20. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Senior Notes due 2019, 2020 and 2022, which are senior unsecured obligations of CHS, the 5⅛% Senior Secured Notes due 2021, and the 6¼% Senior Secured Notes due 2023 (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 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’ (deficit) 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 7. 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 and non-guarantors as of December 31, 2017.



Condensed Consolidating Statement of Loss
Year Ended December 31, 2017

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
	(In millions)
Operating revenues (net of contractual
allowances and discounts)	$	-	$	(22)	$	10,765	$	7,655	$	-	$	18,398
Provision for bad debts		-		-		2,063		982		-		3,045
Net operating revenues		-		(22)		8,702		6,673		-		15,353
Operating costs and expenses:
Salaries and benefits		-		-		3,614		3,762		-		7,376
Supplies		-		-		1,628		1,044		-		2,672
Other operating expenses		-		-		2,376		1,488		-		3,864
Government and other legal settlements and
related costs		-		-		(31)		-		-		(31)
Electronic health records incentive reimbursement		-		-		(12)		(16)		-		(28)
Rent		-		-		198		196		-		394
Depreciation and amortization		-		-		501		360		-		861
Impairment and (gain) loss on sale of businesses, net		-		-		1,212		911		-		2,123
Total operating costs and expenses		-		-		9,486		7,745		-		17,231
Loss from operations		-		(22)		(784)		(1,072)		-		(1,878)
Interest expense, net		-		327		587		17		-		931
Loss from early extinguishment of debt		-		40		-		-		-		40
Equity in earnings of unconsolidated affiliates		2,459		1,955		865		-		(5,295)		(16)
Loss from continuing operations
before income taxes		(2,459)		(2,344)		(2,236)		(1,089)		5,295		(2,833)
Provision for (benefit from) income taxes		-		115		(297)		(267)		-		(449)
Loss from continuing operations		(2,459)		(2,459)		(1,939)		(822)		5,295		(2,384)
Discontinued operations, net of taxes:
Loss from operations of entities sold or
held for sale		-		-		(4)		(2)		-		(6)
Impairment of hospitals sold or held for sale		-		-		(5)		(1)		-		(6)
Loss from discontinued operations, net of taxes		-		-		(9)		(3)		-		(12)
Net loss		(2,459)		(2,459)		(1,948)		(825)		5,295		(2,396)
Less: Net income attributable to noncontrolling interests		-		-		-		63		-		63
Net loss attributable to Community
Health Systems, Inc. stockholders	$	(2,459)	$	(2,459)	$	(1,948)	$	(888)	$	5,295	$	(2,459)



Condensed Consolidating Statement of Loss
Year Ended December 31, 2016

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
	(In millions)
Operating revenues (net of contractual
allowances and discounts)	$	-	$	(25)	$	11,089	$	10,211	$	-	$	21,275
Provision for bad debts		-		-		1,707		1,130		-		2,837
Net operating revenues		-		(25)		9,382		9,081		-		18,438
Operating costs and expenses:
Salaries and benefits		-		-		3,754		4,870		-		8,624
Supplies		-		-		1,660		1,351		-		3,011
Other operating expenses		-		-		2,238		2,010		-		4,248
Government and other legal settlements and
related costs		-		-		16		-		-		16
Electronic health records incentive reimbursement		-		-		(37)		(33)		-		(70)
Rent		-		-		199		251		-		450
Depreciation and amortization		-		-		614		486		-		1,100
Impairment and (gain) loss on sale of businesses, net		-		-		1,262		657		-		1,919
Total operating costs and expenses		-		-		9,706		9,592		-		19,298
Loss from operations		-		(25)		(324)		(511)		-		(860)
Interest expense, net		-		241		631		90		-		962
Loss from early extinguishment of debt		-		30		-		-		-		30
Gain on sale of investments in
unconsolidated affiliates		-		-		(94)		-		-		(94)
Equity in earnings of unconsolidated affiliates		1,721		1,466		585		-		(3,815)		(43)
Loss from continuing operations before
income taxes		(1,721)		(1,762)		(1,446)		(601)		3,815		(1,715)
(Benefit from) provision for income taxes		-		(41)		19		(82)		-		(104)
Loss from continuing operations		(1,721)		(1,721)		(1,465)		(519)		3,815		(1,611)
Discontinued operations, net of taxes:
(Loss) income from operations of entities sold or
held for sale		-		-		(9)		2		-		(7)
Impairment of hospitals sold or held for sale		-		-		(1)		(7)		-		(8)
Loss from discontinued operations, net of taxes		-		-		(10)		(5)		-		(15)
Net loss		(1,721)		(1,721)		(1,475)		(524)		3,815		(1,626)
Less: Net income attributable to noncontrolling interests		-		-		-		95		-		95
Net loss attributable to Community Health
Systems, Inc. stockholders	$	(1,721)	$	(1,721)	$	(1,475)	$	(619)	$	3,815	$	(1,721)



