		(78)		4		-		114		(12)
Income from continuing operations before income taxes		52		47		130		6		(114)		121
(Benefit from) provision for income taxes		-		(5)		53		(10)		-		38
Income from continuing operations		52		52		77		16		(114)		83
Discontinued operations, net of taxes:
Loss from operations of entities sold or held for sale		-		-		(1)		(4)		-		(5)
Loss on sale, net		-		-		-		(3)		-		(3)
Loss from discontinued operations, net of taxes		-		-		(1)		(7)		-		(8)
Net income		52		52		76		9		(114)		75
Less: Net income attributable to noncontrolling interests		-		-		-		23		-		23
Net income (loss) attributable to Community Health
Systems, Inc. stockholders	$	52	$	52	$	76	$	(14)	$	(114)	$	52



Condensed Consolidating Statement of Loss
Nine Months Ended September 30, 2016

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
	(In millions)
Operating revenues (net of contractual
allowances and discounts)	$	-	$	(18)	$	9,712	$	6,434	$	-	$	16,128
Provision for bad debts		-		-		1,414		745		-		2,159
Net operating revenues		-		(18)		8,298		5,689		-		13,969
Operating costs and expenses:
Salaries and benefits		-		-		3,353		3,184		-		6,537
Supplies		-		-		1,469		812		-		2,281
Other operating expenses		-		-		2,080		1,176		-		3,256
Government and other legal settlements and
related costs		-		-		5		5		-		10
Electronic health records incentive reimbursement		-		-		(31)		(23)		-		(54)
Rent		-		-		171		169		-		340
Depreciation and amortization		-		-		546		293		-		839
Impairment of goodwill and long-lived assets		-		-		1,173		522		-		1,695
Total operating costs and expenses		-		-		8,766		6,138		-		14,904
Loss from operations		-		(18)		(468)		(449)		-		(935)
Interest expense, net		-		158		505		67		-		730
Loss from early extinguishment of debt		-		30		-		-		-		30
Gain on sale of investments in
unconsolidated affiliates		-		-		(94)		-		-		(94)
Equity in earnings of unconsolidated affiliates		1,500		1,339		482		-		(3,359)		(38)
Loss from continuing operations before income taxes		(1,500)		(1,545)		(1,361)		(516)		3,359		(1,563)
Provision for (benefit from) income taxes		-		(45)		(17)		(79)		-		(141)
Loss from continuing operations		(1,500)		(1,500)		(1,344)		(437)		3,359		(1,422)
Discontinued operations, net of taxes:
(Loss) income from operations of entities
sold or held for sale		-		-		(5)		1		-		(4)
Impairment of hospitals sold or held for sale		-		-		-		(1)		-		(1)
Loss from discontinued operations, net of taxes		-		-		(5)		-		-		(5)
Net loss		(1,500)		(1,500)		(1,349)		(437)		3,359		(1,427)
Less: Net income attributable to noncontrolling interests		-		-		-		73		-		73
Net loss attributable to Community Health Systems,
Inc. stockholders	$	(1,500)	$	(1,500)	$	(1,349)	$	(510)	$	3,359	$	(1,500)



Condensed Consolidating Statement of Income
Nine Months Ended September 30, 2015

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
	(In millions)
Operating revenues (net of contractual
allowances and discounts)	$	-	$	(14)	$	9,499	$	7,355	$	-	$	16,840
Provision for bad debts		-		-		1,252		949		-		2,201
Net operating revenues		-		(14)		8,247		6,406		-		14,639
Operating costs and expenses:
Salaries and benefits		-		-		3,254		3,460		-		6,714
Supplies		-		-		1,399		875		-		2,274
Other operating expenses		-		-		1,923		1,447		-		3,370
Government and other legal settlements and
related costs		-		-		1		-		-		1
Electronic health records incentive reimbursement		-		-		(84)		(51)		-		(135)
Rent		-		-		166		178		-		344
Depreciation and amortization		-		-		537		338		-		875
Impairment of long-lived assets		-		-		6		-		-		6
Total operating costs and expenses		-		-		7,202		6,247		-		13,449
(Loss) income from operations		-		(14)		1,045		159		-		1,190
Interest expense, net		-		74		569		80		-		723
Loss from early extinguishment of debt		-		16		-		-		-		16
Equity in earnings of unconsolidated affiliates		(241)		(318)		(27)		-		535		(51)
Income from continuing operations before income taxes		241		214		503		79		(535)		502
(Benefit from) provision for income taxes		-		(27)		190		4		-		167
Income from continuing operations		241		241		313		75		(535)		335
Discontinued operations, net of taxes:
Loss from operations of entities sold or held for sale		-		-		-		(22)		-		(22)
Impairment of hospitals sold or held for sale		-		-		(2)		-		-		(2)
Loss on sale, net		-		-		-		(3)		-		(3)
Loss from discontinued operations, net of taxes		-		-		(2)		(25)		-		(27)
Net income		241		241		311		50		(535)		308
Less: Net income attributable to noncontrolling interests		-		-		-		67		-		67
Net income (loss) attributable to Community Health
Systems, Inc. stockholders	$	241	$	241	$	311	$	(17)	$	(535)	$	241


