19. 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. In addition, equity interests held by the Company in non-guarantor subsidiaries have been pledged as collateral under the Notes, except for equity interests held in three hospitals owned jointly with a non-profit, health organization. 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. 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 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. Amounts for prior periods have been revised to reflect the status of guarantors and non-guarantors as of December 31, 2018.



Condensed Consolidating Statement of Loss
Year Ended December 31, 2018

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated

	(In millions)
Net operating revenues	$	-	$	(5)	$	8,712	$	5,448	$	-	$	14,155
Operating costs and expenses:
Salaries and benefits		-		-		3,275		3,109		-		6,384
Supplies		-		-		1,547		808		-		2,355
Other operating expenses		-		-		2,378		1,118		-		3,496
Government and other legal settlements and
related costs		-		-		11		-		-		11
Electronic health records incentive reimbursement		-		-		(1)		(3)		-		(4)
Rent		-		-		174		163		-		337
Depreciation and amortization		-		-		452		248		-		700
Impairment and (gain) loss on sale of businesses, net		-		29		333		306		-		668
Total operating costs and expenses		-		29		8,169		5,749		-		13,947
(Loss) income from operations		-		(34)		543		(301)		-		208
Interest expense, net		-		425		590		(39)		-		976
(Gain) loss from early extinguishment of debt		-		(32)		1		-		-		(31)
Equity in earnings of unconsolidated affiliates		788		414		318		-		(1,542)		(22)
Loss from continuing operations
before income taxes		(788)		(841)		(366)		(262)		1,542		(715)
(Benefit from) provision for income taxes		-		(53)		13		29		-		(11)
Loss from continuing operations		(788)		(788)		(379)		(291)		1,542		(704)
Loss from discontinued operations, net of taxes		-		-		-		-		-		-
Net loss		(788)		(788)		(379)		(291)		1,542		(704)
Less: Net income attributable to noncontrolling interests		-		-		-		84		-		84
Net loss attributable to Community Health
Systems, Inc. stockholders	$	(788)	$	(788)	$	(379)	$	(375)	$	1,542	$	(788)



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)	$	10,932	$	7,488	$	-	$	18,398
Provision for bad debts		-		-		2,081		964		-		3,045
Net operating revenues		-		(22)		8,851		6,524		-		15,353
Operating costs and expenses:
Salaries and benefits		-		-		3,652		3,724		-		7,376
Supplies		-		-		1,651		1,021		-		2,672
Other operating expenses		-		-		2,447		1,417		-		3,864
Government and other legal settlements and
related costs		-		-		(31)		-		-		(31)
Electronic health records incentive reimbursement		-		-		(12)		(16)		-		(28)
Rent		-		-		197		197		-		394
Depreciation and amortization		-		-		515		346		-		861
Impairment and (gain) loss on sale of businesses, net		-		-		1,219		904		-		2,123
Total operating costs and expenses		-		-		9,638		7,593		-		17,231
Loss from operations		-		(22)		(787)		(1,069)		-		(1,878)
Interest expense, net		-		327		610		(6)		-		931
Loss from early extinguishment of debt		-		40		-		-		-		40
Equity in earnings of unconsolidated affiliates		2,459		1,955		868		-		(5,298)		(16)
Loss from continuing operations before
income taxes		(2,459)		(2,344)		(2,265)		(1,063)		5,298		(2,833)
Provision for (benefit from) income taxes		-		115		(314)		(250)		-		(449)
Loss from continuing operations		(2,459)		(2,459)		(1,951)		(813)		5,298		(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)		(1,960)		(816)		5,298		(2,396)
Less: Net income attributable to noncontrolling interests		-		-		-		63		-		63
Net loss attributable to Community Health
Systems, Inc. stockholders	$	(2,459)	$	(2,459)	$	(1,960)	$	(879)	$	5,298	$	(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)	$	11,253	$	10,047	$	-	$	21,275
Provision for bad debts		-		-		1,719		1,118		-		2,837
Net operating revenues		-		(25)		9,534		8,929		-		18,438
Operating costs and expenses:
Salaries and benefits		-		-		3,784		4,840		-		8,624
Supplies		-		-		1,681		1,330		-		3,011
Other operating expenses		-		-		2,291		1,957		-		4,248
Government and other legal settlements and
related costs		-		-		16		-		-		16
Electronic health records incentive reimbursement		-		-		(36)		(34)		-		(70)
Rent		-		-		199		251		-		450
Depreciation and amortization		-		-		626		474		-		1,100
Impairment and (gain) loss on sale of businesses, net		-		-		1,262		657		-		1,919
Total operating costs and expenses		-		-		9,823		9,475		-		19,298
(Loss) income from operations		-		(25)		(289)		(546)		-		(860)
Interest expense, net		-		241		652		69		-		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		1,462		601		-		(3,827)		(43)
Loss from continuing operations before
income taxes		(1,721)		(1,758)		(1,448)		(615)		3,827		(1,715)
(Benefit from) provision for income taxes		-		(37)		19		(86)		-		(104)
Loss from continuing operations		(1,721)		(1,721)		(1,467)		(529)		3,827		(1,611)
Discontinued operations, net of taxes:
Loss 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) income		(1,721)		(1,721)		(1,477)		(534)		3,827		(1,626)
Less: Net income attributable to noncontrolling interests		-		-		-		95		-		95
Net (loss) income attributable to Community Health
Systems, Inc. stockholders	$	(1,721)	$	(1,721)	$	(1,477)	$	(629)	$	3,827	$	(1,721)



