16. 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 registered securities and are guaranteed on a senior basis by the Company and by certain of its existing and subsequently acquired or organized 100% owned domestic subsidiaries. In addition, equity interests in non-guarantors have been pledged as collateral except for three hospitals owned jointly with non-profit, health organizations. 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’ deficit. 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 ABL Facility and Receivables Facility that are further discussed in Note 10. 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. Amounts for prior periods have been revised to reflect the status of guarantors and non-guarantors as of September 30, 2018.



Condensed Consolidating Statement of Loss
Three Months Ended September 30, 2018

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated

	(In millions)
Net operating revenues	$	-	$	1	$	2,095	$	1,355	$	-	$	3,451
Operating costs and expenses:
Salaries and benefits		-		-		804		781		-		1,585
Supplies		-		-		365		200		-		565
Other operating expenses		-		-		572		286		-		858
Government and other legal settlements and
related costs		-		-		2		-		-		2
Electronic health records incentive reimbursement		-		-		-		(1)		-		(1)
Rent		-		-		43		40		-		83
Depreciation and amortization		-		-		107		66		-		173
Impairment and (gain) loss on sale of businesses, net		-		15		76		21		-		112
Total operating costs and expenses		-		15		1,969		1,393		-		3,377
(Loss) income from operations		-		(14)		126		(38)		-		74
Interest expense, net		-		115		149		(8)		-		256
Loss from early extinguishment of debt		-		27		-		-		-		27
Equity in earnings of unconsolidated affiliates		325		272		(39)		-		(563)		(5)
(Loss) income from continuing operations before
income taxes		(325)		(428)		16		(30)		563		(204)
(Benefit from) provision for income taxes		-		(103)		293		(86)		-		104
(Loss) income from continuing operations		(325)		(325)		(277)		56		563		(308)
Discontinued operations, net of taxes:
Loss from discontinued operations, net of taxes		-		-		-		-		-		-
Net (loss) income		(325)		(325)		(277)		56		563		(308)
Less: Net income attributable to noncontrolling interests		-		-		-		17		-		17
Net (loss) income attributable to Community Health
Systems, Inc. stockholders	$	(325)	$	(325)	$	(277)	$	39	$	563	$	(325)



Condensed Consolidating Statement of Loss
Three Months Ended September 30, 2017

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
	(In millions)
Operating revenues (net of contractual
allowances and discounts)	$	-	$	(5)	$	2,661	$	1,677	$	-	$	4,333
Provision for bad debts		-		-		440		227		-		667
Net operating revenues		-		(5)		2,221		1,450		-		3,666
Operating costs and expenses:
Salaries and benefits		-		-		897		827		-		1,724
Supplies		-		-		399		211		-		610
Other operating expenses		-		-		593		318		-		911
Government and other legal settlements and
related costs		-		-		1		-		-		1
Electronic health records incentive reimbursement		-		-		(1)		(1)		-		(2)
Rent		-		-		50		43		-		93
Depreciation and amortization		-		-		127		79		-		206
Impairment and (gain) loss on sale of businesses, net		-		-		29		4		-		33
Total operating costs and expenses		-		-		2,095		1,481		-		3,576
(Loss) income from operations		-		(5)		126		(31)		-		90
Interest expense, net		-		84		156		(2)		-		238
Loss from early extinguishment of debt		-		4		-		-		-		4
Equity in earnings of unconsolidated affiliates		110		28		22		-		(165)		(5)
Loss from continuing operations before income taxes		(110)		(121)		(52)		(29)		165		(147)
(Benefit from) provision for income taxes		-		(11)		(22)		(26)		-		(59)
(Loss) income from continuing operations		(110)		(110)		(30)		(3)		165		(88)
Discontinued operations, net of taxes:
Loss from operations of entities sold or
held for sale		-		-		(1)		-		-		(1)
Impairment of hospitals sold or held for sale		-		-		-		(1)		-		(1)
Loss from discontinued operations, net of taxes		-		-		(1)		(1)		-		(2)
Net (loss) income		(110)		(110)		(31)		(4)		165		(90)
Less: Net income attributable to noncontrolling interests		-		-		-		20		-		20
Net (loss) income attributable to Community Health
Systems, Inc. stockholders	$	(110)	$	(110)	$	(31)	$	(24)	$	165	$	(110)