Condensed Consolidating Statement of Income
Year Ended December 31, 2015

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
	(In millions)
Operating revenues (net of contractual
allowances and discounts)	$	-	$	(20)	$	11,063	$	11,521	$	-	$	22,564
Provision for bad debts		-		-		1,944		1,183		-		3,127
Net operating revenues		-		(20)		9,119		10,338		-		19,437
Operating costs and expenses:
Salaries and benefits		-		-		3,688		5,303		-		8,991
Supplies		-		-		1,586		1,462		-		3,048
Other operating expenses		-		-		2,120		2,400		-		4,520
Government and other legal settlements and
related costs		-		-		4		-		-		4
Electronic health records incentive reimbursement		-		-		(76)		(84)		-		(160)
Rent		-		-		189		268		-		457
Depreciation and amortization		-		-		615		557		-		1,172
Impairment and (gain) loss on sale of businesses, net		-		-		55		13		-		68
Total operating costs and expenses		-		-		8,181		9,919		-		18,100
(Loss) income from operations		-		(20)		938		419		-		1,337
Interest expense, net		-		107		717		149		-		973
Loss from early extinguishment of debt		-		16		-		-		-		16
Equity in earnings of unconsolidated affiliates		(158)		(220)		(125)		-		440		(63)
Income from continuing operations before
income taxes		158		77		346		270		(440)		411
(Benefit from) provision for income taxes		-		(81)		130		67		-		116
Income from continuing operations		158		158		216		203		(440)		295
Discontinued operations, net of taxes:
Loss from operations of entities sold or
held for sale		-		-		(7)		(20)		-		(27)
Impairment of hospitals sold or held for sale		-		-		-		(5)		-		(5)
Loss on sale, net		-		-		-		(4)		-		(4)
Loss from discontinued operations, net of taxes		-		-		(7)		(29)		-		(36)
Net income		158		158		209		174		(440)		259
Less: Net income attributable to noncontrolling interests		-		-		-		101		-		101
Net income attributable to Community Health
Systems, Inc. stockholders	$	158	$	158	$	209	$	73	$	(440)	$	158



Condensed Consolidating Statement of Comprehensive Loss
Year Ended December 31, 2017

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net loss	$	(2,459)	$	(2,459)	$	(1,948)	$	(825)	$	5,295	$	(2,396)
Other comprehensive income, net of income taxes:
Net change in fair value of interest rate swaps, net of tax		19		19		-		-		(19)		19
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		14		14		14		-		(28)		14
Other comprehensive income		41		41		22		-		(63)		41
Comprehensive loss		(2,418)		(2,418)		(1,926)		(825)		5,232		(2,355)
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		63		-		63
Comprehensive loss attributable to
Community Health Systems, Inc. stockholders	$	(2,418)	$	(2,418)	$	(1,926)	$	(888)	$	5,232	$	(2,418)



Condensed Consolidating Statement of Comprehensive Loss
Year Ended December 31, 2016