Condensed Consolidating Statement of Comprehensive Loss
Three Months Ended September 30, 2016

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net (loss) income	$	(79)	$	(79)	$	(17)	$	8	$	111	$	(56)
Other comprehensive income (loss), net of income taxes:
Net change in fair value of interest rate swaps		10		10		-		-		(10)		10
Net change in fair value of available-for-sale securities		(7)		(7)		(7)		-		14		(7)
Amortization and recognition of unrecognized
pension cost components		-		-		-		-		-		-
Other comprehensive income (loss)		3		3		(7)		-		4		3
Comprehensive (loss) income		(76)		(76)		(24)		8		115		(53)
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		23		-		23
Comprehensive (loss) income attributable to
Community Health Systems, Inc. stockholders	$	(76)	$	(76)	$	(24)	$	(15)	$	115	$	(76)



Condensed Consolidating Statement of Comprehensive Income
Three Months Ended September 30, 2015

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net income	$	52	$	52	$	76	$	9	$	(114)	$	75
Other comprehensive (loss) income, net of income taxes:
Net change in fair value of interest rate swaps		(21)		(21)		-		-		21		(21)
Net change in fair value of available-for-sale securities		(9)		(9)		(9)		-		18		(9)
Amortization and recognition of unrecognized
pension cost components		1		1		1		-		(2)		1
Other comprehensive (loss) income		(29)		(29)		(8)		-		37		(29)
Comprehensive income		23		23		68		9		(77)		46
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		23		-		23
Comprehensive income (loss) attributable to
Community Health Systems, Inc. stockholders	$	23	$	23	$	68	$	(14)	$	(77)	$	23



Condensed Consolidating Statement of Comprehensive Loss
Nine Months Ended September 30, 2016

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net loss	$	(1,500)	$	(1,500)	$	(1,349)	$	(437)	$	3,359	$	(1,427)
Other comprehensive loss, net of income taxes:
Net change in fair value of interest rate swaps, net of tax		(11)		(11)		-		-		11		(11)
Net change in fair value of available-for-sale securities,
net of tax		(8)		(8)		(8)		-		16		(8)
Amortization and recognition of unrecognized pension
cost components, net of tax		3		3		3		-		(6)		3
Other comprehensive loss		(16)		(16)		(5)		-		21		(16)
Comprehensive loss		(1,516)		(1,516)		(1,354)		(437)		3,380		(1,443)
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		73		-		73
Comprehensive loss attributable to
Community Health Systems, Inc. stockholders	$	(1,516)	$	(1,516)	$	(1,354)	$	(510)	$	3,380	$	(1,516)



Condensed Consolidating Statement of Comprehensive Income
Nine Months Ended September 30, 2015

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net income	$	241	$	241	$	311	$	50	$	(535)	$	308
Other comprehensive loss, net of income taxes:
Net change in fair value of interest rate swaps, net of tax		(22)		(22)		-		-		22		(22)
Net change in fair value of available-for-sale securities,
net of tax		(10)		(10)		(10)		-		20		(10)
Amortization and recognition of unrecognized pension
cost components, net of tax		2		2		2		-		(4)		2
Other comprehensive loss		(30)		(30)		(8)		-		38		(30)
Comprehensive income		211		211		303		50		(497)		278
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		67		-		67
Comprehensive income (loss) attributable to
Community Health Systems, Inc. stockholders	$	211	$	211	$	303	$	(17)	$	(497)	$	211



Condensed Consolidating Balance Sheet
September 30, 2016
	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated

	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	-	$	18	$	115	$	-	$	133
Patient accounts receivable, net of allowance
for doubtful accounts		-		-		850		2,329		-		3,179
Supplies		-		-		356		171		-		527
Prepaid income taxes		33		-		-		-		-		33
Prepaid expenses and taxes		-		-		144		64		-		208
Other current assets		-		-		259		202		-		461
Total current assets		33		-		1,627		2,881		-		4,541
Intercompany receivable		229		15,243		2,677		6,838		(24,987)		-
Property and equipment, net		-		-		5,854		2,976		-		8,830
Goodwill		-		-		4,027		2,874		-		6,901
Other assets, net		-		-		2,203		926		(1,174)		1,955
Net investment in subsidiaries		1,928		21,769		8,523		-		(32,220)		-
Total assets	$	2,190	$	37,012	$	24,911	$	16,495	$	(58,381)	$	22,227

LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	-	$	170	$	61	$	9	$	-	$	240
Accounts payable		-		-		697		321		-		1,018
Accrued interest		-		149		1		1		-		151
Accrued liabilities		4		-		753		520		-		1,277
Total current liabilities		4		319		1,512		851		-		2,686
Long-term debt		-		14,240		106		736		-		15,082
Intercompany payable		-		19,275		19,501		13,419		(52,195)		-
Deferred income taxes		357		-		-		-		-		357
Other long-term liabilities		8		1,253		1,167		368		(1,174)		1,622
Total liabilities		369		35,087		22,286		15,374		(53,369)		19,747
Redeemable noncontrolling interests in
equity of consolidated subsidiaries		-		-		-		553		-		553
Equity:
Community Health Systems, Inc. stockholders’
equity:
Preferred stock		-		-		-		-		-		-
Common stock		1		-		-		-		-		1
Additional paid-in capital		1,967		759		998		769		(2,526)		1,967
Treasury stock, at cost		-		-		-		-		-		-
Accumulated other comprehensive loss		(87)		(87)		(21)		(6)		114		(87)
(Accumulated deficit) retained earnings		(60)		1,253		1,648		(301)		(2,600)		(60)
Total Community Health Systems, Inc.
stockholders’ equity		1,821		1,925		2,625		462		(5,012)		1,821
Noncontrolling interests in equity of
consolidated subsidiaries		-		-		-		106		-		106
Total equity		1,821		1,925		2,625		568		(5,012)		1,927
Total liabilities and equity	$	2,190	$	37,012	$	24,911	$	16,495	$	(58,381)	$	22,227



Condensed Consolidating Balance Sheet
December 31, 2015
	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated

	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	-	$	32	$	152	$	-	$	184
Patient accounts receivable, net of allowance
for doubtful accounts		-		-		894		2,717		-		3,611
Supplies		-		-		355		225		-		580
Prepaid income taxes		27		-		-		-		-		27
Prepaid expenses and taxes		-		-		125		72		-		197
Other current assets		-		-		335		232		-		567
Total current assets		27		-		1,741		3,398		-		5,166
Intercompany receivable		1,159		16,004		4,590		7,478		(29,231)		-
Property and equipment, net		-		-		6,199		3,913		-		10,112
Goodwill		-		-		4,965		4,000		-		8,965
Other assets, net		-		-		2,018		1,379		(1,045)		2,352
Net investment in subsidiaries		3,438		20,218		9,414		-		(33,070)		-
Total assets	$	4,624	$	36,222	$	28,927	$	20,168	$	(63,346)	$	26,595

LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	-	$	162	$	62	$	5	$	-	$	229
Accounts payable		-		-		774		484		-		1,258
Accrued interest		-		226		-		1		-		227
Accrued liabilities		4		-		814		540		-		1,358
Total current liabilities		4		388		1,650		1,030		-		3,072
Long-term debt		-		15,603		136		817		-		16,556
Intercompany payable		-		15,577		22,143		16,196		(53,916)		-
Deferred income taxes		593		-		-		-		-		593
Other long-term liabilities		8		1,216		1,028		491		(1,045)		1,698
Total liabilities		605		32,784		24,957		18,534		(54,961)		21,919
Redeemable noncontrolling interests in
equity of consolidated subsidiaries		-		-		-		571		-		571
Equity:
Community Health Systems, Inc. stockholders’
equity:
Preferred stock		-		-		-		-		-		-
Common stock		1		-		-		-		-		1
Additional paid-in capital		1,963		1,324		1,505		964		(3,793)		1,963
Treasury stock, at cost		(7)		-		-		-		-		(7)
Accumulated other comprehensive loss		(73)		(73)		(22)		(1)		96		(73)
Retained earnings		2,135		2,187		2,487		14		(4,688)		2,135
Total Community Health Systems, Inc.
stockholders’ equity		4,019		3,438		3,970		977		(8,385)		4,019
Noncontrolling interests in equity of
consolidated subsidiaries		-		-		-		86		-		86
Total equity		4,019		3,438		3,970		1,063		(8,385)		4,105
Total liabilities and equity	$	4,624	$	36,222	$	28,927	$	20,168	$	(63,346)	$	26,595



Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2016

	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated
	(In millions)
Net cash (used in) provided by operating
activities	$	(13)	$	(322)	$	742	$	403	$	-	$	810

Cash flows from investing activities:
Acquisitions of facilities and other related
equipment		-		-		(3)		(119)		-		(122)
Purchases of property and equipment		-		-		(386)		(175)		-		(561)
Proceeds from disposition of hospitals
and other ancillary operations		-		-		13		(1)		-		12
Proceeds from sale of property and equipment		-		-		6		4		-		10
Purchases of available-for-sale securities		-		-		(171)		(224)		-		(395)
Proceeds from sales of available-for-sale securities		-		-		157		229		-		386
Proceeds from sale of investments in
unconsolidated affiliates		-		-		403		-		-		403
Distribution from Quorum Health Corporation		-		1,219		-		-		-		1,219
Increase in other investments		-		-		(149)		(52)		-		(201)
Net cash provided by (used in) investing
activities		-		1,219		(130)		(338)		-		751

Cash flows from financing activities:
Repurchase of restricted stock shares for payroll
tax withholding requirements		(5)		-		-		-		-		(5)
Deferred financing costs and other
debt-related costs		-		(22)		-		-		-		(22)
Redemption of noncontrolling investments in joint
ventures		-		-		-		(19)		-		(19)
Distributions to noncontrolling investors in joint
ventures		-		-		-		(69)		-		(69)
Changes in intercompany balances with
affiliates, net		18		530		(597)		49		-		-
Borrowings under credit agreements		-		3,905		23		1		-		3,929
Proceeds from receivables facility		-		-		-		66		-		66
Repayments of long-term indebtedness		-		(5,310)		(52)		(130)		-		(5,492)
Net cash provided by (used in) financing
activities		13		(897)		(626)		(102)		-		(1,612)
Net change in cash and cash equivalents		-		-		(14)		(37)		-		(51)
Cash and cash equivalents at beginning of period		-		-		32		152		-		184
Cash and cash equivalents at end of period	$	-	$	-	$	18	$	115	$	-	$	133



Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2015

	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated
	(In millions)
Net cash (used in) provided by operating
activities	$	(14)	$	(220)	$	309	$	540	$	-	$	615

Cash flows from investing activities:
Acquisitions of facilities and other related
equipment		-		-		(20)		(21)		-		(41)
Purchases of property and equipment		-		-		(466)		(230)		-		(696)
Proceeds from disposition of hospitals
and other ancillary operations		-		-		20		67		-		87
Proceeds from sale of property and equipment		-		-		6		7		-		13
Purchases of available-for-sale securities		-		-		(42)		(85)		-		(127)
Proceeds from sales of available-for-sale securities		-		-		38		85		-		123
Increase in other investments		-		-		(76)		(60)		-		(136)
Net cash used in investing activities		-		-		(540)		(237)		-		(777)

Cash flows from financing activities:
Proceeds from exercise of stock options		24		-		-		-		-		24
Repurchase of restricted stock shares for payroll
tax withholding requirements		(20)		-		-		-		-		(20)
Deferred financing costs and other
debt-related costs		-		(30)		-		-		-		(30)
Redemption of noncontrolling investments in joint
ventures		-		-		-		(18)		-		(18)
Distributions to noncontrolling investors in joint
ventures		-		-		-		(69)		-		(69)
Changes in intercompany balances with
affiliates, net		10		260		(100)		(170)		-		-
Borrowings under credit agreements		-		3,220		30		214		-		3,464
Proceeds from receivables facility		-		-		-		112		-		112
Repayments of long-term indebtedness		-		(3,230)		(44)		(350)		-		(3,624)
Net cash provided by (used in) financing
activities		14		220		(114)		(281)		-		(161)
Net change in cash and cash equivalents		-		-		(345)		22		-		(323)
Cash and cash equivalents at beginning of period		-		-		373		136		-		509
Cash and cash equivalents at end of period	$	-	$	-	$	28	$	158	$	-	$	186