Condensed Consolidating Statement of Loss
Nine Months Ended September 30, 2018

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated

	(In millions)
Net operating revenues	$	-	$	(7)	$	6,488	$	4,221	$	-	$	10,702
Operating costs and expenses:
Salaries and benefits		-		-		2,437		2,413		-		4,850
Supplies		-		-		1,148		625		-		1,773
Other operating expenses		-		-		1,742		904		-		2,646
Government and other legal settlements and
related costs		-		-		9		-		-		9
Electronic health records incentive reimbursement		-		-		-		(2)		-		(2)
Rent		-		-		133		124		-		257
Depreciation and amortization		-		-		329		202		-		531
Impairment and (gain) loss on sale of businesses, net		-		29		96		189		-		314
Total operating costs and expenses		-		29		5,894		4,455		-		10,378
(Loss) income from operations		-		(36)		594		(234)		-		324
Interest expense, net		-		304		434		(18)		-		720
(Gain) loss from early extinguishment of debt		-		(33)		1		-		-		(32)
Equity in earnings of unconsolidated affiliates		460		351		181		-		(1,009)		(17)
Loss from continuing operations
before income taxes		(460)		(658)		(22)		(216)		1,009		(347)
(Benefit from) provision for income taxes		-		(198)		342		(86)		-		58
(Loss) income from continuing operations		(460)		(460)		(364)		(130)		1,009		(405)
Loss from discontinued operations, net of taxes		-		-		-		-		-		-
Net (loss) income		(460)		(460)		(364)		(130)		1,009		(405)
Less: Net income attributable to noncontrolling interests		-		-		-		55		-		55
Net (loss) income attributable to Community
Health Systems, Inc. stockholders	$	(460)	$	(460)	$	(364)	$	(185)	$	1,009	$	(460)



Condensed Consolidating Statement of Loss
Nine Months Ended September 30, 2017

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated

	(In millions)
Operating revenues (net of contractual
allowances and discounts)	$	-	$	(17)	$	8,252	$	6,088	$	-	$	14,323
Provision for bad debts		-		-		1,306		722		-		2,028
Net operating revenues		-		(17)		6,946		5,366		-		12,295
Operating costs and expenses:
Salaries and benefits		-		-		2,721		2,983		-		5,704
Supplies		-		-		1,240		816		-		2,056
Other operating expenses		-		-		1,797		1,187		-		2,984
Government and other legal settlements and
related costs		-		-		(32)		-		-		(32)
Electronic health records incentive reimbursement		-		-		(12)		(13)		-		(25)
Rent		-		-		152		154		-		306
Depreciation and amortization		-		-		376		289		-		665
Impairment and (gain) loss on sale of businesses, net		-		-		108		255		-		363
Total operating costs and expenses		-		-		6,350		5,671		-		12,021
(Loss) income from operations		-		(17)		596		(305)		-		274
Interest expense, net		-		241		456		9		-		706
Loss from early extinguishment of debt		-		35		-		-		-		35
Equity in earnings of unconsolidated affiliates		446		198		256		-		(913)		(13)
Loss from continuing operations before
income taxes		(446)		(491)		(116)		(314)		913		(454)
(Benefit from) provision for income taxes		-		(45)		87		(116)		-		(74)
Loss from continuing operations		(446)		(446)		(203)		(198)		913		(380)
Discontinued operations, net of taxes:
Loss from operations of entities sold or
held for sale		-		-		(3)		(1)		-		(4)
Impairment of hospitals sold or held for sale		-		-		(4)		(2)		-		(6)
Loss from discontinued operations, net of taxes		-		-		(7)		(3)		-		(10)
Net (loss) income		(446)		(446)		(210)		(201)		913		(390)
Less: Net income attributable to noncontrolling interests		-		-		-		56		-		56
Net (loss) income attributable to Community Health
Systems, Inc. stockholders	$	(446)	$	(446)	$	(210)	$	(257)	$	913	$	(446)