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net loss	$	(1,721)	$	(1,721)	$	(1,475)	$	(524)	$	3,815	$	(1,626)
Other comprehensive income (loss), net of income taxes:
Net change in fair value of interest rate swaps, net of tax		17		17		-		-		(17)		17
Net change in fair value of available-for-sale securities,
net of tax		(11)		(11)		(11)		-		22		(11)
Amortization and recognition of unrecognized pension
cost components, net of tax		3		3		3		-		(6)		3
Other comprehensive income (loss)		9		9		(8)		-		(1)		9
Comprehensive loss		(1,712)		(1,712)		(1,483)		(524)		3,814		(1,617)
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		95		-		95
Comprehensive loss attributable to
Community Health Systems, Inc. stockholders	$	(1,712)	$	(1,712)	$	(1,483)	$	(619)	$	3,814	$	(1,712)



Condensed Consolidating Statement of Comprehensive Income
Year Ended December 31, 2015

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net income	$	158	$	158	$	209	$	174	$	(440)	$	259
Other comprehensive (loss) income, net of income taxes:
Net change in fair value of interest rate swaps, net of tax		(6)		(6)		-		-		6		(6)
Net change in fair value of available-for-sale securities,
net of tax		(5)		(5)		(5)		-		10		(5)
Amortization and recognition of unrecognized pension
cost components, net of tax		1		1		1		-		(2)		1
Other comprehensive loss		(10)		(10)		(4)		-		14		(10)
Comprehensive income		148		148		205		174		(426)		249
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		101		-		101
Comprehensive income attributable to
Community Health Systems, Inc. stockholders	$	148	$	148	$	205	$	73	$	(426)	$	148



Condensed Consolidating Balance Sheet
December 31, 2017
	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated

	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	-	$	497	$	66	$	-	$	563
Patient accounts receivable, net of allowance
for doubtful accounts		-		-		355		2,029		-		2,384
Supplies		-		-		288		156		-		444
Prepaid income taxes		17		-		-		-		-		17
Prepaid expenses and taxes		-		-		146		52		-		198
Other current assets		-		-		152		310		-		462
Total current assets		17		-		1,438		2,613		-		4,068
Intercompany receivable		-		13,381		5,857		7,109		(26,347)		-
Property and equipment, net		-		-		4,448		2,604		-		7,052
Goodwill						2,882		1,841		-		4,723
Deferred income taxes		62		-		-		-		-		62
Other assets, net		15		39		1,594		939		(1,042)		1,545
Net investment in subsidiaries		-		21,717		10,890		-		(32,607)		-
Total assets	$	94	$	35,137	$	27,109	$	15,106	$	(59,996)	$	17,450
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	-	$	-	$	25	$	8	$	-	$	33
Accounts payable		-		-		663		304		-		967
Accrued interest		-		228		-		1		-		229
Accrued liabilities		-		-		644		483		-		1,127
Total current liabilities		-		228		1,332		796		-		2,356
Long-term debt		-		12,998		216		666		-		13,880
Intercompany payable		833		21,582		24,028		13,310		(59,753)		-
Deferred income taxes		19		-		-		-		-		19
Other long-term liabilities		9		1,018		997		378		(1,042)		1,360
Total liabilities		861		35,826		26,573		15,150		(60,795)		17,615
Redeemable noncontrolling interests in
equity of consolidated subsidiaries		-		-		-		527		-		527
Equity:
Community Health Systems, Inc. stockholders’
(deficit) equity:
Common stock		1		-		-		-		-		1
Additional paid-in capital		2,014		(252)		204		234		(186)		2,014
Accumulated other comprehensive loss		(21)		(21)		(4)		(4)		29		(21)
(Accumulated deficit) retained earnings		(2,761)		(416)		336		(876)		956		(2,761)
Total Community Health Systems, Inc.
stockholders’ (deficit) equity		(767)		(689)		536		(646)		799		(767)
Noncontrolling interests in equity of
consolidated subsidiaries		-		-		-		75		-		75
Total (deficit) equity		(767)		(689)		536		(571)		799		(692)
Total liabilities and equity	$	94	$	35,137	$	27,109	$	15,106	$	(59,996)	$	17,450



Condensed Consolidating Balance Sheet
December 31, 2016
	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated

	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	-	$	174	$	64	$	-	$	238
Patient accounts receivable, net of allowance
for doubtful accounts		-		-		799		2,377		-		3,176
Supplies		-		-		297		183		-		480
Prepaid income taxes		17		-		-		-		-		17
Prepaid expenses and taxes		-		-		124		63		-		187
Other current assets		-		-		158		410		-		568
Total current assets		17		-		1,552		3,097		-		4,666
Intercompany receivable		295		14,996		3,150		7,597		(26,038)		-
Property and equipment, net		-		-		4,965		3,184		-		8,149
Goodwill		-		-		3,947		2,574		-		6,521
Deferred income taxes		15		-		-		-		-		15
Other assets, net		-		-		1,869		1,946		(1,222)		2,593
Net investment in subsidiaries		1,728		21,224		10,122		-		(33,074)		-
Total assets	$	2,055	$	36,220	$	25,605	$	18,398	$	(60,334)	$	21,944
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	-	$	149	$	53	$	253	$	-	$	455
Accounts payable		-		-		628		367		-		995
Accrued interest		-		205		1		1		-		207
Accrued liabilities		17		-		626		587		-		1,230
Total current liabilities		17		354		1,308		1,208		-		2,887
Long-term debt		-		14,018		232		539		-		14,789
Intercompany payable		-		18,861		20,517		15,071		(54,449)		-
Deferred income taxes		411		-		-		-		-		411
Other long-term liabilities		12		1,259		1,082		444		(1,222)		1,575
Total liabilities		440		34,492		23,139		17,262		(55,671)		19,662
Redeemable noncontrolling interests in
equity of consolidated subsidiaries		-		-		-		554		-		554
Equity:
Community Health Systems, Inc. stockholders’
equity:
Common stock		1		-		-		-		-		1
Additional paid-in capital		1,975		675		939		768		(2,382)		1,975
Accumulated other comprehensive loss		(62)		(62)		(22)		(9)		93		(62)
(Accumulated deficit) retained earnings		(299)		1,115		1,549		(290)		(2,374)		(299)
Total Community Health Systems, Inc.
stockholders’ equity		1,615		1,728		2,466		469		(4,663)		1,615
Noncontrolling interests in equity of
consolidated subsidiaries		-		-		-		113		-		113
Total equity		1,615		1,728		2,466		582		(4,663)		1,728
Total liabilities and equity	$	2,055	$	36,220	$	25,605	$	18,398	$	(60,334)	$	21,944



Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2017

	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated
	(In millions)
Net cash (used in) provided by operating
activities	$	(12)	$	(317)	$	750	$	352	$	-	$	773

Cash flows from investing activities:
Acquisitions of facilities and other related
businesses		-		-		(1)		(5)		-		(6)
Purchases of property and equipment		-		-		(365)		(199)		-		(564)
Proceeds from disposition of hospitals
and other ancillary operations		-		-		596		1,096		-		1,692
Proceeds from sale of property and equipment		-		-		4		3		-		7
Purchases of available-for-sale securities		-		-		(91)		(34)		-		(125)
Proceeds from sales of available-for-sale securities		-		-		154		54		-		208
Increase in other investments		-		-		(106)		(37)		-		(143)
Net cash provided by investing activities		-		-		191		878		-		1,069

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		-		(65)		-		(1)		-		(66)
Proceeds from noncontrolling investors in
joint ventures		-		-		-		5		-		5
Redemption of noncontrolling investments in
joint ventures		-		-		-		(6)		-		(6)
Distributions to noncontrolling investors in
joint ventures		-		-		-		(100)		-		(100)
Changes in intercompany balances with
affiliates, net		17		1,566		(575)		(1,008)		-		-
Borrowings under credit agreements		-		795		30		16		-		841
Issuance of long-term debt		-		3,100		-		-		-		3,100
Proceeds from receivables facility		-		-		-		105		-		105
Repayments of long-term indebtedness		-		(5,079)		(73)		(239)		-		(5,391)
Net cash provided by (used in) financing
activities		12		317		(618)		(1,228)		-		(1,517)
Net change in cash and cash equivalents		-		-		323		2		-		325
Cash and cash equivalents at beginning of period		-		-		174		64		-		238
Cash and cash equivalents at end of period	$	-	$	-	$	497	$	66	$	-	$	563



Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2016

	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated
	(In millions)
Net cash provided by (used in) operating
activities	$	14	$	(335)	$	1,218	$	240	$	-	$	1,137

Cash flows from investing activities:
Acquisitions of facilities and other related
businesses		-		-		(3)		(120)		-		(123)
Purchases of property and equipment		-		-		(474)		(270)		-		(744)
Proceeds from disposition of hospitals
and other ancillary operations		-		-		16		127		-		143
Proceeds from sale of property and equipment		-		-		6		9		-		15
Purchases of available-for-sale securities		-		-		(263)		(242)		-		(505)
Proceeds from sales of available-for-sale securities		-		-		218		246		-		464
Proceeds from sale of investments in
unconsolidated affiliates		-		-		403		-		-		403
Distribution from Quorum Health Corporation		-		1,219		-		-		-		1,219
Increase in other investments		-		-		(156)		(86)		-		(242)
Net cash provided by (used in)
investing activities		-		1,219		(253)		(336)		-		630

Cash flows from financing activities:
Repurchase of restricted stock shares for payroll
tax withholding requirements		(6)		-		-		-		-		(6)
Deferred financing costs and other
debt-related costs		-		(26)		-		-		-		(26)
Redemption of noncontrolling investments in joint
ventures		-		-		-		(19)		-		(19)
Distributions to noncontrolling investors in joint
ventures		-		-		-		(92)		-		(92)
Changes in intercompany balances with
affiliates, net		(8)		801		(925)		132		-		-
Proceeds from sale-lease back		-		-		147		12		-		159
Borrowings under credit agreements		-		4,848		28		3		-		4,879
Proceeds from receivables facility		-		-		-		107		-		107
Repayments of long-term indebtedness		-		(6,507)		(64)		(144)		-		(6,715)
Net cash (used in) provided by financing
activities		(14)		(884)		(814)		(1)		-		(1,713)
Net change in cash and cash equivalents		-		-		151		(97)		-		54
Cash and cash equivalents at beginning of period		-		-		23		161		-		184
Cash and cash equivalents at end of period	$	-	$	-	$	174	$	64	$	-	$	238



Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2015

	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated
	(In millions)
Net cash (used in) provided by operating
activities	$	(25)	$	159	$	349	$	438	$	-	$	921

Cash flows from investing activities:
Acquisitions of facilities and other related
businesses		-		-		(21)		(36)		-		(57)
Purchases of property and equipment		-		-		(600)		(353)		-		(953)
Proceeds from disposition of hospitals and other
ancillary operations		-		-		21		134		-		155
Proceeds from sale of property and equipment		-		-		6		9		-		15
Purchases of available-for-sale securities		-		-		(53)		(109)		-		(162)
Proceeds from sales of available-for-sale securities		-		-		46		110		-		156
Increase in other investments		-		-		(143)		(62)		-		(205)
Net cash used in investing activities		-		-		(744)		(307)		-		(1,051)

Cash flows from financing activities:
Proceeds from exercise of stock options		25		-		-		-		-		25
Repurchase of restricted stock shares for payroll
tax withholding requirements		(20)		-		-		-		-		(20)
Stock buy-back		(159)		-		-		-		-		(159)
Deferred financing costs and other
debt-related costs		-		(30)		-		-		-		(30)
Proceeds from noncontrolling investors in joint
ventures		-		-		-		47		-		47
Redemption of noncontrolling investments in joint
ventures		-		-		-		(36)		-		(36)
Distributions to noncontrolling investors in joint
ventures		-		-		-		(100)		-		(100)
Changes in intercompany balances with
affiliates, net		179		(181)		89		(87)		-		-
Borrowings under credit agreements		-		4,880		34		8		-		4,922
Proceeds from receivables facility		-		-		-		206		-		206
Repayments of long-term indebtedness		-		(4,828)		(77)		(145)		-		(5,050)
Net cash provided by (used in) financing
activities		25		(159)		46		(107)		-		(195)
Net change in cash and cash equivalents		-		-		(349)		24		-		(325)
Cash and cash equivalents at beginning of period		-		-		372		137		-		509
Cash and cash equivalents at end of period	$	-	$	-	$	23	$	161	$	-	$	184