Condensed Consolidating Statement of Comprehensive Loss
Year Ended December 31, 2018

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net loss	$	(788)	$	(788)	$	(379)	$	(291)	$	1,542	$	(704)
Other comprehensive income (loss), net of income taxes:
Net change in fair value of interest rate swaps, net of tax		20		20		-		-		(20)		20
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		17		17		(3)		-		(14)		17
Comprehensive loss		(771)		(771)		(382)		(291)		1,528		(687)
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		84		-		84
Comprehensive loss attributable to
Community Health Systems, Inc. stockholders	$	(771)	$	(771)	$	(382)	$	(375)	$	1,528	$	(771)



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)	$	(1,960)	$	(816)	$	5,298	$	(2,396)
Other comprehensive income (loss), 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)		(1,938)		(816)		5,235		(2,355)
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		63		-		63
Comprehensive loss attributable to
Community Health Systems, Inc. stockholders	$	(2,418)	$	(2,418)	$	(1,938)	$	(879)	$	5,235	$	(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)	$	(1,477)	$	(534)	$	3,827	$	(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)		(1,485)		(534)		3,826		(1,617)
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		95		-		95
Comprehensive loss attributable to
Community Health Systems, Inc. stockholders	$	(1,712)	$	(1,712)	$	(1,485)	$	(629)	$	3,826	$	(1,712)



Condensed Consolidating Balance Sheet
December 31, 2018
	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated

	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	-	$	135	$	61	$	-	$	196
Patient accounts receivable		-		-		1,972		380		-		2,352
Supplies		-		-		261		141		-		402
Prepaid income taxes		3		-		-		-		-		3
Prepaid expenses and taxes		-		-		132		64		-		196
Other current assets		-		-		120		280		-		400
Total current assets		3		-		2,620		926		-		3,549
Intercompany receivable		-		12,698		4,875		6,316		(23,889)		-
Property and equipment, net		-		-		3,992		2,147		-		6,139
Goodwill		-		-		2,760		1,799		-		4,559
Deferred income taxes		69		-		-		-		-		69
Other assets, net		-		25		956		562		-		1,543
Net investment in subsidiaries		-		21,519		11,698		-		(33,217)		-
Total assets	$	72	$	34,242	$	26,901	$	11,750	$	(57,106)	$	15,859
LIABILITIES AND DEFICIT
Current liabilities:
Current maturities of long-term debt	$	-	$	155	$	22	$	27	$	-	$	204
Accounts payable		-		-		593		294		-		887
Accrued interest		-		206		-		-		-		206
Accrued liabilities		-		-		635		460		-		1,095
Total current liabilities		-		361		1,250		781		-		2,392
Long-term debt		-		13,167		147		78		-		13,392
Intercompany payable		1,572		22,178		24,646		11,819		(60,215)		-
Deferred income taxes		26		-		-		-		-		26
Other long-term liabilities		9		2		714		283		-		1,008
Total liabilities		1,607		35,708		26,757		12,961		(60,215)		16,818
Redeemable noncontrolling interests in
equity of consolidated subsidiaries		-		-		-		504		-		504
Deficit:
Community Health Systems, Inc. stockholders’
deficit:
Common stock		1		-		-		-		-		1
Additional paid-in capital		2,017		(327)		162		(566)		731		2,017
Accumulated other comprehensive loss		(10)		(10)		(5)		(9)		24		(10)
(Accumulated deficit) retained earnings		(3,543)		(1,129)		(13)		(1,212)		2,354		(3,543)
Total Community Health Systems, Inc.
stockholders’ (deficit) equity		(1,535)		(1,466)		144		(1,787)		3,109		(1,535)
Noncontrolling interests in equity of
consolidated subsidiaries		-		-		-		72		-		72
Total (deficit) equity		(1,535)		(1,466)		144		(1,715)		3,109		(1,463)
Total liabilities and deficit	$	72	$	34,242	$	26,901	$	11,750	$	(57,106)	$	15,859



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		-		-		1,938		446		-		2,384
Supplies		-		-		291		153		-		444
Prepaid income taxes		17		-		-		-		-		17
Prepaid expenses and taxes		-		-		148		50		-		198
Other current assets		-		-		149		313		-		462
Total current assets		17		-		3,025		1,026		-		4,068
Intercompany receivable		-		13,369		5,794		7,102		(26,265)		-
Property and equipment, net		-		-		4,489		2,563		-		7,052
Goodwill		-		-		2,882		1,841		-		4,723
Deferred income taxes		62		-		-		-		-		62
Other assets, net		15		39		1,728		806		(1,043)		1,545
Net investment in subsidiaries		-		21,605		11,126		-		(32,731)		-
Total assets	$	94	$	35,013	$	29,044	$	13,338	$	(60,039)	$	17,450
LIABILITIES AND DEFICIT
Current liabilities:
Current maturities of long-term debt	$	-	$	-	$	25	$	8	$	-	$	33
Accounts payable		-		-		670		297		-		967
Accrued interest		-		228		1		-		-		229
Accrued liabilities		-		-		651		476		-		1,127
Total current liabilities		-		228		1,347		781		-		2,356
Long-term debt		-		12,998		779		103		-		13,880
Intercompany payable		833		21,458		24,600		12,915		(59,806)		-
Deferred income taxes		19		-		-		-		-		19
Other long-term liabilities		9		1,018		1,031		344		(1,042)		1,360
Total liabilities		861		35,702		27,757		14,143		(60,848)		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)		963		(529)		(182)		2,014
Accumulated other comprehensive loss		(21)		(21)		(5)		(4)		30		(21)
(Accumulated deficit) retained earnings		(2,761)		(416)		329		(874)		961		(2,761)
Total Community Health Systems, Inc.
stockholders’ (deficit) equity		(767)		(689)		1,287		(1,407)		809		(767)
Noncontrolling interests in equity of
consolidated subsidiaries		-		-		-		75		-		75
Total (deficit) equity		(767)		(689)		1,287		(1,332)		809		(692)
Total liabilities and deficit	$	94	$	35,013	$	29,044	$	13,338	$	(60,039)	$	17,450



Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2018

	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated
	(In millions)
Net cash provided by (used in) operating
activities	$	40	$	(409)	$	319	$	324	$	-	$	274
Cash flows from investing activities:
Acquisitions of facilities and other related
businesses		-		-		(3)		(23)		-		(26)
Purchases of property and equipment		-		-		(410)		(117)		-		(527)
Proceeds from disposition of hospitals
and other ancillary operations		-		-		185		220		-		405
Proceeds from sale of property and equipment		-		-		2		6		-		8
Purchases of available-for-sale securities
and equity securities		-		-		(54)		(24)		-		(78)
Proceeds from sales of available-for-sale securities
and equity securities		-		-		79		35		-		114
Increase in other investments		-		(7)		(109)		(25)		-		(141)
Net cash used in investing activities		-		(7)		(310)		72		-		(245)
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		-		(96)		-		-		-		(96)
Proceeds from noncontrolling investors in
joint ventures		-		-		-		3		-		3
Redemption of noncontrolling investments in
joint ventures		-		-		-		(31)		-		(31)
Distributions to noncontrolling investors in
joint ventures		-		-		-		(96)		-		(96)
Changes in intercompany balances with
affiliates, net		(39)		99		207		(267)		-		-
Borrowings under credit agreements		-		-		28		-		-		28
Issuance of long-term debt		-		1,033		-		-		-		1,033
Proceeds from ABL and receivables facility		-		748		49		-		-		797
Repayments of long-term indebtedness		-		(1,368)		(657)		(8)		-		(2,033)
Net cash (used in) provided by
financing activities		(40)		416		(373)		(399)		-		(396)
Net change in cash and cash equivalents		-		-		(364)		(3)		-		(367)
Cash and cash equivalents at beginning of period		-		-		499		64		-		563
Cash and cash equivalents at end of period	$	-	$	-	$	135	$	61	$	-	$	196



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)	$	727	$	375	$	-	$	773
Cash flows from investing activities:
Acquisitions of facilities and other related
businesses		-		-		(1)		(5)		-		(6)
Purchases of property and equipment		-		-		(367)		(197)		-		(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		-		-		172		36		-		208
Investment in other non-operating assets		-		-		(106)		(37)		-		(143)
Net cash used in investing activities		-		-		207		862		-		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		1,565		(437)		(1,145)		-		-
Borrowings under credit agreements		-		795		30		16		-		841
Issuance of long-term debt		-		3,100		-		-		-		3,100
Proceeds from ABL and receivables facility		-		-		105		-		-		105
Repayments of long-term indebtedness		-		(5,078)		(291)		(22)		-		(5,391)
Net cash provided by (used in) financing
activities		12		317		(594)		(1,252)		-		(1,517)
Net change in cash and cash equivalents		-		-		340		(15)		-		325
Cash and cash equivalents at beginning of period		-		-		159		79		-		238
Cash and cash equivalents at end of period	$	-	$	-	$	499	$	64	$	-	$	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)	$	1,074	$	384	$	-	$	1,137

Cash flows from investing activities:
Acquisitions of facilities and other related
businesses		-		-		(99)		(24)		-		(123)
Purchases of property and equipment		-		-		(476)		(268)		-		(744)
Proceeds from disposition of hospitals and other
ancillary operations		-		-		14		129		-		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		(353)		(236)		-		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		(708)		(85)		-		-
Proceeds from sale-lease back		-		-		147		12		-		159
Borrowings under credit agreements		-		4,848		30		1		-		4,879
Proceeds from receivables facility		-		-		107		-		-		107
Repayments of long-term indebtedness		-		(6,507)		(193)		(15)		-		(6,715)
Net cash provided by (used in) financing
activities		(14)		(884)		(617)		(198)		-		(1,713)
Net change in cash and cash equivalents		-		-		104		(50)		-		54
Cash and cash equivalents at beginning of period		-		-		55		129		-		184
Cash and cash equivalents at end of period	$	-	$	-	$	159	$	79	$	-	$	238