Condensed Consolidating Statement of Comprehensive Loss
Three Months Ended September 30, 2018

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net (loss) income	$	(325)	$	(325)	$	(277)	$	56	$	563	$	(308)
Other comprehensive income (loss), net of income taxes:
Net change in fair value of interest rate swaps, net of tax		2		2		-		-		(2)		2
Net change in fair value of available-for-sale securities,
net of tax		-		-		-		-		-		-
Amortization and recognition of unrecognized
pension cost components, net of tax		-		-		-		-		-		-
Other comprehensive income (loss)		2		2		-		-		(2)		2
Comprehensive (loss) income		(323)		(323)		(277)		56		561		(306)
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		17		-		17
Comprehensive (loss) income attributable to
Community Health Systems, Inc. stockholders	$	(323)	$	(323)	$	(277)	$	39	$	561	$	(323)



Condensed Consolidating Statement of Comprehensive Loss
Three Months Ended September 30, 2017

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net (loss) income	$	(110)	$	(110)	$	(31)	$	(4)	$	165	$	(90)
Other comprehensive (loss) income, net of income taxes:
Net change in fair value of interest rate swaps, net of tax		5		5		-		-		(5)		5
Net change in fair value of available-for-sale securities,
net of tax		2		2		2		-		(4)		2
Amortization and recognition of unrecognized
pension cost components, net of tax		1		1		1		-		(2)		1
Other comprehensive income		8		8		3		-		(11)		8
Comprehensive (loss) income		(102)		(102)		(28)		(4)		154		(82)
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		20		-		20
Comprehensive (loss) income attributable to
Community Health Systems, Inc. stockholders	$	(102)	$	(102)	$	(28)	$	(24)	$	154	$	(102)



Condensed Consolidating Statement of Comprehensive Loss
Nine Months Ended September 30, 2018

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net (loss) income	$	(460)	$	(460)	$	(364)	$	(130)	$	1,009	$	(405)
Other comprehensive income (loss), net of income taxes:
Net change in fair value of interest rate swaps, net of tax		26		26		-		-		(26)		26
Net change in fair value of available-for-sale securities,
net of tax		(2)		(2)		(2)		-		4		(2)
Amortization and recognition of unrecognized pension
cost components, net of tax		1		1		1		-		(2)		1
Other comprehensive income		25		25		(1)		-		(24)		25
Comprehensive (loss) income		(435)		(435)		(365)		(130)		985		(380)
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		55		-		55
Comprehensive (loss) income attributable to
Community Health Systems, Inc. stockholders	$	(435)	$	(435)	$	(365)	$	(185)	$	985	$	(435)



Condensed Consolidating Statement of Comprehensive Loss
Nine Months Ended September 30, 2017

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net (loss) income	$	(446)	$	(446)	$	(210)	$	(201)	$	913	$	(390)
Other comprehensive income (loss), net of income taxes:
Net change in fair value of interest rate swaps, net of tax		8		8		-		-		(8)		8
Net change in fair value of available-for-sale securities,
net of tax		7		7		7		-		(14)		7
Amortization and recognition of unrecognized pension
cost components, net of tax		2		2		2		-		(4)		2
Other comprehensive income		17		17		9		-		(26)		17
Comprehensive (loss) income		(429)		(429)		(201)		(201)		887		(373)
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		56		-		56
Comprehensive (loss) income attributable to
Community Health Systems, Inc. stockholders	$	(429)	$	(429)	$	(201)	$	(257)	$	887	$	(429)



Condensed Consolidating Balance Sheet
September 30, 2018
	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated

	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	-	$	247	$	88	$	-	$	335
Patient accounts receivable		-		-		1,921		426		-		2,347
Supplies		-		-		280		144		-		424
Prepaid income taxes		17		-		-		-		-		17
Prepaid expenses and taxes		-		-		159		32		-		191
Other current assets		-		-		120		290		-		410
Total current assets		17		-		2,727		980		-		3,724
Intercompany receivable		-		12,836		6,110		7,149		(26,095)		-
Property and equipment, net		-		-		4,246		2,324		-		6,570
Goodwill		-		-		2,833		1,798		-		4,631
Deferred income taxes		-		-		-		-		-		-
Other assets, net		-		26		841		677		-		1,544
Net investment in subsidiaries		-		21,319		11,261		-		(32,580)		-
Total assets	$	17	$	34,181	$	28,018	$	12,928	$	(58,675)	$	16,469
LIABILITIES AND DEFICIT
Current liabilities:
Current maturities of long-term debt	$	-	$	-	$	27	$	8	$	-	$	35
Accounts payable		-		-		542		274		-		816
Accrued interest		-		258		-		-		-		258
Accrued liabilities		-		-		859		511		-		1,370
Total current liabilities		-		258		1,428		793		-		2,479
Long-term debt		-		13,251		184		100		-		13,535
Intercompany payable		1,174		21,808		25,543		12,722		(61,247)		-
Deferred income taxes		39		-		-		-		-		39
Other long-term liabilities		9		-		717		325		-		1,051
Total liabilities		1,222		35,317		27,872		13,940		(61,247)		17,104
Redeemable noncontrolling interests in
equity of consolidated subsidiaries		-		-		-		495		-		495
Deficit:
Community Health Systems, Inc. stockholders’
deficit:
Common stock		1		-		-		-		-		1
Additional paid-in capital		2,011		353		673		(279)		(747)		2,011
Accumulated other comprehensive loss		(8)		(8)		(8)		(10)		26		(8)
Accumulated deficit		(3,209)		(1,481)		(519)		(1,293)		3,293		(3,209)
Total Community Health Systems, Inc.
stockholders’ deficit		(1,205)		(1,136)		146		(1,582)		2,572		(1,205)
Noncontrolling interests in equity of
consolidated subsidiaries		-		-		-		75		-		75
Total deficit		(1,205)		(1,136)		146		(1,507)		2,572		(1,130)
Total liabilities and deficit	$	17	$	34,181	$	28,018	$	12,928	$	(58,675)	$	16,469



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	$	-	$	-	$	499	$	64	$	-	$	563
Patient accounts receivable, net of allowance
for doubtful accounts		-		-		1,861		523		-		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		-		2,946		1,105		-		4,068
Intercompany receivable		-		13,381		5,092		7,873		(26,346)		-
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		-		21,742		10,890		-		(32,632)		-
Total assets	$	94	$	35,162	$	27,852	$	14,362	$	(60,020)	$	17,450
LIABILITIES AND DEFICIT
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		1,333		795		-		2,356
Long-term debt		-		12,998		779		103		-		13,880
Intercompany payable		833		21,607		23,465		13,876		(59,781)		-
Deferred income taxes		19		-		-		-		-		19
Other long-term liabilities		9		1,018		997		378		(1,042)		1,360
Total liabilities		861		35,851		26,574		15,152		(60,823)		17,615
Redeemable noncontrolling interests in
equity of consolidated subsidiaries		-		-		-		527		-		527
Deficit:
Community Health Systems, Inc. stockholders’
deficit:
Common stock		1		-		-		-		-		1
Additional paid-in capital		2,014		(252)		960		(524)		(184)		2,014
Accumulated other comprehensive loss		(21)		(21)		(4)		(4)		29		(21)
(Accumulated deficit) retained earnings		(2,761)		(416)		322		(864)		958		(2,761)
Total Community Health Systems, Inc.
stockholders’ deficit		(767)		(689)		1,278		(1,392)		803		(767)
Noncontrolling interests in equity of
consolidated subsidiaries		-		-		-		75		-		75
Total deficit		(767)		(689)		1,278		(1,317)		803		(692)
Total liabilities and deficit	$	94	$	35,162	$	27,852	$	14,362	$	(60,020)	$	17,450



Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2018

	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated
	(In millions)
Net cash provided by (used in) operating
activities	$	45	$	(250)	$	361	$	284	$	-	$	440
Cash flows from investing activities:
Acquisitions of facilities and other related
businesses		-		-		(3)		(18)		-		(21)
Purchases of property and equipment		-		-		(313)		(100)		-		(413)
Proceeds from disposition of hospitals
and other ancillary operations		-		-		10		218		-		228
Proceeds from sale of property and equipment		-		-		2		5		-		7
Purchases of available-for-sale securities
and equity securities		-		-		(30)		(20)		-		(50)
Proceeds from sales of available-for-sale securities
and equity securities		-		-		55		20		-		75
Increase in other investments		-		-		(36)		(40)		-		(76)
Net cash (used in) provided by
investing activities		-		-		(315)		65		-		(250)
Cash flows from financing activities:
Repurchase of restricted stock shares for
payroll tax withholding requirements		(1)		-		-		-		-		(1)
Deferred financing costs and other debt-related
costs		-		(93)		-		-		-		(93)
Proceeds from noncontrolling investors in
joint ventures		-		-		-		2		-		2
Redemption of noncontrolling investments in
joint ventures		-		-		-		(27)		-		(27)
Distributions to noncontrolling investors in
joint ventures		-		-		-		(74)		-		(74)
Changes in intercompany balances with
affiliates, net		(44)		(10)		276		(222)		-		-
Borrowings under credit agreements		-		-		22		2		-		24
Issuance of long-term debt		-		1,033		-		-		-		1,033
Proceeds from ABL and receivables facility		-		538		49		-		-		587
Repayments of long-term indebtedness		-		(1,218)		(645)		(6)		-		(1,869)
Net cash (used in) provided by
financing activities		(45)		250		(298)		(325)		-		(418)
Net change in cash and cash equivalents		-		-		(252)		24		-		(228)
Cash and cash equivalents at beginning of period		-		-		499		64		-		563
Cash and cash equivalents at end of period	$	-	$	-	$	247	$	88	$	-	$	335



Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2017

	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated
	(In millions)
Net cash (used in) provided by operating
activities	$	(44)	$	(228)	$	688	$	201	$	-	$	617
Cash flows from investing activities:
Acquisitions of facilities and other related
businesses		-		-		-		(4)		-		(4)
Purchases of property and equipment		-		-		(277)		(151)		-		(428)
Proceeds from disposition of hospitals
and other ancillary operations		-		-		593		1,073		-		1,666
Proceeds from sale of property and equipment		-		-		3		1		-		4
Purchases of available-for-sale securities
and equity securities		-		-		(57)		(28)		-		(85)
Proceeds from sales of available-for-sale securities
and equity securities		-		-		84		49		-		133
Investment in other non-operating assets		-		-		(72)		(23)		-		(95)
Net cash (used in) provided by
investing activities		-		-		274		917		-		1,191
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		-		-		-		(5)		-		(5)
Distributions to noncontrolling investors in joint
ventures		-		-		-		(79)		-		(79)
Changes in intercompany balances with						-
affiliates, net		49		1,413		(434)		(1,028)		-		-
Borrowings under credit agreements		-		795		27		17		-		839
Issuance of long-term debt		-		3,100		-		-		-		3,100
Proceeds from receivables facility		-		-		26		-		-		26
Repayments of long-term indebtedness		-		(5,015)		(232)		(24)		-		(5,271)
Net cash provided by (used in) financing
activities		44		228		(614)		(1,114)		-		(1,456)
Net change in cash and cash equivalents		-		-		348		4		-		352
Cash and cash equivalents at beginning of period		-		-		176		62		-		238
Cash and cash equivalents at end of period	$	-	$	-	$	524	$	66	$	-	$	590